Reentering…

0207spx

 

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=9&dy=0&id=p83750808625&a=214966864

Prices are surging across the trendline at 4 in what we interpret as a buy signal.  We are lifting (in stages) our hedge and scaling new capital into the market.  The conservative thing to do is wait for the old high to be taken out, but it looks like to us (today) that the “correction”  (British rock group?) has fulfilled its purpose — i.e. to scare the hell out of timid money sitting on the sidelines and discourage them from entering until they can be thoroughly punished.

Readers will note the resemblance to the alpha-beta-gamma pattern.  The flag fizzled under the weight of  economic facts.

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This Post Has 2 Comments

  1. WFGCO

    Oh wise and experienced master – we do have a daily close above the damage – but is that enough of a test to buy. I see the wisdom in the hedge coming off – but is it not true we need another test…? SGR

  2. WHC Bassetti

    well if we thought this an a-b-c formation we could debate what is the a wave and whether the action thurs and fri were the b wave. but prices have surged across the trendline. I remarked that really conservative investors would wait for the last high to be taken out. less risk, less profit.
    cb

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