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CGTS WEDNESDAY 23 DECEMBER 2009 -- CHINESE INDICES FALTERING 0 comments
Wednesday, 23 December 2009
WHAT'S WRONG WITH THIS PICTURE?
Dollar down; stocks up. Dollar up; stocks up. Is it possible that the Fed's continual destruction of the US Dollar since March had nothing to do with the Bear Market Rally? Are stocks going up on their own merit? Has it nothing to do with the Fed's policy of bankrolling, backstopping, stocks and bonds? If the banks can borrow short-term from the Fed for nothing, and funnel funds into risky stocks and bonds, why not? If stocks appear to be faltering, why not borrow more and buy more? This is, indeed, a bizarre market we are living through.
Indexes look pretty good, with the exception of gold stocks, which seem to be approaching a bottom -- and Chinese stocks, which seem to be collapsing.
The major victim of the US Dollar rally, at least so far, appears to be Chinese stocks. Funny, Korean and Japanese indexes both seem to be recovering from pretty healthy pullbacks. Clearly a weakening of the Yen and Won should help Japan and Korean exports. China understands that it will have NO economic recovery unless exports recover. If the Dollar rallies, China's currency will also rally -- and Chinese exports will become relatively more expensive, less attractive. A Dollar rally is a mixed blessing, in that it should make China's investment in American treasuries and securities healthier -- but, unless China's exports to America and Europe recover, China faces economic and, perhaps, social trouble.
Both the Hang Seng and Shanghai Index look damaged. The Shanghai Index has crashed through support and looks to be read to sink lower. The Hang Seng is now at support and looks ready to break through on the down side.
Non-Chinese indexes look pretty healthy at the moment.
We are modifying one of our trading systems, M2F ASP (Alt Sum Plus) LT #2. The modification is the sell signal. Currently we sell when our trading indicator (M2F ALT SUM) reads -1 for two days in a row. This can be very productive for shot-term trading. One of the problems we have with it is that it often gives a buy signal a day or two after terminating a trade. Our goal is to turn this into an intermediate-term trading system -- and we do this by selling only when our trading indicator goes negative (-1) AND our intermediate trend indicator (T11) turns negative. We still use the old system's buy signals, and add to a position as long as the trend holds out. In Estee Lauder (below), we would buy every buy signal in the chart, but we would not sell, as the trend has not reversed. The same with Apple Computer below. But GGB (Gerdau) does gie a 'sell signal', when the trend and the indicator broke down in late October. But it was right back up giving another series of buy signals. Our hope is that this modification will help us to generate longer-term profits with this trading system. Our two short-term systems (M2F ALT and M5 10) do fine generating short-term trading profits.
DAILY PORTFOLIO
Our daily portfolio is up 12%, with the first trade being on 6/29/09 -- so this is roughly a 25% annualized rate. Note: we are also including the number of short trades in each portfolio and the percentage of long trades to show how overwhelming the bullish trend is at the moment. These percentages should begin to change as time goes on.
DAILY TRADING SIGNALS
We closed some positions today (11 winners, 1 loser) and added more long positions. We show some charts below.
SELL
BUY
More information on this system can be found at
home.mindspring.com/~mclark7/CGTS09.htm
A draft of the book Turn Out the Lights can be found at the website below. This book is a description of the metaphysical causes of the economic cycles of expansion (Day) and contraction (Night).
www.hoalantrangallery.com/Turnoutlights.htm
Michael J. Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210
Disclosure: The author does not own issues mentioned in this article.
Disclosure: Disclosure: The author does not own issues mentioned in this article.
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StockTalks
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Apple wants to bottom; but IS Apple bottoming? Not so far. http://seekingalpha.com/p/zmvd
Mar 18, 2013
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Are global stocks topping? Probably not. All depends on what the US Dollar does. http://bit.ly/LfW9VY
Mar 15, 2013
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Words matter. Let's first agree to start calling INFLATION and ECONOMIC GROWTH the same thing. http://seekingalpha.com/p/zcd1
Mar 14, 2013
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