Tuesday

Tuesday Market Summary

Post a Comment April 21, 2009 – 5:26 am |   | Permalink |  Print This Post |

The Dow Industrials tanked 289 points, 6 weeks after it bottomed and at 28 percent higher. The top came in as suggested by all technical indicators available to most good technical websites (Tony Caldaro, Guy Lerner, Brian Shannon). Our indicators concurred but we applied another level of buffer and were hoping for another 2-3% rise before shorting more. We are happy with our timing so far, having closed most of our long positions in the weeks leading up to this (including a small Dax short), and have a bunch of discrepancies opened between the Dax and FTSE (510 at time of writing). Our indicators confirmed a sell signal for the following few days to weeks after Mondays move - but we caution against shorting. We prefer to take this as an opportunity to get into good companies which is fundamentally unimpaired and well run (including those which have been hit the hardest and are “government protected” eg Citigroup).

Our short term indicators suggest markets may go up tonight - so hold your horses if you wish to short. The price movement last night also demonstrate that they show little correlation to news. Last week’s earnings reports were no different to Monday - the forces of market makers cannot be underestimated (and should always be exploited). Despite better than expected earnings, the market showed no mercy to Bank of America’s latest earnings. Citigroup dropped 24% from $4.00 to $2.80. We could not resist that temptation and bought 500 shares in Citigroup at $2.80. When DJIA hits our target 7350 +/- 100 points, we will go on another shopping spree.

In the mean time we have our sights on:

• General Electric : aim for sub-$10 - more on our analysis on GE soon.
• Google : only if it falls significantly
• Natural Gas ETF and Natural Gas May contract : Buy signals triggered but may take 6-12 months to move up (long term play)
• Gold : awaiting further falls and buy signals