Confusion rains. River floods.

Posted on May 15, 2011 by in Letters

The Mississippi floods and the punditry leaks just as much wisdom confusion and nonsense — and the markets seem to be listening.  Everybody’s got an opinion — unfortunately.  Big names saying to cut and run now.

What is the market saying?  A down wavelet in an unusual place and an apparent stall in momentum.  What do you do?  Wait for the chart to sort it out.  We have marked the new stop for the SPX –1217.08.

In the INDU the stop is 11368.25.  This downwavelet in the INDU and the SPX are not destructive.   They are not constructive either, and they illustrate the crosswinds and rain raining on the market.

What to do?  Play it as it lies.  And try to improve the lie without catching a penalty.

We looked at the banks and saw a bunch of short candidates:  BAC, Cl, JPM and GS  all looking shortable.

At the same time the other indices look good:  MVV, IJK,  IWM all look like they have strong chart patterns and may well out perform the majors over the near future.  We could well see diverting some capital into these issues.

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