Thursday, July 08, 2010

The Leader Board

WOW!. . . 3 up days in a row.
OK. . this reminds me of a parallel and I must digress. . . .
I lived in Seattle for 35 years and for those that have spent any time there you know that July through September can be absolutely beautiful . . trees are in full bloom and the air is rich with invigorating oxygen. The sun shines almost every day and it's a great place to be outdoors. Unfortunately, that paradise is typically short lived and Fall often ushers in an almost permanent condition of overcast gloom, occasional drizzle and chilly winds. This situation persists through the winter months, frequently accented by driving rains and snow storms with temps is the 20s and low 30s. After 5 or 6 months of this many folks tend to aberant and/or suidical behavior as vitamin D deprivation begins to effect thier brain chemistry. And then the sun finally appears in the Spring and people emerge from their self-imposed cave-like existence, step out into the street and stare into the sky at the golden orb whose existence they had almost forgotten.
Such is a prevalent attitude among some bloggers following these past 3 days who claim that the low of the year is now in. And they may be right. BUT . . I seem to recall an old theory of pain management applicable to trading that says traders will look for the first opportunity to dump risky positions once they have reached a breakeven point or if it apears that recovering positions are poised to plunge again. That point is of course different from trader to trader depending on their entry point, but a likely baseline would be the LR30 upper channel line. . . a level that has now been reached on many of the majors this week.
So while these markets may have a bit more room to run, I'm not that encouraged by the post July 4th low volume melt up. Earnings reports may be the catalyst that drives the markets over the next 2 weeks and by most accounts the early reports have been mixed. Now a little caveat: If you've learned anything over the past 3 months it should be that this market is fickle and it can change direction in a heartbeat. I sincerely believe that the past quarter has placed traders in an entirely new paradigm, driven and manipulated by HFT and masking programs much more that anyone including the SEC would care to admit. Now, I'm not a conspiracy nut . . but if you watch the markets every day on 2 minute bars you would have noticed that market dynamics are not what they were last Fall and I believe there are profound reasons for that change . . which I'll explore in upcoming posts as time permits. In the meantime, the New Approach coupled with the Market Prognosticator is the best revenue stream I can find.

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