Sunday, October 25, 2009
Lets Get NASTY + Thin Blue Line
Well here is that start of another week. And on Monday, Oct 26, formally commences a HALF moon. Now some who deal with the public know full moons are fraught with all kinds of tumult, people wearing tinfoil hats etc. What most dont realize is that the dangerous ones are most stimulated during the waxing of the half moon to the full.
Welcome to the "weird world" but after what you have seen in the last 24 mo's little can surprise you.
So when I introduce the "THIN BLUE LINE" chart, you will nod your head as if you have instinctivly sensed it all along. Remember last year when Goldman Sachs reformulated the CRB Index to de-emphasize petroleum products? Well the CCI is the OLD index and still available for use. They "HEDONIZED" it but were not able to remove their tracks. So now along comes John Holt back in the 70's and puts out the VALUE LINE ARITHMETIC INDEX [ $VLE ]. It contains each stock weighted THE SAME.
So any of your stocks, divided by the cost of living, is typically represented on the "THIN BLUE LINE" chart. NOT A PRETTY PICTURE, but now you have proof. Lower Highs, Lower Lows. A Downtrend in a word, measured monthly and powerful. My expectation is that like Japan was stuck in the doldrums for X years, we might start by expecting value to oscillate 20some% above to 20some% below the THIN BLUE LINE.
OK so now what.
In the middle pix, Mr. Nasty looks none too good, plunging below its GREEN LINE, its upward momentum gone. On the upper panel, something else appears out of kilter and that would be that the SLOPE measurement CANNOT now climb above its 20 Day EMA.
CAPTAIN Namo also appears to be amongst the walking wounded but wills stage some sort of rebound as he nears the -50 Oversold ZONE. Whether it is a "Dead Cat Bounce" or "Hockey Puck Ricochet" remains to be seen, hence the need to keep your stops updated and within reasonable reach of the current market as you remember how market prices can take you down where you really dont want to sell if your stops are not close enuf.
What is clear is that certain select stocks are doing well. Primarily the ones I follow are associated with resources. Those companies whose developments bode for their eventual payoff's will do well whether energy or metals. A number of them are featured in PEAK PERFORMANCE PICKS Every week.
The one stock that can turn into a bomb will be featured this week on PEAK PERFORMANCE PICKS.