Wednesday, 10 February 2010
GETTING ITCHY TO TRADE AGAIN?
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
-- John Maynard Keynes
Have we all had enough selling? Getting itchy to pull th trigger on some short-term trades again? We can help with that.
We developed a new trading system (short- and intermediate-term) over Christmas -- called HOHO -- and it looks rather promising. We're getting some signals that we will relay to you.
First, let's see how this decline in share prices is playing out.
NDX, Nasdaq Index: Trying to bottom again. Nothing is certain as to how well this rally will play out of course. M5 (3) -- brown line -- is 'predicting' a bottoming. But M5 (3) predictions are sometimes in advance of the fact. We won't really have a bottom until the short-term trend (gray line) turns back up.
SSMI, Madrid Index (Spain). I've been very negative on this one for some time now. The sell-off has been very significant, taking out three support levels and creating a gap in the process. I would not touch Spanish stocks with a ten-foot pole -- and American stocks are almost in the same soup in fact, aren't they?
How to play this? See EWP chart beneath the SSMI chart.
NIKKEI Index. Unharmonious picture. I'm not sure what happened to the short-term trend in this picture (missing) -- but it is down. And M5 (3) momentum indicates that more selling is coming. Japan is really not much better than Spain, and may be an even worse investment than the US.
SSEC, Shanghai. The Chinese miracle continues. But the Chinese stock market suggesting the party may be over. If the 2639 support level were to break, then a testing of the March 09 lows seems almost certain.
SOX, Semiconductor Index. M5 (3) is indicating a pretty good chance of a trading rally from here. T5 (gray line) needs to turn back up to confirm. Not a bad looking chart at the moment.
VIX, CRB Volatility Index. Volatility, indeed. Has put in a trading bottom and now needs to keep it -- which will mean more downside volatility for stocks. Support at 21.08 MUST hold up, or VIX becomes the victim of its own volatility (and the bane of technical analysts everywhere).
GOLD, IAU Gold ETF. Not a great picture. Has violated a support level and failed overhead resistance on the way down. Is TRYING (valiantly) to re-establish an uptrend at the moment. If gold cannot go up in the face of US Dollar strength, however, the road ahead for gold seems mostly constrained.
TBT, Short Longer-Term TBonds. Has pulled back, but is trying to bottom ahead of schedule. Dollar strength SHOULD indicate more demand for Dollar products, including TBonds, driving yields down. But the European freak-out is throwing all logic into the air, a bit. Are the Europeans going to rush to TBonds again, out of fear of a declining Euro -- and subsequent decline of EU stability. Greek labor is mobilizing to defeat the austrerity being forced on it by Euro bankers -- pulling an Icelandic 'tua culpa' -- and this may spread, as a sentiment, all over afflicted areas of the globe. There cannot be austrity for the poor only; this austerity for the poor MUST BE accompanied by higher tax rates for the rich -- the rich must pay their share, and it must be clear that the rich are paying their share (do not own the governments) or there will be civil war across Europe and eventually also in America.
OIL, DBO Oil ETF. Vectors are down. Expect lower prices after this rally attempt unless it takes out overhead resistance at 26.8.
FEEL LIKE GAMBLING?
We've created a new momentum indicator that gives positive and negative points for price performance (we're calling it 'Momentum Tally 2010'). Short-term test results have been positive for trading potential. We're expecting a rally in stocks (that might be short-lived); so we are looking at short-term moves up in Amgen (NASDAQ:AMGN) and McDonald (NYSE:MCD) and another leg down in Electronic Arts (ERTS).
We'll see how we get treated.
Low-priced stocks are beginning to give us short-sell signals, which is logical, since our three trend indicators all have to go negative to trigger such signals. Low-priced stocks degenerate by percentages faster than high-priced stocks.
More information on this system can be found at
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).
Michael J. Clark's Gate Timing System
Disclosure: Author owns no issues mentioned in this post.