Wednesday

TheInflationist Longs Dow Jones and Australia 200

1 Comment January 14, 2009 – 4:16 pm |   | Permalink |  Print This Post |

Indices for 14.01.09

Our technical indicators suggest that this is an expected pullback within a rally, as stocks continue its losing streak with Dow falling from 9100 to 8180 (down 10.1%) at time of writing. FTSE has fallen from 4600 to 4120 (down 10.4%) whilst Australia 200 is down from 3820 to 3575 (down 6.4%). We put a $5/point long for the Dow Jones at 8150 (Dow is still 8180 at the moment) - the index has an affinity for nice round numbers - the support is about 8130, and so it is likely for it to fall to 8100. We also put a long $5/point for Australia 200 at 3558 (down 3.8%). As always, our strategy is to hit very light, and to anchor longs as market goes further lower. We enter another order to open long position at 8050 for the Dow. 

By the way, our stops for dow is at 7950, ie 200 points ($1k) from our entrypoint. Our target for Dow is 10000 in the next few months, which gives us an upside of about 2000 points x 5 = $10k. Australia 200 after hours presents a great opportunity as the Australian market rarely makes >3% moves during trading hours, so as it swings (up or down) after hours to follow Big Brother Dow, it often corrects itself during trading hours. 

Our trade just got hit at the time of writing. Dow went to 8143, below our 8150 order to open. If it were to rebound, it will need to hover at this level long enough to register itself on the HOURLY chart before making a move up. If lower, then our next target is at 8050 (our indicators suggest support at 8034; which means it will most likely go slightly below 8000 briefly to take out the stops at 8000). If it goes below 7950, all bets are off (as confident as we are in our indicators, we still need to protect our capital)

If you have an informed opinion on investing that you want to share with The Inflationist community, we welcome you to register as an author. The best way to contribute to The Inflationist is to sign up for “The Inflationist Challenge 2009″ and to manage your own virtual portfolio. That way, your portfolio performance speaks for the quality of your articles (price action is all we care about really). The Inflationist strives to provide objective, transparent stock recommendations leveraging on public investing talent.