Sunday

Hope For A Crash To Make Some Cash

Post a Comment January 18, 2009 – 12:10 pm |   | Permalink |  Print This Post |

The Inflationist have reviewed our numbers: a few mixed signals but our indicators suggest the recent falls are corrective within a wave up. We feel that 7995 may have been the bottom for now, but hope that it goes back sub-8000 so that we can re-enter our long positions. Our target remains about 10000 at this stage, subject to new technical indicators. There is a potential great trade/gamble here (we always look at trading opportunities which could set one up for life). Assuming DJIA goes back down lower than 7995 - say 7850 (100 points below our support - sometimes major supports/resistance are broken transiently by manipulators for the sake of taking traders out, that’s our theory anyway). At the worst case, a clear exit point at November lows of 7500 is about 350 points away (assuming DJIA goes to 7850), whilst upside we feel is about 2000 points. We feel that risk reward is on our side. We may lose 350 points but we know where the floor/exit is. Assuming one has an appetite for risk (and wish to make enough in one trade to stop working for the year), one would go long at $100/point at a point as close to 7850 as possible (anchor $33/pt each averaging down as markets goes against your position). Exit point is to lose $35k, upside is $200k. The odds, (BIG) if you believe in our technical indicators, is on our side - plus the favourable upside downside ratio of 6:1. The Inflationist hopes to have $20/point long at an average entry point as close as possible to 7500. 

The news we read over the weekend continue to make us doubt our indicators. Fundamentals are not align with Technicals - making this not an ideal trade. Best trade is if both align with each other - we are hoping to see this when the DJIA is at >10000 sometime in 2009. Our 10000 target is NOT confirmed. This rally may be a sideway rally ie swinging between here (8000) to 9000. 

We will open another long at levels below 8000 if the opportunity presents itself. Looking at the news over the weekend, this is definitely a possibility. It may just be an intraday low so you need to keep your eyes open or put an order to open!