Comments on: Tuesday’s Action

By: Crimson Ghost

Crimson Ghost — Wed, 20 Aug 2008 20:16:25 +0000

Energy stocks bounced hard today despite another rise in the buck. XNG jumped 3.5%.

This does not augur well for the longevity of the rally.

By: meb 820

meb 820 — Wed, 13 Aug 2008 17:31:22 +0000

Matt/Larry-
LBR’s comprssion meter (www.lbrgroup.com)
shows the potential for a big move. The
summation tick is about mid-range.

MEB

By: meb 820

meb 820 — Wed, 13 Aug 2008 16:54:48 +0000

Larry-
I have a friend who trades like you do. He
sleeps well and I’m sure you do too. I
only trade the SPX and am a swing trader.
When I see an outside week (up or down), I
mortgage the house. So far I’ve been lucky
and have not had to tell my wife that we
have to move out.
The NYA pattern has shown the big boys
selling on any rally…hard to tell what they
will do on a drop…might try to bring the
lambs in again.

MEB

By: meb 820

meb 820 — Wed, 13 Aug 2008 16:02:40 +0000

Larry-
The SPX ST trend is currently down, but
will it lead to the IT trend turning down???
I don’t know…we will have to wait and
see. We have to see the SPX 20 DMA
turn down first.

MEB

By: Larry

Larry — Wed, 13 Aug 2008 15:51:26 +0000

Hi Meb, I am the last person you should ask for trading advice. I am just short. I only trade a few times per year, simply because I am so bad at it.

Having said that, I would start to go short now, even with the risk that this bear-rally lasts 5 more weeks. The turnaround might have started. VIX up to 22 now.

What’s your guess?

By: meb 820

meb 820 — Wed, 13 Aug 2008 15:38:57 +0000

Larry-
The DOW had two H&S patterns. The target
for the first H&S was 10,800. The target for
the second H&S was 9300. Do we go there
now???

MEB

By: meb 820

meb 820 — Wed, 13 Aug 2008 14:53:06 +0000

Matt-
One of the indicators that I use is the SPX
3 DMA. I move the number forward 3 days.
If the SPX closes above, the ST trend is up.
If it closes below, the ST trend is down. I
do not know where the SPX will close today, but
the ST trend is currently down.
I got this indicator from Joe DiNapoli.

MEB

By: admin

admin — Wed, 13 Aug 2008 03:48:27 +0000

Hi Paul,

XLF has to reach the top of the rectangle during this wave upward, no matter how long it takes. It could be three days of small gains. It doesn’t have to breakout; all it has to do is continue to oscillate between the lower and upper bounds. If it can only make it halfway up before turning back down, then that is an indication that it may breakdown through the lower bound. So, what I’m doing is looking at the oscillations and judging how strong they are to try to predict which way the pattern will break.

SPY can’t get far without XLF, so an XLF breakdown would make me skeptical of SPY’s chances.

Matt

By: Paul

Paul — Wed, 13 Aug 2008 03:19:27 +0000

Concerning IWM, I agree that it should outperform big cap (DOW, SP500) in a strong-dollar environment. The corollary is it should also underperform in a weak dollar environment, right? It hasn’t. We have been in a weak dollar environment for a few years, but it looks like it has only underperformed in the first half of 2008.

The small caps with low debt will do well, but the ones that rely on bankrolling will have problems because of the credit crunch.

By: Paul

Paul — Wed, 13 Aug 2008 03:08:49 +0000

I’m very interested to see how your USO trading pattern goes, but it’s too volatile for me. If I did trade it, I would have went long yesterday based on the high-volume bounce and the Georgia news - which would have been a loser.

Based on the chart, are you saying that not only has the XLF have to avoid a loss (breaching down past the rectangle), but that it actually has to break-out upward on naked-short-Wednesday? A upward breakout tomorrow would really surprise me.

On a related note, how would a downward breakout of XLF affect SPY, technically speaking. I don’t see SPY getting past 135 max withouth XLF. As a chart technician, would you would wait to spot this weakness in the SPY chart, rather than act on it from a fundamental basis?