Thursday, September 11, 2014

This Is The $ign

When all is said and done, there are only two classes of stock investors. The leading school throughout history has been the fundamentalist. They rely upon basic knowledge concerning the prospect of a product. Keep in mind that all products are a result of agriculture or mining. Then, they utilize the stats of a market. This investor understands the demand, keeps a breast on transportation, current affairs that pertain to the buyer of the product, weather and all aspects that are relevant to sales.
The other school are the people who use charts. They study price action, support and resistance, cycles and season of the year. They don't even have to know the name of a company because they feel that all the information that they see on the charts is included. This is what determines whether they buy or sell.
The fundamentalist call these people voodoo doctors, but these are the people who make the most money and do it on a consistent basis. Under this light, I study. This is what
I $ee
The market has been going higher and higher like Jackie Wilson's great song, Lately, it has been choppy. Fundamentalist, remember this: More demand, higher price. Less demand, lower price. The volume is the lowest in twenty years, but in the short down turns, volume explodes. This is a tell, but the charts are screaming this...
Trend Line
If you draw a trend line in the upper price range of the Dow Index, which was the first American use of a chart school, go back 15 years to the year 2000. Don't worry about the gaps or the drop in the market like in 2001, 2007-09, but just connect the line along the top and you will see a market that trends higher in price. Wait! We are not done. Now, draw another line from the low of the market in March of 2009. Keep this line connecting all the lows in the market, right up to today. You will see a strong resistance and support, going higher and higher, love that Jackie Wilson. So, you might conclude that the market is going north, but you might be jumping the gun, Kemosabe. You see, the two lines are now intersecting. They are forming a point that looks like an ascending triangle. Under chart school thinking, this means a decisive stock market action will soon follow. In most cases, an ascending triangle heads SOUTH! Pay attention to support and resistance levels. You are warned. Be ready!
China Explosion
I have reminded you, dear reader of the potential housing bust in China and after this revelation, the bomb bay doors are open and the ticking time bomb is on its way. Chinese home builders are in a slump. This is how they are selling. In one sense I love this idea because it gives individuals a chance to grow their hard working savings, but the expression "dumb money" clouds my mind. Individual Chinese people are pooling their money in a crowd funding network called, Tuandai. This is the ultimate speculation. The crowd funding buys expensive properties to flip in the market and then, they split the proceeds. Don't they realize that they are becoming the last buyers on the totem pole? This will only end badly. I will feel for the little guy. I wish that I could write Chinese to let them hear a voice of reason. Could this be the point of concern that sends the ascending triangle south? In any case the results will soon be revealed.
Oh yeah, End the Fed!