Thursday, August 11, 2011

I m buying

Yup. You got that. yesterday, the market collapsed 500 points. I am buying. The world is not ending tomorrow.

Sunday, August 7, 2011

Hail Stop Losses

Got stopped out of my recent experimental trades.

Looks like maybe a short term bounce may come. With S&P downgrading US looks like they nailed it on they hoped was the top. Warren Buffet does not seem to think so.

With distribution going on for first 6 months of this year (understood in hindsight), it seems that on a longer term economic slowdown is being accepted by the markets. We also see a broadening top pattern. August 2nd was the day to watch (in hindsight for me).

The volume during the 7-month H&S top in SPX has shown the classic volume profile, with the heaviest volume in the left shoulder and the lightest weekly volume during the high week of the right shoulder. That volume picked up last week could be a sign that distribution is complete and supply will begin to overwhelm the market.

With the Dow Theory indicating a bear market and Europe being served on a plate. It looks like cash alone is king. What happens to precious metals? In 2008 it too tanked with the markets. So one ought to be careful with the gold story.

So what is the learning here?
Have gone from buying dips to selling rallies?

So what is with the dollar. Se 2008 chart below. Due for a close watch.

Start building up your cash reserves for the opportunities of a life time.

"Italian and Spanish interbank lending is freezing up. French Finance Ministry officials and banks have been in emergency meetings regarding Eurozone interbank market stress. IMF and EU officials are warning that France might also face downgrade if greater spending cuts are not made. Finance Ministry staff have been warned to be available 24/7 (irrespective of sacred August holidays!), as contagion may soon affect French banks and sovereign debt."
............................               ...............
Thus, the Eurozone appears to be entering into renewed crisis of breakdown in interbank trust and escalating borrowing costs for Italy and Spain, and maybe even France...It is increasingly possible that the ECB may not be able to function as lender of last resort on the scale required to cope with an interbank lending breakdown.

Demand for dollars will likely escalate, while confidence in Eurozone financial institutions falls. This could force Eurozone banks to purchase dollars in the open market and drive the dollar higher.

Here starts the circus again. But why is the VIX so calm?