Tuesday, March 24, 2009

MARKET COMMENTARY (2-24-09)


On my Thursday post, I explicitly stated that the market was forming a bull flag and that we had additional room for upside. Well, here you go. I also mentioned the coveted Force spike in that post. A +7% day is an example of a very powerful Force spike. If you didn't read that post, then that's your fault. Charts do tell.

Another thing: On my Wednesday post, I outlined the very distinct possibility of bullish broadening bottom wedges forming on every major index. We broke out of that pattern (sky blue lines on the 6-month charts). Don't say I didn't say anything. Once again, charts do tell.

I have my own personal beliefs about the Geithner plan, and I don't have very nice comments to say on it or to him, so I won't say them. Just be aware that there is no magical solution to a problem that was created for several decades. The purging of our financial and credit systems will take many years and it will not be solved immediately. Apparently there are many people that like to think so, but if you use some common sense, it's not possible to fix something like this "quickly".

Forget the political rhetoric from Obama, Geithner, etc. Obama has zero experience in economics and the financial markets. I doubt he even personally traded a single stock. Not to mention, all the cronies in his cabinet existed while the problem was being created into a bubble in the first place, and no one in a political position of power did anything meaningful in their power to stop it. Times were too good, and the economy was flourishing. Or so they thought.



On the 45-day chart, you can see the green channel drawn for the current rally since there is enough data to do so. The rally continues until it ends, basically. Currently, there is no indication of advanced distributional sell-offs (ADS). The down days that we've experienced are minor distributional corrections (MDC). There is no way I will be adding longs here and since there is no indication of an imminent breakdown, I cannot add shorts here either (as swing trades).

I'll be back in long when we get a healthy correction or short if I sense a sell-off. If you haven't read my weekend article, you definitely should.



2 comments:

Moneymonkey said...

YOU SURE NAILED IT! AS SOON AS WE BREAKOUT OF THE 800s levels.THE MARKET SPIKE UP AS IF SAINT WAS CHASING THEM FROM HELL. I can't believe what I am reading is FREE! PRICELESS Technical analysis! THANKS again JOHN!

John said...

I agree best blog on technical analysis I've ever seen, as an aside I hope the economy gets better soon, I don't care if its in recession for the next 24 months as long as its minor bleeding, and not a dramatic plunge in the dow to the 2000-3000 levels, I dunno.. I just have a horrible feeling that things will continue to get worse. Maybe its just my faith in governments/leaders,
I have never trusted any, nor will I ever. Anywho! Great site John c. and I hope the rest of you are being careful out there :P