Around 8:30 p.m. Monday evening we had a violent thunderstorm--blinding rain, powerful winds and chip-sized hail, lightening ground strikes. Greta, my orange belton bird dog, is deathly afraid of storms. She shivers like perennially jiggled jello. I put her in the utility room and turned the dry on to mute the thunder. She also does not like flash cameras--she knows that a flash is the precedent of thunder.
That trick worked until we lost power. Luckily our dinner, courtesy of my son, was on the table (yeah, we eat late!). He grilled bratwurst and onions. So we ate by candlelight and with the wonder of when power would be restored. My neighbor said that the power company said by 11:30 p.m. With that information, we elected not to go down to the woodshed to get the generator.
Tuesday a.m.. Still no power. So yesterday I was sans internet, though I could connect through my Open Wave through Verizon to see what the market was doing. Good, bad, then good it seemed! Power/cable was restored around 5:00 p.m.
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It looks like today there may be a market thunderstorm with the Chinese govt's tripling of the stamp duty. You can read the story here on Bloomberg. One half of the Shanhai's stocks dropped the daily drop limit of 10%. Naturally, analysts are not concerned. I'm not suggesting that they need to be, for I truly do not know. But we can always be assured that no matter how dire the news, MOST analysts will not be concerned. I at least believe that it is a correction. Whether a healthy one or not remains to be seen. Watch FXI today. It will open at least $2 down.
SRS is the 2x inverse of IYR. IYR was up about 3% due to buyout news and speculation. SRS was down 6%. I'm sure that there were many investors in SRS thinking that REITS had rolled over and more was to come. It was a beautiful H&S pattern--THAT FAILED. At least so far. I had exited my position in SRS profitably (because I watched the technical pattern in IYR), and I was glad not be exposed yesterday. Buyouts must release some trader pheromones--they get a whiff of it and go into a buying frenzy for all stocks in a group. I imagine that frenzy will buoy the REITS for a little while--at least through a merger Monday. But the double ETF's can double your pleasure or pain.
I know that some of you dismiss technical indicators, and there are certainly arguments for that. But there are technical indicators that I believe that are separate from the seeming voodoo chart patterns that have increased my transaction success. Most particularly, overbought/oversold as well as RSI have been useful to me. I also watch the Aroon up/down indicators. That has helped me understand whether a price is trending, changing trend or consolidating. Given that I've not wanted to be long this market (call me chicken), I have found that these tools have helped me find some attractive short-term positions, so that I'm earning some return without feeling too exposed on the long side. Stated another way, I feel like I'm making an 'informed gamble'.
May your portfolios persevere today.
2 comments:
IYR is interesting right here. Yes the H&S pattern, which is bearish, has failed in that price has reversed to the upside; however, it is not uncommon to get a rally back to the neckline, which is essentially where price is now.
Also, we have price bumping up against resistance at a downtrend line drawn from the February high, and additional resistance right at the 50 day moving average. Lot's of resistance to break through, but I'm sure it's nothing the Street can't handle.
A picture, if you will:
http://stockcharts.com/h-sc/ui?s=iyr&p=D&b=3&g=0&id=p79019746308
Hi Doug. Thanks for your visit and post. Rally to neckline and beyond! I'm sure there were some broken hearted SRS folks. This sort of action is exactly why one wants to be careful what they buy on margin and what they buy through cash. In two days SRS has lost 10% that's alot.
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