Monthly Archives: November 2008

Preparing for the week Nov 3

I haven’t posted much in the past few week’s. I have been trading, I have been reviewing acct. And quite honestly I haven’t been too excited with this market. Honestly I am still not. Although now that we have tested a bottom a few times, it offers a tested point of reference.
Most people are pointing to the Oct 10, which is actually a false low. The low which really makes sense is the Oct 27th (Monday) low. Why? – because we closed LOWER and greater Negative volume. With that said, we have not made higher highs, or higher lows yet. The previous bearish pattern seems to still be in effect. The bulls hope, the bears are regathering their strength.
Last monday and tuesday, I was picking up some long issues and it paid off. On thursday and friday I was lightening my longs, and moving into some shorts.
I often find that the placement of Fibonacci retracement lines end up in the most obvious places. For example:
24% is at the top of the recent range
38% is at the top of the gap
50% is a the bottom of the gap
62% is at the previous supporting low
SPY 11.4.gif
We seem to be in a base building area. Are we ready to breakout? Perhaps. Here is my socio-economic guess:
With tuesday’s election we will have 1 uncertainty out of the market.
Everyone knows about it, we could see a sell the news reaction.
And then, people who missed the recent run up would have a solid entry point with a defined stop (10/27 lows).
We are certainly in bear market, and this bounce only a counter-trend bounce. I have been working with my father to help him exit some of his long portfolio. We are exiting as we move through these fibonacci levels. And you can bet, if we get to SPY 121 and we break an uptrend line, I will be decidedly short. I don’t doubt we can get to SPY 113, but there seems to be a long time between now and then.
Here is one I started nibbling on last week. This looks good as a short to me:
double topping w4, into the 50day MA. Weakening Oscillator. I will add more if I we see substantial weakening via a trendline break.
GILD 11.4.gif

And finally a political message:
Beware the strawmen the political spinners are creating. It sickens me to hear friends whom I once thought were intelligent falling for this crap. Basing their decision on emotionally charged labels. Socialism, abortion, gay promotion, Muslim, freedom, Cut and run, same as Bush, Joe the Plumber (ave Joe Schmoe), etc It is important to know what you stand for, and wade through the junk, and see which candidate truly resonates with you. For me it is Mr. Barack Obama.
Capitalism is the best economic system devised, however it is running amok at this time. Energy technologies are being suppressed, Financial companies have come under the illusion that they are entitled to the huge salaries and bonuses, even if they DON’T make money. We are in an 80 yr Grand Cycle. (I will take some liberty on the exact dates, but you should get the idea).
1776 – Revolution (power from the “King” back to the citizen/local and regional governmental power) read: The Federalist Papers
1860 – Slavery (“property rights” /Civil War) read: Team of Rivals: The political Genius of Abraham Lincoln
1929 – Peak of the Roaring 20s. Soon thereafter, massive social changes… New Deal, Keynesian economics read: The Great Depression and the New Deal
2008 – Peak of Financial Engineering (fake prosperity/credit bubble/large disparity of wealth) read: Hot, Flat, and Crowded
Something needs to change, it always does. Those who want it to remain the same, need to see what it takes to achieve the next level of prosperity. There are many moving parts.
Global challenges/opportunities:
Energy and Food Technologies, rebuilding of economic foundation of the US, climate consciousness, global emerging prosperity
Enough said, now back to the business of making money.