I sent the following email to blog readers yesterday evening –
“I am about as Bullish as I have been in the last 12 months. If they can't take it down, then they may just have to pop it higher. I started buying the Dow, the NASDAQ and Nat Gas today. On Friday I bought some Materials companies and Crude Oil.
I may get stopped out of everything tomorrow, or it may run for a week or two. I have no clue. But the setup this there for a Big, Fast move and I need to put some money at risk to try and participate.”
“In the mean time, this weekend, Pelosi talked about the government buying Common Stock in banks. That is a radical shift from any previous solution. It is a desperate attempt to not have to nationalize the banks outright. I hope it works.
One more thing - I would not be surprised to see Gold peak this week.”
There are three patterns right now –
1. Tight Consolidations
2. Holding the Lows
3. Rising Wedges
Tight Consolidations
If you have been reading my posts for any period of time, then you know that markets move in fits and starts. They tend to sit around for a long time and then make a big move over a very short period of time. These big moves are where you make the majority of your investment returns.
Dow Jones Industrial Average
Here is the hourly chart of the Dow Jones tracking stock, DIA (DIA = Dow Jones Average / 10). DIA has been stuck between 80 and 90 for almost 4 months. That means that the Dow has been trading between 8,000 and 9,000.
At some point, the Dow will rapidly move out of this trading range by launching or crashing. Remember, the Dow sat in a trading range like this for a year after the 1987 Crash.
“I am about as Bullish as I have been in the last 12 months. If they can't take it down, then they may just have to pop it higher. I started buying the Dow, the NASDAQ and Nat Gas today. On Friday I bought some Materials companies and Crude Oil.
I may get stopped out of everything tomorrow, or it may run for a week or two. I have no clue. But the setup this there for a Big, Fast move and I need to put some money at risk to try and participate.”
“In the mean time, this weekend, Pelosi talked about the government buying Common Stock in banks. That is a radical shift from any previous solution. It is a desperate attempt to not have to nationalize the banks outright. I hope it works.
One more thing - I would not be surprised to see Gold peak this week.”
There are three patterns right now –
1. Tight Consolidations
2. Holding the Lows
3. Rising Wedges
Tight Consolidations
If you have been reading my posts for any period of time, then you know that markets move in fits and starts. They tend to sit around for a long time and then make a big move over a very short period of time. These big moves are where you make the majority of your investment returns.
Dow Jones Industrial Average
Here is the hourly chart of the Dow Jones tracking stock, DIA (DIA = Dow Jones Average / 10). DIA has been stuck between 80 and 90 for almost 4 months. That means that the Dow has been trading between 8,000 and 9,000.
At some point, the Dow will rapidly move out of this trading range by launching or crashing. Remember, the Dow sat in a trading range like this for a year after the 1987 Crash.
Several other major Indexes look like the Dow and will probably move in unison with the Dow. I will use the Dow as a proxy for the market.
Holding the Lows (so far)
Transports (IYT)
Holding the Lows (so far)
Transports (IYT)
Transports have been holding the lows of November 24 (Green Circle and Line). If IYT can break above 55, then it could make a stab higher. There is a lot to clear in the 58 – 60 range. I stopped into IYT today in the $52.80 range.
Failed Leadership
Airlines ($XAL)
Airlines have broken and were pounded today (-6.91%). They now run the risk of retesting the July 2007 lows. Keep in mind that Airlines got crushed today, even though Oil was down -9% today! Airlines normally move inverse to Oil, so this development is not good for the Airlines.
Airlines ($XAL)
Airlines have broken and were pounded today (-6.91%). They now run the risk of retesting the July 2007 lows. Keep in mind that Airlines got crushed today, even though Oil was down -9% today! Airlines normally move inverse to Oil, so this development is not good for the Airlines.
School Stocks
Devry (DV) has failed on its latest breakout attempt and been sold hard the last 2 days on heavy volume. DV is down another couple bucks in the aftermarket on their earnings release. STRA looks a lot like DV. Another day like today and this group is toast!
Devry (DV) has failed on its latest breakout attempt and been sold hard the last 2 days on heavy volume. DV is down another couple bucks in the aftermarket on their earnings release. STRA looks a lot like DV. Another day like today and this group is toast!
And that’s it for leadership. I’m serious. Nothing else has shown up. Big money is not breaking out stocks and sectors on high volume and committing money as these stocks break to new highs. Until big money shows up to support new leadership, we remain in a Bear Market and I remain a Trader.
Rising Wedges
Silver
The charts of the metals scare me. I look at Silver (SLV) and I see a rising wedge (Blue Lines) on diminishing volume (Red Line and Arrow). That is the stuff of crashes, not the stuff of Bull markets. At some point soon (tomorrow), I will enter stop orders to short Silver.
Rising Wedges
Silver
The charts of the metals scare me. I look at Silver (SLV) and I see a rising wedge (Blue Lines) on diminishing volume (Red Line and Arrow). That is the stuff of crashes, not the stuff of Bull markets. At some point soon (tomorrow), I will enter stop orders to short Silver.
Gold (GLD = the price of Gold / 10) looks like Silver on steroids! That may turn out to be “The Mother of All Wedges”. Time will tell, but I think it very improbable for Gold to continue to go vertical without some sort of pullback. If I am wrong, I am wrong. I will only commit money when I am confident in the set up. Buying Gold here is insane. Risk management right here is impossible.
US Dollar ($USD)
The Dollar looks like it is putting up a big top and I hope to be able to short a retest of 88.
The Dollar looks like it is putting up a big top and I hope to be able to short a retest of 88.
Back To The US Government
Pelosi has told you that the goal of the Government is to own stocks. Stocks will be the next Bubble. They are liquid, they are marginable, they are easily manipulated and a parabolic advance can lead to euphoria that strips reality from all reality (also called GREED).
The US Government will announce their new version of “recapitalizing” the insolvent beast that is the US Banking System. It will most likely come in the form of a “Bad Bank” where the US Taxpayer will overpay for a bunch of toxic waste and get over-value Stock in return.
Preferreds
This is the Asset Class that may most directly benefit from the “Bad Bank” model. I have started to buy Preferreds via JNK and will be looking to add via HYG if they show a strong bid tomorrow.
Remember – STOP LOSSES ON ALL TRADES. I am not telling you to do anything with your money, any more than a heart surgeon would tell you how to operate on yourself. I’m just going through my though process for how I commit capital. That was the whole purpose of creating the blog.
Pelosi has told you that the goal of the Government is to own stocks. Stocks will be the next Bubble. They are liquid, they are marginable, they are easily manipulated and a parabolic advance can lead to euphoria that strips reality from all reality (also called GREED).
The US Government will announce their new version of “recapitalizing” the insolvent beast that is the US Banking System. It will most likely come in the form of a “Bad Bank” where the US Taxpayer will overpay for a bunch of toxic waste and get over-value Stock in return.
Preferreds
This is the Asset Class that may most directly benefit from the “Bad Bank” model. I have started to buy Preferreds via JNK and will be looking to add via HYG if they show a strong bid tomorrow.
Remember – STOP LOSSES ON ALL TRADES. I am not telling you to do anything with your money, any more than a heart surgeon would tell you how to operate on yourself. I’m just going through my though process for how I commit capital. That was the whole purpose of creating the blog.
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