Tuesday, November 10, 2009

Market Observations - parabola

I have not been posting much for personal reasons but did want to post something about this market situation.

  1. Everyone and their brother went short when trendlines were broken
  2. Those people feel hoodwinked again
  3. The dollar pattern failed
  4. Big fractures in the market
  5. Extremely low volume

I am going to restate my thesis from quite a while back. We need an emotional bottom for the dollar. With a dive below 74.50 the market can panic people into buying and covering inflation assets and dollar longs can capitulate. I hear people looking for a positive seasonal move and this and that...however, volume is weak, the dollar sucks and conditions are ideal for fumes to be lit...we need this little parabola to complete to the upside...I think it is very difficult to set an exact level to short here since we could see a one day spike that could be dramatic.

Apparently, EWI may be about to retract their P3 thesis. Hochberg has certainly had his challanges calling the rally from the lows. First he waited until we got to the 800's on the SP to call P2 and then he promptly used the whole trip from 800 to 920 looking for wave B down. In July, I believe he called P2 complete also, but handled that rebound much better. Recently, his bearish bias (which I can certainly rationally understand) is so strong that nearly every squiggle on the Dollar chart down from 80ish is a bottom and every pop on the markets is a top. And finally, just when a little potential parabola sets up he's addressing folding the forecast...Hochberg has been (and generally is) too bearish in opinion and thusly interprets his forecasts in that light rather than objectively. His interpretations have impacted many a waver - I am sure. It is important to remain detached from the market and convictions - apparently this is something that Hochberg needs to do better.
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