Tuesday, July 28, 2009

Couple of Thoughts

I have received some emails asking if I was on vacation due to my lack of posting. Unfortunately I am not, as I sit here at my post looking at chart after chart after chart. Again, my apologies for the BPO chart the other day as it looks like my chart feed provider Prohet.net has some type of error with the data thus skewing the chart. This happens.

As I look at chart after chart I see the same thing across the board, low volume rallies. Now for those that do not see this I suggest you look at a weekly chart which is a much more difficult animal to paint. Volume has noticeably waned the entire ride up.

I realize many out there suggest you close your eyes and play the tape in front of you. I agree with this, to some extent, but I try to marry the technicals (the charts) with the fundamentals. Hence I will pass on a great looking pattern if I do not like the underlying fundamentals. Hence you will not see me trading housing on the long side in the current environment.

Yes I do realize the bottom will be formed amidst bad news but what I need to get my head around is that we are exiting a speculative credit and debt bubble of a magnitude only the history books will be able to do justice to. You do not correct this type of euphoria (1)this quickly and (2) with this "lack" of pain.

I have mentioned countless times before that one need only to look to the aftermath of the tech bubble or to Japan for empirical evidence. Anyone who shrugs these 2 examples off as meaningless or irrelevant will pay a very steep price I can assure you. This rally like others before it will end when it ends and not a moment before. I surmise that the same forces, that numbly propelled this fume based rally will head for the exits just as indiscriminately.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

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