Tuesday, March 24, 2009
Oh here we are again. "ITS A RALLY" ; "ITS ONLY A BEAR MARKET RALLY, xxxxxxxxxx DONT GET SUCKED IN" ; xxxxxxxxxxx "IT'S A BULL MARKET IN BEAR'S CLOTHING" ; xxxxxxxxxxxx "THE RALLY WONT CORRECT" ; xxxxxxxxxx "THE RALLY IS GOING TO CORRECT".
Honestly folks, how much of this can anyone take before emotional exhaustion. ? ? ? The CHICKEN LITTLES are screaming "THE SKY IS FALLING", Bernacke is trying to sound like a FREE-MARKETEER, and the OBAMA Team has finally figured out how to use the PPT.
So what are investors with a wit of sanity left, to do ?
STAY ON THE CORRECT SIDE OF THE INTERMEDIATE TREND ! ! ! PERIOD.
HOW CAN ONE HOPE TO DO THAT ?
USE THE MACD SIGNALS FROM THE CHART AT THE TOP OF THIS PAGE TO POSITION YOUR MOVES AND EXECUTIONS. Accept the fact that you will suffer at times, after all investing is a RISK-BEARING proposition.
Use this link to access the free charts at www.stockcharts.com
Feel free to hate me for saying so, but no one said this would be easy.
My best advice is to study MACD behavior, and work from there. At least you only have one factor to cope with, not umpteen GURU's each with a differing opiniion WHY. The MACD does NOT care WHY, it digests what everyone has discounted to-date and quantifies it in an understandable graphic form. Use wisely, your results will vary.
In the end, you wont know WHY either, but if PROFITS are more important than knowing WHY, you might want to look at the MACD.
GOOD LUCK ALL
Or is it the "Tale of Two Rallies"?
Either way it doesnt matter too much. At times there would seem to be a two tier market, one for the LARGE CAPS, and one for everyone else.
This matters NOT, as this Rally shows itself "ROLLING OVER", like a tall ship off the coast of Labrador in October, with so much ice forming in the rigging that it slowly heels over.
The TALKING HEADS are OOHHing and AHHHing about the strength of Monday's rally and how we have only given back a quarter of MONDAY's Advance. Good enuf. I wonder what they will be saying later this week? PRICE BOTTOMS AFTER BREADTH. That is a lesson well illustrated during the latter parts of 2008 and early 2009.
Now after a gander at the Exaggerated Momentum turn-about Chart[ GOLD COLOR ] at the 2nd from the top of the page, will indeed lead you to question the idea that this Rally is not correcting. Breadth-wise the correction has been underway for about FOUR sessions, despite yesterday's rally. Yesterday's Rally was in fact, the kind of fireworks that lend a smoke screen to what is actually going on.
If you use the above chart to gauge when turns REALLY occurred, it is apparent that although the rally APPEARED to TURN upward from March 6th on, the actual turn in BREADTH MOMENTUM occurred about Feb 23. BREADTH LEADS PRICE.
PRICE LAGS MOMENTUM. Its like observing a beautiful fireworks display while pickpockets are working the crowd, and suddenly you realized you've been robbed.
The time of that last UP-CYCLE from Valley to PEAK was 15 market days. Likely the decline as measured above will run from 10 to 20 market days.
If you are using free charts, on www.stockcharts.com, you can use: http://stockcharts.com/h-sc/ui?s=$NYAD&p=D&b=5&g=0&id=p48588850371
will create the TOP chart for you, so that you yourself can COUNT the days UP and DOWN and get a bit of a clearer picture of when things are actually moving, and which way.
In the next post I will steal a headline I liked from an email I got yesterday.
Good Luck All