1. Breath is weak, and has been getting weaker, as happens before the end of a bull market. The NYA closed below the 200 day and will have resistance above now. The RUT closed barely above. The NYA and other indices have large H&S patterns. The $BSE has a target of at least 16,000 (IMO). And Gold as been on a tear. Also, short-term, we are now entering the down phase of the moon cycle. New moon is here; we are headed for a full moon. This indicates further bearishness to come.
However, before a bull market ends, sentiment is usually very positive. We haven't had very positive sentiment since March or April. Of course it's possible that we are already in Wave 3 of the bear market, and March/April was a top.
However,
2. A few indicators indicate that we made a short-term bottom today (or will do so Monday/Tuesday). These are divergences on 5 MA and 10 MA of advancing stocks on the NYSE and on New Highs (positive divergence in New highs but not yet in New lows. The Russell printed a hammer.
3. A few other indicators (VXW:VIX) also indicate a bottom, perhaps an even longer term bottom.
4. At this point, I plan to go long on Monday or Tuesday. I will be careful with longs. Whether we are in a bull market or not, I think we get a bounce here or Monday. After the bounce, I will likely check out and consider going short.
Friday, July 29, 2011
Friday, July 22, 2011
Monday, Monday morning
1. FAS at 24.7
2. SVM at 11.3 (top pick)
3. AG at 24.4 (top pick)
4. YOKU at 34.3
5. AGQ (at 214?) top pick.
Silver is at $41 resistance. If it breaks through, it's going to 50. I think it will break through, possibly with some hiccups. A lot depends upon this stupid debt deal.
2. SVM at 11.3 (top pick)
3. AG at 24.4 (top pick)
4. YOKU at 34.3
5. AGQ (at 214?) top pick.
Silver is at $41 resistance. If it breaks through, it's going to 50. I think it will break through, possibly with some hiccups. A lot depends upon this stupid debt deal.
Wednesday, July 20, 2011
Tuesday, July 19, 2011
Wednesday's Plan
I may buy only one or two of these.
Buy BGU at 83.2.
FAS 23.2?
Buy SVM at 10.9
AG at 21.8 - 22.5 zone.
Sell SOHU at 86.2 or so.
BAC at 9.3
Buy BGU at 83.2.
FAS 23.2?
Buy SVM at 10.9
AG at 21.8 - 22.5 zone.
Sell SOHU at 86.2 or so.
BAC at 9.3
Sunday, July 17, 2011
'Response to John Mauldin's Most Recent "Thoughts from the Frontline"
This is a response to an article that can be found here:
http://www.johnmauldin.com/frontlinethoughts/back-to-the-basics/
Sir, you say: "The following graph is from today’s Wall Street Journal editorial page. They use it to show how much Democrats allowed the budget in terms of GDP to rise and spin out of control.// I would point out that in the 8 previous years, under Bush/Hastert/Delay et al., there was also a rise in the growth of government, as the chart shows. While it was not as large, it was clearly there."
This clearly shows your partisan bias. If you had taken a moment to question the WSJ's graph, you would have realized that the Obama-Pelosi congress had nothing to do with the budget increase until late 2009, well into the parabolic phase of that graph. There were two fiscal stimuli in 2008 under the Bush Administration: the $168 billion tax cut and $700 Billion TARP in October 2008. The funds for the latter bailout were disbursed in 2009. The Obama-Pelosi administration did pass further budgetary stimulus in 2009 (The American Recovery and Reinvestment Act) totaling about $880 billion, and funds were disbursed in 2009-10, but that was about half of that parabolic climb. That second stimulus is responsible for the little (and much needed) road reconstruction we have seen in the DC area. Thank god for that!
Further, please examine how your data about government investment verses growth rate functions when analyzed properly, with a lag of 3-5 years in GDP growth. How do you think China has achieved its stunning growth rates over the past 20 years -- from private investment? Really? How do you think America was able to boom from the 50s to the 80s. Hint: The answer has something to do with infrastructure. Government investment has been responsible for highways, education investment, and military and space technology, all of which led to subsequent massive growth in the private sector. As you perhaps know, sir, the internet was not discovered by Al Gore. It was jointly discovered and developed in the military, the National Science Foundation (NSF), and several universities including MIT, Stanford, UCLA, and Harvard. University research is subsidized by... you guessed it ... Government Spending!
http://www.johnmauldin.com/frontlinethoughts/back-to-the-basics/
Sir, you say: "The following graph is from today’s Wall Street Journal editorial page. They use it to show how much Democrats allowed the budget in terms of GDP to rise and spin out of control.// I would point out that in the 8 previous years, under Bush/Hastert/Delay et al., there was also a rise in the growth of government, as the chart shows. While it was not as large, it was clearly there."
This clearly shows your partisan bias. If you had taken a moment to question the WSJ's graph, you would have realized that the Obama-Pelosi congress had nothing to do with the budget increase until late 2009, well into the parabolic phase of that graph. There were two fiscal stimuli in 2008 under the Bush Administration: the $168 billion tax cut and $700 Billion TARP in October 2008. The funds for the latter bailout were disbursed in 2009. The Obama-Pelosi administration did pass further budgetary stimulus in 2009 (The American Recovery and Reinvestment Act) totaling about $880 billion, and funds were disbursed in 2009-10, but that was about half of that parabolic climb. That second stimulus is responsible for the little (and much needed) road reconstruction we have seen in the DC area. Thank god for that!
Further, please examine how your data about government investment verses growth rate functions when analyzed properly, with a lag of 3-5 years in GDP growth. How do you think China has achieved its stunning growth rates over the past 20 years -- from private investment? Really? How do you think America was able to boom from the 50s to the 80s. Hint: The answer has something to do with infrastructure. Government investment has been responsible for highways, education investment, and military and space technology, all of which led to subsequent massive growth in the private sector. As you perhaps know, sir, the internet was not discovered by Al Gore. It was jointly discovered and developed in the military, the National Science Foundation (NSF), and several universities including MIT, Stanford, UCLA, and Harvard. University research is subsidized by... you guessed it ... Government Spending!
Saturday, July 16, 2011
RSP:SPX
I think in Wave5, as breath thins, it is natural for RSP (equal weighted SP500) to trail the S&P. The RSP:SPX chart looks ghastly right now. If you look at it in isolation, with MACD, you'll see a declining channel. However, IMHO, what you see is quite common in the beginning of Wave 5. To see a complete Wave 5 comparison of RSP:SPY and SPX, look at this chart, from 2005 to 2008:
Note that RSP:SPX peaked in around March 2007 and the October highs in the SPX didn't even make a dent in RSP:SPX ratio.
Now look at the same chart for the past 2 years.
Thursday, July 14, 2011
PMs
Buy AG around 21.
AGQ around 193.
I think we get a little more downside in the indices today and tomorrow.
Sunday, July 10, 2011
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