After the hurricane Fay, I hope you are getting back to a normal schedule, and hope that all that rain did not cause problems for you and your family.
You are a consummate trader, but you still want to know what uninformed amateurs like me think.
First, the following quote is appropriate in the current political climate and uncertain stock market.
"We can chart our future clearly and wisely only when we know the path which has led to the present." - Adlai E. Stevenson
(Adlai Stevenson lost to Eisenhower, although he was a good diplomat, who presented a strong case to the UN during the Cuban Crisis, and convinced the world of Russian duplicity. Recently, with its newfound oil wealth, Russia is again getting closer to Cuba to tweak the US.)
You have said it all in the chart you have presented. But I am not sure of the next two months, although based upon the chart (cup and handle, support at 50 dma) it seems that the bond prices may continue to rise into September and October.
My thoughts on the market:
· The current period from March to August 2008 is similar to that from August to December 2007.
· The flight to quality that started in January 2008 continued until the March bottom.
· I consider the descending triangle to be a part of the current handle, and not a separate technical signal of lower bond prices and higher rates.
· Political uncertainty now is similar to that in 2000. Except that in 2000 the interest rates were rising and in 2008 the rates are falling and now steady.
· Market may rally in November and December, depending upon how convincing is the margin of victory for the President.
· I expect the Fed to raise rates in 2009, after the elections, and then 2009 will be similar to 2001.
These thoughts are just thoughts, nobody can predict the future. Technical analysis only prepares us for the future, so that we can change course if we are wrong. (I have not learnt my lesson to protect profits. I am still holding FCX, BG, FWLT, and PWE)
With best wishes,
On Sat, Aug 23, 2008 at 12:43 PM, Tom Malone
I have been looking at more CHARTS than usual as you know I am a "Market Timer" and "Stock Picker" and believe charts can tell you about anything you or your imaginations want to know. That is no slam on TA guys or Fundie guys but I believe if you keep track of several simple factors and indicators you will be able to beat the market better than the pros.
With that said let me show you why I have been against most analysts in two areas. 1) I have been bullish since the July 15th Bottom as most have been bearish. 2) I have said consistently that rates are going nowhere. How important is the fact that rates won't be rising "anytime soon" as Chairman Bernanke mentioned yesterday and why did the market soar on the news and oil plummet ?
I have mentioned day after day since the bear market began and as far back as June 2007 ! When our Bull advance decline line began to give way that we were in a period of LOWER rates and eventually the economy ....stimulus or not...would fall into recession . Even some of the smartest folks in the world ..those FED FUND FUTURES guys had rising rats as early as this past spring and 100% into DEC !!!!
Now it looks as if there will not be any hikes and I do not see rates going higher until 2010 !
Can they go lower ? Why not...if the world and our economy does fold we will have to promote growth and ease...another easing cycle even if for a 6 month period from current levels to say 1% would be a HUGE chance to get into a new Super Bull and it could happen by early 2009 !
Again these are sorta off the wall statements that you see when someone wants to sell you something ...but I have nothing to sell you except the facts that will help your retirement. And the facts are the economies around the globe (2/3) are in or near recession. This is good for cutting inflation and good for stocks long run as the system is relieved of pressures resulting from rapid uncontrolled growth i.e. China/ India.
So US stocks took a cue from FTSE yesterday and rallied ...why am I selling stocks here if the outlook is so good. Well it is far from good ...we have instances that have never ever been seen by man in financials and the toughest trading environment for all from commodities (more funds will go out of business ) stocks (hundreds of banks will still drop or be bought) which leads me to a bullish scenario.
What if M2 grows enough to give some confidence for a M and A craze ? Dr. Greenspan once wrote how nice it would be in a world with 8-10 mega corporations in each sector ! So instead of several million companies you have a couple thousand worldwide ?
Big picture and nothing you can trade on Monday for sure !
What you can trade on Monday is the DOLLAR has risen pretty much straight up and we took a great profit in UUP and are now happy to be contrary to the greenback and jumping in and out of commodities in TRADERS as the dollar will be tested soon so be careful. The stock market likes to go thru periods of adjustment and a test of 1250 or 1200 is not out of the question .
Rates and the dollar will be more important into the final quarter ....here is a chart ...if you can find the time please use all your skills to help me decipher what we all think it means ...it would be of great help to me and also see if anyone really reads my E-Mails !!!!!
So click and write me back with any ideas on the stocks rates the dollar commodities ...they are all affected by this simple chart !
Investing Made Easy !!!