Tuesday, October 26, 2010

Still no downturn

Today's 34 point gain in the Dow kept us inside the rising RTC channel, but the small size of the increase moved us closer to the lower edge. In fact the last nine sessions have more or less been just consolidation rather than consistent gains. We're really just stuck at April resistance level of 11,200. Upwards from there, there's no meaningful resistance until 11,500 which is the "summer shelf" going way back to 2008.

In the meantime I'm hearing a lot of conflicting opinions on how much further this rally has to go. There's a lot of noise about how a Republican victory is now "baked into" the market and won't do much to help the rally. My personal feeling is that this is wrong. I expect the market to post some significant gains, at least short term, following the elections. It just might be the push to get us through the 11,200 level.

But for the time being, one just has to sit tight and watch the RTC. And there is still no sell signal there.

Political Aside

Personally, I don't think it's going to make much difference who wins. As far as I'm concerned, the Demicans and the Republicrats are just two sides of the same tarnished coin. Our choice at the polls is basically a choice between Jack L. Johnson and John L. Jackson. To quote those astute political analysts, The Who, "Meet the new boss, same as the old boss". Even worse, nearly half the races on our own local ballot are going completely uncontested this year. We have become like the old Soviet Union - one party, no choice.


I got tired of waiting for AUY to perform and dumped it today for a whopping 2 cent profit. It's just floundering around right now and I'm out of patience. See ya.

I could find nothing else to replace it with but I did notice something interesting in AMD. Check out this daily chart. Notice how on September 27th, AMD broke out of a declining RTC going all the way back to April and has been in a horizontal channel since then. It made two attempts, one last month and one this month to top 7.46. After that double top and a 5.37% gain today, it seems like it's about to make another run at it.

But here's the interesting part. Note how the indicators now are much less overbought than the last run (blue arrow). There has also apparently been a lot of call action in AMD recently on news of some new product (from a tehnical analysis point of view, it doesn't even matter what this product is). I think AMD could be poised to break out on this attempt. Note also the increased volume. I'll bet something's up here. Disclaimer - I am long AMD (though still underwater).

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