Thursday, August 30, 2007

"Confirmed" Rally !?

IBD says yesterday's "pong" bounce confirmed the rally that began mid August on the pre-discount rate cut reversal day. The Nazz had higher volume and was up over the 1.7% cutoff amount. One might as well go along with long-standing rules. IBD messed up August 2006 when they let a bearish pre-conceived attitude induce them to not accept a minimal rally confirmation signal.

And from the index charts, an inverse head & shoulders bottom does exist on the Nazz, S&P and Dow. The neckline is not straight, but the ping-pong right neck two day point might be deceptive. Well, of course Tuedays and Wednesday were ping-pong days, too.

The Bible of stock patterns - "Technical Analysis of Stock Trends" by Edwards & Magee [5th edition, 1966] says sloping necklines are OK as long as the shoulders are pronounced AND the neckline break has VOLUME. I don't often write about volume as beefers and ETF games make it somewhat suspect nowadays. But here I think it might matter. IF the inverse H&S pattern is correct, there should be resistance at the downtrending neckline, around 1475 S&P cash. So there must be volume on a breakthru if the pattern is correct. Let's see what develops.

The Fed needs to cut rates at least 50 bps.

European banks are still starved for dollars. I think the Mideast and Russia governments are holding petrodollars back, hence the Euordollar famine.

XLE is showing an intermediate term bottoming pattern. XLF might show an inverse H&S bottom, too, but it ragged.

The beefers favorite toy, the Russell 2000 index, shows a "W" bottom pattern. Some consolidation over the 50 DMA and 200 DMA might set up a big move.

It's Thursday - in keeping with trends on the "Street" lately, I suspect that many participants will start exiting for the Hamptons & other holiday weekend spots this afternoon. Maybe beefer managers with gutshot returns will play more ping-pong. Don't be fooled unless something significant occurs.

Wait for a trend unless you like risky games like I play - buying sectors I think will outperform next year. Unless you have a fundamental outlook, that might be hard for you.

I still like the big cap financial, big integrated oils, deep water drillers, miners, and Internet related Tech. That's where I'm looking for my 30% gains over the next year.

Even with the carnage in some of my stocks, the Alpha Fund is still up 34% YTD. My high was 51% so I'm well off those levels. And I've shifted a bit, selling most of India and buying the big cap financials.

PS: The iPhone works great! I put some Julie Andrews and Judy Garland songs on it, along with some Artie Shaw and some old World War I era songs, like, "It's a Long Way to Tipperary". Later this morning, I'll put my stock lists onto it. The picture, sound and ease of use are superb!

PPS: Selling more TIPs bonds at the close & buying stocks: US, Pacific, Europe, Emerging Markets, some REITS, too.

P^3S: Bought some more AA, DOW and WB.

18 comments:

Bud said...

OK. Made a slight change to my opinion again. I do think the fed will cut rates but only 25bps. And not before the sept meeting but that day.

PS....I think Ben is doin a fantastic job. But remeber, i believe the Fed is powerless when it comes to market cycles and market direction. The fed is just a referee to keep things in order.........the players on the field decide the outcome.

Bunkerman said...

Ben is doing a crappy job. He raised rates too far and now he's too slow in cutting. I actually think he listens to his press too much.

Bud said...

Very interesting article on bernanke and the role of fed in today's WSJ. Ben doesn't believe in a greenspan put. He's not gonna cut rates to help investors. I agree with him. Especially since the Dow is 5% off all time highs.


PS.....the common man.....lmaoooooooooooooo

Bunkerman said...

Hmmm ... if the press starts calling him "Dr. Bernanke", I might have to change to Dr. Bunkerman ;-)

Bunkerman said...

The Fed's job is the real economy and there is not a shred of doubt from the commercial paper and jumbo mortgage markets that short term rates are too high.

The Fed has two mandates: price stability and maximum employment. Mandate #2 is in great danger now while mandate #2 is in fine shape. But a grade to 50% is an "F".

Bud said...

stupid red sox.....they go in with their 2 aces......and the yankees just dominatin them

when he have a knife at your enemies throat .....have to slash it

need to win today.....a yankee sweep puts al east in play


die yankees die !!!!

Spin-em said...

preppy is back ..pfftt.... frosty dont start wearing a sweater around your neck......

Spin-em said...

Yanks drop todays game...and the East is lost......Mariners had the Wild Card lead by 3 games and lost it.....

Bud said...

Here's my take on the american league. Angels far and away the best team. Yankees are second best. Red sox are a soft team...that have the best record beatin up on weak teams. ( if you dropped in from mars and didn't know the standings....you couldn't believe red sox have a better record than ny). Sox prolly win the east and face the indians in division series. Angels play ny in divison series.

PS.....Right now it looks like a Angels v mets/cubs in the world series.

Spin-em said...

Sox,Angels best records....If the sox end up with most wins...and the yanks win the wild card, dont the yanks play the sox?....Yanks cant beat the Angels

maverick said...

Time to move baseball to the second page....COLLEGE FOOTBALL is here!!!!!!

Bud said...

US economy grew at 4%. That's good. I guess the world is not ending.

Bud said...

No. In the division series....best record plays wild card winner....unless from same divison. Then the wild card team plays the 2nd best record. Either Angels or red sox will end up with best record. So yankees will be playin angels in either case.


die yankees die !!!!!!!!

Spin-em said...

Skipper Frosty on the water..IM SAILIINNNG!!!..I SAIL....Im a sailor...with the wind...and the water...I sail...AHOY!!!!...

Bunkerman said...

Zzzzzzzzzzzzzzzzzzzzzz

Bunkerman said...

Selling some more bonds at the close & buying stocks: US, Pacific, Europe, Emerging Markets, some REITs, too.

Bud said...

Zzzzzzzzzzzz....of course Bman. That's what the market is like when no beefer ping pong. Isn't this what you want?

Bunkerman said...

hmmmmm ... good point, Bud.

Perhaps there is a conflict between the investor Bunkerman and the market participant Bunkerman?

But I was trapped in my office Thursday by painters, so couldn't go out & read or goof off. I'll have to keep an eye on this trait of needing market action.