Thursday

Thursday Turn

1 Comment March 26, 2009 – 1:07 pm |   | Permalink |  Print This Post |

Last nights 300-point roller-coaster ride would have shaken off quite a few longs and shorts - clear manipulation at play. We held on tenaciously to our last Dow long position, but do aim to unload it tonight as close to out entry 7950 as possible. We will accept a small loss (which is a big win considering we have held it all the way down to 6480 - such is the power of under-leveraging). The turn is near/here - we pencilled today as the turning point a while ago. Our last countdown for the turning point had a margin of error by 2 days. We are at this juncture again, except shorting is a more dangerous game at these levels no matter how overbought people say the rally is. The technical blogs have all circled 9000-10000 as a target. That said, markets go up and down - and to continue to rise unabated would present less opportunity for market makers to profit. It also needs time to unfold regardless of the direction to allow the transfer of holding from smart hands to dumb (and vice versa). Hence expect more of last nights volatility. Despite the ups and downs, Dow closed up at 7749, still within target (3.2%) of 8000. A few months ago, 8000 was “so oversold” and “cheap”. After 6 weeks of mental conditioning, we now see 7750 (current level) “overbought”. Companies do not fluctuate in value by 20% over a 6 week period.

Meanwhile, our sights are on Google and GE. We intend to be proud owners of Google and GE by the end of this financial fallout. We believe these companies will be around the next 20 years and will remain market leaders. GE is 100% up from its all time lows, so we will sit back and wait for it to fall onto our hands rather than chase. We will digest all the numbers before coming up with a target entry price.

Dow Futures at the time of writing is up at 7820 (0.84%). Looking at this it may be an up-down night - or at least that would be the ideal morphology to trade. Expect another “better than expected news” to push Dow one notch higher to breach our 8000 mark (3% up) - hopefully this occurs very early in the day - then short lightly (not a big fan of shorting at these levels, those who are risk adverse may choose to sit out and wait for markets to pullback to our target 7000-7200 to get a long foothold).

Our plan for tonight:

• Order to short Australia 200 $5/point at 3720 (upside target of 3750), and
• Order to short Dow at 8030. Aim to close long Dow position tonight at 8000 +/- 100 points (yes we will accept 7900 if its struggling to push higher at those levels)

www.theinflationist.com

www.theinflationist.com