Key reversal? DDHigh 10580 support or resistence?

24FEBDJI: Trading at BDD 10440, acting as the short term resistence level.

20JANDJI: Trading at DDHigh 10580, acting as the short term support level. If the DJI breaks DDHigh on the downside, short term support level is BDD 10440 ( -1,4% ).

Since DDHigh is the long term resistence level ( from "week chart" ), I do not get any deviations at higher levels in my modell. Taken this into consideration, it is an exremely nice risk reward, selling this market. DDLow 9580 (-9,5%) appears as the long term support level.

Awaiting the market to trade at BDD 10440, as the WVAP ( Volume-Weighted Average Price ), for 2010, and to bottom out in late April-May ( " Sell in May, fly away" ) at DDLow 9580. If this is a Key Reversal and the BDD fails to support the market, I would expect a sell off, with the target at DDLow ( -9,5% ).

Whats happening next?

PAY BACK!!
" The Invisible hand, suddely gets very Visible " ( PAY BACK! ): Desperate times calls for desperate measures. Capitalism is a system depended on growth to function, and is a system where the "strongest survive". Now when the goverments all over the world, has bailed out the the weak, it threatens the evolution of capitalism and creates disturbance in the force. The stimulus plans made by different countries, will only make the reseccion time longer and deeper. We have to let nature run its course, and the weak go down with it! No its PAY BACK time!

Rescent earnings repports show that the equity owners has to get used to lower yields, in the financial sector especially. When FED overflows the market with greenbacks, it finally ends up at different EBITDA`s showing inflated corporate growth. When the FED now has its rate range at 0-0,25 and the dynamics of export/import balance between Mother China and US is gapping, the FED has no instruments, other than printing money, and buying expencive ( already inflated ) equities and bonds.

USD appears to be the new carrie trade, inflating allready stretched commodity and assets prices, for net. importing nations, with low organic growth in GDP and without high government spending, especially, this could be devastating:(Y = C + I + G + (X − M)). This phenomenon could in the end, shut down "parts" of Capitalizm, as we see it today. Due to the fact that the china man ( google money ), with their underlying growth prospectus at high/low 12%/8% y/y, and with their undervalued Yuan, always can afford higher commodity prices , and with that strangle the US economy, outpacing them exponentially, beeing the "derivative" ( high delta ) of the US economy.

I`m not an expert, so I`ll let them speculate on whats gone happen to the market and macro fundamentlas. I do not know if we in the future have to look at capitalism in a different way, with different spreadsheets, models and theories, but to me it looks like mother earth can`t handle much more input to the pyramide (( a new middle class in the east, where the productivity growth input is Oil ( "Peak oil theory")), without technological progress. Boom or Bust? Iran next?

Buy Tech!

TMTMAN

"It takes a man a long time to learn all the leassons of all his mistakes. They say there are two sides of everything. But there is only one side to the stock market; and it is not the bull side or the bear side but the right side!"

Jesse Livermore

Seeking Alpha17feb: Is China Tightening? Not Really

Terminology: My Dynamic Theory

Macro Update.

Some of my thoughts:

" The Invisible hand, suddely gets very Visible " ( extension of the Tarp ): Desperate times calls for desperate measures. Capitalism is a system depended on growth to function, and is a sytem where the strongest survive (Darwin ). Now when the goverments all over the world, further decide to extend the bailout program, protecting the "weak", it threatens the evolution of capitalism and creates disturbance in the force. The stimulus plans made by different countries these days will only make the reseccion time longer and deeper. We have to let "nature" run its course, and the weak go down with it!

Typically we often experience that in a Bull Marked, traders sell their positions before the weekend, so they can have a good nights sleep, and don’t worry about their longs. This “fear” creates a short term sell off. In a Bear Marked the same traders cover their shorts of the same reason. Almost every broker, trader and investor have the same “Devils eye“ on the futures screen during the day, and taking their bets of the same reasons. I believe it is important to find out what is the contrarian side of the marked, all tough it hurts some times. When your stomach says BUY, you should actually SELL, and vice versa.

Short term USD strength continues, despite of the low interest rates.... This makes the price elasticity for goods and commodities stretched, and short term demand will go down. It creates further inflacion in a market place showing signs of receccion.... This will over the longer term create deflationary spirals. The Domino Effect.

Inflationary Holocaust Jim Rogers: Watch the video! (click)

From the book by James Grant: “Market Miscalculates”:
"Economics, mistaking itself for physics, is wont to turn up its nose at history, but the past has much to teach"; "as dress on Wall Street has become more casual, so have the monetary arrangements... the gold standard and swallowtail coats have given way to Greenspan and open-neck shirts"

Lately the focus has turned from corporate fundamentals to macro outlooks, resulting in a change of newsflow, to the negative ( USD, Dubai, Inflation, New "Tarp" programs, etc. ), and lower levels in the indexes. I`ts still cheap to hedge against your long positions ( put/call ratio ).

Hyperinflation Nation ( click )

Dow Jones: Awaiting high volatility!

Dow Jones: At the moment trading in to a coil formation, with a negative divergence in the RSI. RSI trades in top of range. Awaiting volatility to pick up short term. BDD 10440 appears as the short term resistence level, DDLow 9580 as the support level. If DJI breaks out of the coil formation on the upside, and with that, the resistence level BDD 10440, next resistence level is DDHigh 10580 ( + 1,8% ). On the downside DDLow 9580 ( - 7,70% ). With the risk reward of ( +1,8% / -7,7% ), and with the negative divergence in the RSI, I would either allocate in to cash, or go short.
Terminology: My Dynamic Theory

Dow Jones: Trading at Best Dynamic Deviation 10440. Risk reward ( +1,8% / -7,8% )

Dow Jones: At the moment trading close to BDD=10440. BDD appears as the short term resistence level. If DJI exceed BDD, next resistence level is DDHigh=10580 ( +1,82% ). DDLow=9580 ( -7,8% ), gives a short term risk reward of: ( +1,82% / -7,8% ).With this taken into consideration I would start to sell some stocks.

Terminology: My Dynamic Theory