Tuesday, September 1, 2009

S&P Triggering Sell Signal??

Some techicians like to watch the Wilder's Parabolic stop and reverse indicator. The indicator provides a trailing stop (as reflected by the dotted line in the chart). When price moves through the dotted line, one closes out (in this case) their long position and takes a short position.

I have found that this indicator works very well in trending markets however, in sideways markets, it can mark a top or bottom and result in one selling the bottom or buying the top.

Seems that everyone on tv these days is so bullish. Few are calling for a test of the March lows. Many state that there is no possibility that this could happen. But not I. I'm sad to say that I have become totally cynical about the government and our financial markets. We have been lied to and deceived so often that you really have to close your ears to the noise and just look at the technicals.

I have been suggesting that you buy DXD or SDS positions as the market has been rising. These ETFs provide you with protection against a downdraft in the market. Also, I have discussed long-term put positions on Boeing and JB Hunt. These are just fun plays however as I was happy to get a 15% market gain in June. Realizing the fiction that we call the market, I was thrilled to get 15% in a market that may well again wind up providing negative returns.

The problem with most people though is that they cannot be satisfied with a 10% to 15% annual gain, especially when they see the market rallying sharply. But you must understand that rising prices acts as a magnet, sucking in more money as greed sets in. Without a discipline these days, you are going to get creamed and wind up broke.

Unless you are a banker and going to receive your millions in bonuses, I insist that you figure out what annual return you need to achieve your goals, dip your foot in the very volatile market, get your goal, and move to safety.


Yup, all of these banks paying off the TARP money, it's all a sham I think. They want to get their bonuses. Obama's Pay Czar will probably let them have it too. Then watch, these banks will be back begging for more bail out money. I'll bet you on this. There should have been some provisions, just like in a personal bankrupcy, that if you pay off the TARP, you can't come back for seven years. Nope, watch, these guys (and gals) are going to get their millions in bonuses and then BAM!, back to "bail us out or the economy and the entire free world will collapse."

If our politicians allow this again, then I totally give up.

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