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Dead cat bounces and the true state of the market.

Posted on Jul 07, 2010 by WHC Bassetti.

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2010-07-07-induTuesday didn’t furnish much of a bounce, but as this is written Wednesday one could think — well, maybe this is over.  And maybe this downwave is over, but what is not over is the general state of the market.  Which is in a trading mode.  And the trading mode is within a downtrend.  During times like these investing and trend following can be very frustrating.

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Stops tripped. Time to hedge or exit.

Posted on Jul 03, 2010 by WHC Bassetti.

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2010-07-03-induThe most destructive habit — or decision, or characteristic or event or test of character– in the markets is to contemplate  a stop long set, and to reconsider it.  Actually it’s ok to reconsider it, but it’s not ok to decline it.  Only if it were set in error should it be negated.  Error means a glaring error in procedure, or in computation.  The present stop is a valid stop.  Those who ignore it will end up like the owners of Enron.  The stop at 9729 is violated.

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Stops. And esoteric technical arcana…

Posted on Jul 02, 2010 by WHC Bassetti.

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2010-07-01-indu

Email pours in from friends, students, readers, colleagues.  How did the market know where your stop was (9729) and know to stop just above the stop.  (Stop us if you’ve heard this one.)  Do we like this stop? No.  We set it back in December from a congestion pattern.  We actually think it should be set using a Basing Point from February, which we have illustrated here with the lower horizontal line of 9408.88.  In fact that is the stop that is generated by the weekly Basing Point system.

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Analyzing IEDs.

Posted on Jun 30, 2010 by WHC Bassetti.

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2010-06-29-induhThe market is certainly spooked.  Could have something to do with the full moon.  Or fear of Greeks selling bearer bonds.  Whatever it is it’s like a roadside bomb.  In looking for bottoms on a short term basis we can go to hourly data to look for hints of the possible future direction.  What we see in the hourly chart of the Dow looks like a bottom forming, and even has a breakout across significant trendlines.  But then it turns and returns to the congestion pattern.

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Onrushing train. F, BAC, Dow, S&P

Posted on Jun 29, 2010 by WHC Bassetti.

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2010-06-29-fIn general we don’t worry about why it’s doing what it’s doing.   We just worry about what it’s doing.  What it’s doing right now is not pretty.  It is testing the general market lows with a vengeance.  A severe test of the bull trend is in progress.

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