Divination of market bottoms (crystal ball analysis)

Posted on Mar 06, 2009 by WHC Bassetti.

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First of all we are not even looking for a market bottom here.  Bottoms to bear markets like this do not form overnight.  They take months.  We are just trying to divine (divinate?) where the rally is likely to start.  We are going on 45 days of downwave now.  That is a pretty long wave.  Is there any way to know whether a rally (strong or otherwise) is likely to start.  Note this well: NO.  There is a negative indicator.  Peter Eliades just said that the Dow was going to 4000.  That probably means we are close to a bottom (irony).  When pundits start exposing their probisci to low flying eggs and making wild predictions (intended to generate attention getting traffic) but which usually result in egg on the face we perk up.  Ah! An Indicator.

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Gaps in the S&P?????

Posted on Mar 04, 2009 by WHC Bassetti.

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As if the weight of the market momentum were not heavy enough here are gaps in the S&P.  Somewhat rare if we remember, but we don’t watch the S&P that closely.  We regard it as a further bearish sign.  

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Are we there yet? Are we there yet?

Posted on Mar 04, 2009 by WHC Bassetti.

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Anyone who ever took a long car trip with little kids has heard this question to the point of madness.  Are we there yet, at the bottom in the market?  We would bet not, but we may be at a rally point.  Monday’s action had the look of a selling climax and the volume pattern looked right for an end of wave.  Of course it may just be more sideways before any definitive new direction (most probably down).  And anyway that noted analyst Barak Obama said some very wise things about the market today.  He said if you are watching it bob up and down you are going to be misled about the long term.  The weight and momentum of the market is still heavily down, even if a rally should be due.  

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And the waves roll on down, and down and…

Posted on Mar 02, 2009 by WHC Bassetti.

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The present downwave is now 38 days long without any significant upwave, or even any signs of an attempt to rally.  We do not exult in having been correct about this market.  The real personal pain our fellow citizens — in this country, and our fellow humans in all countries– are feeling leaves us in no mood to celebrate.  It is satisfying to see the establishment which has so disrespected technical analysis reap the just rewards of their “buy and hold” and “value investing” and “whatever else” strategies.  But even for them we have some sympathy.  Everybody has been hurt.  And they will probably be hurt some more judging from the chart.

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The truth and …

Posted on Feb 27, 2009 by WHC Bassetti.

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We make a practice of reporting all our trades to our readers.  This may not be a good idea as it might encourage foolish behavior on their part.  In our letters we clearly discriminate between trading tactics and investment tactics and recommend that our readers follow investment tactics.  We also — as in our recent letters about “lottery tickets” — identify potentially crazy and nutty ideas.  In line with this practice we scaled out of some GLD and SLV PFE (will someone remind us why we bought this?) doubled down on AIG and checked our Smith and Wesson .38 to see how many cartridges were in the magazine before playing our daily game of Russian roulette.  We are currently reading the popular Russian Fandorin thrillers by  Boris Akunin in which the characters play “American roulette”.  Given the games the Russians are currently playing Russian roulette seems more appropriate.  For your amusement in this vein “French leave”  (abandonment of ship in port) is known as “English leave” in French.  

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