Friday, June 5, 2009

Taking Stock: When you wish ...

It appears as though the inevitable is finally coming true. First and foremost, the dollar is falling, and Boeing is also finally in production of the 787 Dreamliners. The past few days, the dollar has managed a sort of "dead cat bounce" rally to the now downtrending 20DMA, which the inverse is true for precious metals.

I have also been thinking lately about how much the degree of technical analysis has helped me the past few months, which is a remarkable amount.

I have been busy making a handfull of trades the past few months, to compliment my other positions and to keep the rent paid. My CME trade has been working out quite nicely, and I think my Intuitive Surgical (ISRG) trade will come to fruition soon enough.

Consensus is that the longer term rally is the broad market will eventually cease to sustain. Only the market wil tell, which is when I will be interested in loading up on some of the ProShares UltraShort S&P 500 (SDS). Nothing is safe from a broad-based selloff (fortunately, I have learned that lesson now). What I am anticipating, by accord of the consensus view, is that the market will fall almost to the March lows. I won't hold SDS all the way to that point, though. Another part of the consensus view is that the market will continue to rally for the time being, simply because there are some latecomers just getting back into the market.

Something that I was reading in one of Dr. Leeb's "Market Updates" is that he views the rally as being driven by systemic mechanisms, and he noted his analysis of that everything has been rallying is virtual unision (Dan Fitzpatrick noted something very similar in one of his videos). I'm looking for the DJIA to go up to around 10,000-10,500, simply because it is a round number (it has more psychological significance than you might think). Also, that is where the 200DMA was when the deflationary period started. By virtue of simple logic (overly simplified?), is that all of the "Monopoly Money" was deemed to be worth much less than what it was originally valued at, causing a deflationary period, and now that money isbeing replaced by the graces of the US Government and taxpayers.

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