An interesting comment from a subscriber yesterday that we've been changing our Dow projections recently more often, showing we're guessing the market.
Darn right. I'm following charts to see bottoms, and have seen the market hold at 8300 area several times. I also see the market as far overextended for no real new bad news that has not already been known to be true.
My projections are changing as the moving average changes, and because I see true confusion and hesitation at different times of each day.
As a good example, Trader BW wrote me at end of day:
"This is all from Citi? I've gotta believe the retail number has already been accounted for?"
In my mind he was right. The fall off, and our constantly changing projections, bases on news events like Citi's split up that permeate fear or greed in the market
"History is a collection of agreed upon lies"-Voltaire
The amount of downturn, and length of days, shows a market that is struggling at support lines, and "trying" to hold." Yesterday marked a historical low day for the market, but in a vastly overextended downside.
No matter what the bad news, which never ends, markets cycle and reversals (up and down) are what keeps the market healthy. Obama is speeding to action philosophically, and the mood of the general public I believe much better than 4 months ago, despite everyone wanting to know where the "money went", and why there seemed no controls anywhere. We've now read of suicides, fraud with huge companies in India, and a general collapse of many companies, because of "false facts" and "false financials". Worldwide greed exposed, supply side economics in shambles.
I think optimism and a "centrist" thinking is exactly the euphoric spark we'll need.
I may have been too early on the Feb460C, and it may be our first loss, or tight tight profit, in several weeks. We'll hold until Friday. And we'll watch for a new call entry at the same time, while we show OTM puts as tight trades.
Trader Ben asked me yesterday morning:
"Floyd, the futures are down sharply this AM. Should we add to our call at the end of the day? About the long term. If there is a bounce in this bear market the earnings for 09 will probably be non existent, how is the market going to go to 10,000? This mess can not possibly be over in 09 it has taken 15 years to get to this point. Financials are not coming back for quite a while, and I don’t think we have reached bottom yet. People are scared, my self included, and consumer spending is dropping rapidly. I forsee any bounce as a short bear market rally. Bad news is causing the market to go down whereas it was rallying in the face of bad news. Thanks, Ben"
Here was my response to him:
"I believe it will do so, within 6 to 8 months, a 38.1 Fibonacci retracement.
If you have made two buys to the call, you would hold until Friday, unless I move the stop loss out. What you saw in early January was "false optimism", and you're seeing FEAR and short selling.
I believe we will soon bottom."
Effectively we are within a 1000 point trading range in the market after bottoming at 7700 several times. Doomsayers say it will happen again, and have facts behind them. Other chartists see a strong bottom testing at 8350 to 8200, the range we saw as the bottom. Floyd sees upside short term around the inauguration. And perhaps fear again after this, and more bottom testing. But, within 09 I continue to see a 38.1 Fib retracement from our lowest lows, and a general "catching" of what has occurred. This doesn't mean it will get better quickly, just that we have the opportunity now to create economic policy.
The February 320P, bought Tuesday, hit 4.60 for a doubling in price by 11 a.m. on Wednesday.
A humorous video for you to watch -
http://www.youtube.com/watch?v=NIfH0vY2ANA
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