Saturday

Markets Failed To Confirm Breakout

Post a Comment January 10, 2009 – 1:44 pm |   | Permalink |  Print This Post |

Every technical blog we follow have cautioned readers of a failed breakout on Friday after the dow broke below support and to sit on the sidelines until we have confirmation of a bullish setup. Bad employment numbers and general market conditions have once again hit headlines as the market behaves like a Bipolar patient with extreme mood swings. Based on our own analysis, we feel that this pullback is not unexpected and our indicators remain on a “Buy” signal since November. Hence, we will break out of the pack this coming week and consider taking a small position soon if the market continues to drop - in particular, we are focusing on H-shares which we got in sub-5000 and got out way too early (and are still kicking ourselves to this day) which have been hit the hardest and whose fundamentals are least impaired in the long term. Jim Rogers have not sold a single China share and he believes that selling anything Chinese “would be like selling out of American stocks during the Great Depression”. Be mindful not to over-leverage - the Dow could fall lower to 8400 and yet be in an uptrend whilst the FTSE (which we feel is overpriced compared to the rest; TheInflationist will not long the FTSE unless it falls below 4300). We will also consider taking a bite on Australia 200 this coming week, having unloaded all our long positions last week at 3780-3810 (not part of The Inflationist Challenge). We would not recommend anyone to short the market at these levels - the risk benefit is just not worth it. The market is trying to find every possible excuse to rally, and have noticed that bad news seem to have less of an effect on markets lately (a sign that markets have bottomed for the time being).