Thursday, October 9, 2008

Event horizon

We have not posted much due to our day job taking its toll in a tough corporate environment.
I will leave out charts for the same reason here. I guess individuals can do their own DD. The
We made decent gains this last month by staying short and finally covered all our shorts today.
We think tommorrow could be the abyss, and we expect a multi month rally. How high - sizeable. One thing at a time. Why?
There are lots of reason.

1. The charts are playing out in 5 moves down and 3 up. EWT theorists know what I am talking about. Today was move 3, looking at the futures, it is very likely that wave 5 finishes tomorrow.
2. We are expecting to see the investor intelligence sentiment index to hit a pick. If you take a look at http://www.market-harmonics.com/images/tech/sentiment/ii2.gif, we expect to hit the upper trendline. The peaks have been significant market bottoms.
3. Next week is opex. Banks are in dire need of money and a rally can be a cash cow for the put writers.
4. Wink wink!! Count the number of weeks between market highs and lows. We were amazed to find it is so perfectly periodic. Ideally this periodicity leads us to a turn next week.
5. The reason everyone knows, - divergences on all momentum indicators and oversold. How much value does this have? I don't know but I guess, it has been enough to scare us away from shorting for now.

We will start dipping our pinky toe tomorrow on the long side. Tech is the most beaten down and so are emerging markets. We expect these to rally big.

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