Well you asked, I don't know how much time you have <ggg>. The thing that
just amazes me is why the "experts" are not bringing up some of the real technical
and fundamental issues. Are they so busy running their mouths that they don't
read, research or think for themselves?
Clearly, coming off the Aug/Sep lows this has been an incredible market. We
talked about the Millenium meltup scenario, thought it would not begin till
Y2K but it kicked in early and ran through 10Mar for the NAZ.
I continue to be bullish long term but this market in my estimation is at an inflection point. In terms of seasonality, the tide should be turning against us. At the same time, the NAZ is >20% of its high. We put in a double bottom today. 1st bottom set 5 Apr at 4,009 on the NAZ comp. Today we hit 4,009.52 intraday (and to think some still say TA has no merit) closing at 4055.90 The NAZ needs to close above 4,009 tomorrow, some may extend and say if it violates that level as long as it closes above 4,009 on Thursday all is okay. Bottom line? If the NAZ violates 4,009, there is a high probability that ~3,500 level +/- 50 can be seen. Also interesting to note that this level around 3,500 gives us about a 1/3 retracement from the old highs. Who are we to argue with the Fibonnaci <G>? But if the techs have already sold off hard before we enter the weak seasonality period then would we be set up for further downside or one of those infrequent years when we rally during the Spring into Summer?
The thing that may prove amusing shortly are the tech perma bears now pointing to the DOW as if it will run like the NAZ. They didn't get the NAZ over the past three years and I don't think they really get the DOW or old economy over the past month. Most of the money fueling the DOW has come from tech and I'm by no means a pure mo mo player but I will flow with the trend and have dabbled with some "old economy" plays recently. I have done this with DOW type stocks at this time of the year over the past couple years. Grab the low hanging fruit during the DOW sucker rally and dump the slow growing junk when the time is right. I also know the mo mo boys can yank their money out in a matter of minutes and the DOW can plummet. I will not be the last one to the DOW exit door.
Pull up a four month chart of the DOW.
What chart pattern do you see...Ever heard of a Diamond? We live in unusual times and we get a rare chart pattern (+/-). It could turn into a head and shoulders, some might call it head and shoulders right now, but bottom line, the hair should start to stand on the back of your neck <ggg>.
The diamond formation reversal pattern is found relatively infrequently. When it does form, however, it usually does so at market tops rather than at bottoms. This is consistent with its appearance, which suggests a confused, active market found at a top more often than at a bottom.
traders.com
Head and shoulders pattern
detnews.com
Identifying Noise Traders: The Head-and-Shoulders Pattern in U.S. Equities
C. L. Osler
This paper identifies a specific set of agents as noise traders in U.S. equity markets, and examines their effects on returns. These agents, who speculate using the "head-and-shoulders" chart pattern, are shown to qualify as noise traders because (1) trading volume is exceptionally high when they are active, and (2) their trading is unprofitable. Head-and-shoulders sales lower prices and vice versa, effects that disappear within two weeks.
ny.frb.org
-Bottom line, continued volatility ahead.
-We could run hard and fast back up.
-Seasonality can no longer be ignored, it argues against higher highs.
-In the near term, for those remaining invested with
"risky" positions, the need for maintaining protective strategies can not be over stated.
-It will be possible to profit greatly regardless of which way this market goes given proper positioning. (Straddles, puts whatever works for a given individual)
-Mobius and the rest of the he man tech haters club will soon see the DOW get bonked on the head again
Have your computer or RIMM pager or Palm 7 wireless or broker at the ready for the "noise traders" are on the prowl.
Time to enter the Arena...No FEAR!!! |
