Sunday

Technical Analyses

Post a Comment November 8, 2009 – 10:36 am |   | Permalink |  Print This Post |

Apologies for the downtime. We changed servers again - the site should load up faster now. All posts have been retrieved and backed up except for our most recent post. We will move our orders to short higher after reviewing the pool of analyses over the weekend.

We particularly pay more attention to analyses which differ from ours. This is one from Slope of Hope by Fujisan, which has a target for the DJIA at 10400. The reverse head and shoulders pattern from October 2008 pre-crash remains to be filled, hence reaching 10400 would fulfill that technical requirement according to their analysis (looks more like 11000 to us to complete the reverse H&S pattern)

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Alternate Outcomes:

1. Dow 11500 - this remains the textbook technical pattern, ie fulfillment of the reverse H&S pattern. We definitely do not discount this possibility. Even though the fundamentals of the economy are no better, a 10-15% move of the index is insignificant. Fundamentals may be defied in the short term, but eventually the DJIA will reflect reality.

Matt Taibbi wrote an interesting article about the crooks at Goldman Sachs. It is 8 pages long but definitely worth the read. For a long time we have been critical of Goldman and all the investment banks. Reading what Matt wrote echoes our thoughts. We were not aware of the details written by Matt prior to reading this article. It is a transfer of wealth from the middle class to the rich. No longer are investment banks creating value by providing services to the community by M&A, etc, instead they pay themselves obscene bonuses by trading. Their trading profits come from small time traders like you and I. It creates ZERO value to the community. This rally is a fake and completely not backed by fundamentals. The most economic data is EMPLOYMENT. Everything else matters less - especially Consumer Confidence. I never understood why people paid so much attention to consumer confidence. Just check what the level of confidence was immediately BEFORE the October 2008 crash - I am sure it was all time high, indicating that it is a LAGGING/useless indicator.

With unemployment rising (yea the rate of increase may be lower but with 1/10 out of a job, we do not see the Dow making higher highs above 15000). So from here (10050) to previous peak - about 4000 points, let us celebrate as markets go higher. Every short from here will be in the money in time. And our investment horizon is medium-long term, so for every dollar/point short that you hold, relax. This level will be breached, and in our view (disclaimer: we are NOT financial advisers. Ask for advice from your financial advisors AT YOUR OWN RISK) there is a long way down. A retest is almost certain in our view.

This week:

• orders to short at 10220 $2/point and 10350 $2/point