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Strategies & Market Trends : Longer-Term Market Trends
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To: AllansAlias who wrote (1389)7/16/2008 6:39:01 PM
From: Perspective   of 3209
 
Interesting times. We've already moved up from 1200 to 1244 on SPX, with significant overhead resistance at just 1275. We're less than 1% from the lines on this chart: (sorry, I just stole from AA and didn't update them)



and we actually closed right at the "failed" support line on this chart:



I say "failed" because such a long-term trendline can't be considered lost until it spends a long time underneath it. We actually closed last week right at the line, and have spent this entire week underneath it. This could just be a simple retest of the line, or it could be that we merely probed beneath it and we're being rejected.

I suspect we need to spend more time working off the oversold, but given the resistance above, perhaps it favors a choppy pause as opposed to continued upward price movement.

I maintain my long-term shorts, but my gearing is too high, so I've been hedging exposure downward these last two days. There may be some fantastic entry points against some very vulnerable stocks in the coming days, and I want to save some powder to take advantage of them. Often my hedging doesn't even earn me any profits by the time I unhedge, but the peace of mind and ability to maintain composure over an extended countertrend move that could last weeks is invaluable. That lets me keep my eye on the ball and not lose sight of the big picture: we're likely in a severe bear market associated with the unwinding of a credit bubble of historic proportions.

`BC
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