Technical Analysis of Stock Trends

A buy signal in the Dow.

Posted on Jun 16, 2010 by WHC Bassetti.

Yesterday prices powered across the signal line in the dumpity-bumb-dump pattern (or whatever it is we call it).  This does not guarantee the resumption of the uptrend, but it is the way to bet for moderately aggressive traders and investors, as Napoleon said about Kenyatta and Runyon said about the heavy battalions — or was it ….?

Continue Reading

Tipping point tiptoes along razor’s edge…

Posted on Jun 14, 2010 by WHC Bassetti.

We have always had our eyes on that little known Nobel Prize category — the mixed metaphor prize.  We probably have the inside track on it, but you never know.  Our old college classmate and friend Fischer Black had the inside track and blew it by dying.  (Just a minute here.  We’re checking the old heart monitor…)  The Dow is racing along the razor’s edge here and is approaching a tipping point.

Continue Reading

Dow black cloud. Silver lining. (Gold lining?)

Posted on Jun 07, 2010 by WHC Bassetti.

Actually, maybe it’s a gold lining.  While the Dow was deteriorating gold was contributing to account equity — as was silver.  Both could probably stand add-ons to the position.  You will remember our admonition about portfolio allocation:  increase commitments to profitable positions, decrease commitments to losing positions.

UUP, the dollar index also continued to contribute profits rather than sucking them away.  There is an ongoing lesson here in the value of diversity.

Continue Reading

Long term perspective on the Dow.

Posted on Jun 06, 2010 by WHC Bassetti.

Readers who have read Sacred Chickens, the Holy Grail and Dow Theory will remember that the system discussed there used weekly bars.  Weekly bars have the characteristic of stepping back from daily volatility and enabling the tracking of long term trends with more tranquility.  We took a look at this system given the extreme volatility of the last 30 trading days.  In this system the Basing Point is more clearly articulated than in the daily system, occurring at the downwave low of February.  We have  annotated the chart with the stop  generated from this Basing Point, and as the reader will see it is around 300 points lower than the daily stop.  This might appear to be just theoretical nattering, but if we were sitting on large long term positions we would be using this stop.  And we would be trading against it to ameliorate the  short term pain of the downwave.

Continue Reading

Yo-Yo? Bungee? And, surprise, an upwave in the Dow!!

Posted on Jun 03, 2010 by WHC Bassetti.

Wonder of wonders.  An upwave in the Dow?  Here the 90 minute bars in the Dow.  As is obvious either a reversal or a consolidation is taking place.  As readers know patterns of this type can continue the trend (short term down) or reverse it.  This pattern appears to us more a reversal than a continuation — but it is unresolved as yet.  It actually looks like to us a kilroy (or(h&s) bottom.  But short term data like this can be unreliable.  As can be seen from this intraday chart an upwave started 7 days ago.  This is a surprise to us on looking closely at the chart.  It may be better seen on the daily chart.

Continue Reading