Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Saturday, August 23, 2008

My rule of 3's

My "rule of Thumb", which to make up some Physics Bullshit to Back up my Supposition/ Untested speculation. Is based on the Heisenberg uncertainty. Stocks aren't Quantum, but they do exist in a quantum Universe. Ok Here it is.
I come up with an idea:(theory if you will)
"market is going to Turn after 2 days"(Blue Arrows, and red arrows(ok, it's 4 arrows but the delta is 2 periods)

  • Market turns.
  • 2 days later, I look for the Pattern "Will the market again turn in 2 days?"
  • The second time... It repeats, and shows a pattern.
  • Suddenly, it's an obvious Trend, As we have seen the "late adopters" jump on the trend.
  • But ONCE OBSERVED, It changes the momentum...... the point is, you can anticipate a pattern, but once it shows itself, it's too late.
As we have seen the pattern has been obviosly observed by many participants, but in fact, as I noted on thursay, the pattern Broke... and I suspected the pattern would break. And in a sort of "Slope of hope" way, as people notice "market Delta", and Blog to convince themselves that their Pattern recognision was correct, by blogging about it..... They will Continue to slide down the slope of hope. and get thrown out in the next few days. Clear the position, then we will get the turn that validates their market theory.

I have some boxes in the charts that show how the market built a base(Red Box), showing Accumulation, and the Blue Green and Yellow boxes, that show where some distribution could develope, asuming it hasn't started yet(Blue Box). My hope on monday is that we jump up to that 130.40 line and hit it as resistance(Green Box), Either in futures or right off the bat in the first hours.. Also Take note the Blue Wedge Pattern.

here is the Quandry. This is the XLF, and Honestly it has yet to "Run", One may even suggest it's still base building. There seems like there is no doubt that if the XLF runs, the market will run. Suggested is that if "Fanny and freddy will be resolved" the XLF could see a break out of the trade channel to above 23. That kind of action out of the xlf, has the potential to take the market to a new high.

One may also sugjest that if the Xlf has put in a New "Low" and it's a Higher Low, a higher High is possible.

Also possible is a decline in the "volitility in the XLF" the range of it's range bound could Contract. and a new high of 22 maybe.

A rally like this could go on for 3 or 4 days. and haul the market with it, like a lead baloon

News flow, we have another bank failure number 10 happened on friday, some 20 branch Kansas bank..... Oooooo Maybe 20 bank failures by the end of the year at this rate.. maybe... and if another 1 branch credit union goes out of business... I'll be spooked..... So we could get the "some regional bank will fail Meme"

Or maybe paulson has a plan on sunday..... *shrug*

and a pet Meme irritation.... "Boogidy Boogidy" wait till commercial fails. Listen, Likening Commercial loans to the Securitized subprime/alt A- market, Is like com pairing some Goldman Trader to my Brother in law, that works the Call center for Fidelity..... ya, they are in the same universe, but defiantly different Galaxies.

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