Saturday, January 26, 2008

Market Update

I should explain that what I've been trying to do the last several days is position myself in some longer term investments while trying to use trading tools to get good entries. If the market looks like turning down again I'm going to take defensive action and then try another shot at entry at the next low. Friday, US markets spiked higher and then fell back. About the time the opening gap closed and with things not looking like a real recovery was going to get underway I dumped half of my positions in IBKR, RICK, XLF, and BWLD. Today's action has brought forward the model's turning point and in fact it said to get short at today's close. This doesn't mean that Monday can't be an up day but you shouldn't count on it. I wasn't prepared for this and couldn't do anything more before the close - I will attempt to do so on Monday. I'm still up on trading for the month but gave back about half the gain today. My thinking - this is more speculative based on chart reading is that the next low defined by the 5 day stochs will be a higher low. This could be the point for really going long investmentwise if that low is higher and looks like holding.

The SPX weekly chart shows a tentative crossing of the stochastics:

The weekly candle is a doji. All in all a very indecisive read. Anyway, my research shows that weekly stochastics aren't very predictive of anything by comparison with daily ones. Something very interesting is that the McClellan Oscillator rose despite the negative index action:

The NYSE one fell but remained in positive territory. This is a somewhat bullish sign. At the 2002 bear market bottom, the McClellan Summation made a higher low:

Is it possible that the Summation is doing the same thing here?

The NASDAQ summation made a higher low in October 2002, but not now. This time it's at the lowest point in several years.


Anonymous said...

Trading tools are for speculation. For investments, you should be analyzing fundamentals and buying value.

mOOm said...

The question is when to buy not what to buy. I'm using technical analysis to get a better idea of when to enter investments that I want to buy on a value basis. It's not perfect obviously but better than some of the investments I saw recommended in recent months on "investing blogs" which subsequently lost half their value or so. If those bloggers had just waited a bit they could have done much better at getting a good price.