Friday, November 9, 2012
The market found a bottom today as expected and initiated a bounce. What remains to be seen is if the 1373 level is a bottom that will hold for a while or just a stop on the market's way down. As it is the market's bottom today was just 2 points shy of a 50% retracement of the wave that started at 1268 in the summer, pure coincidence or will the market find its footing to rally until the end of the year? if anyone knew the answer, they'll be richer than Buffet :) The bounce has 2 waves so far an W1-2 or A-B so ideally we would see a leg that is equal to A/W1 early next week to the Fib retracement area/Trend Average. If the market manages a rally that approximates 1.6 of A/W1 then odds will favor the leg being part of a 5 wave count. Whatever the bigger picture is, I think a bottom is in or close to being in before a strong counter rally. The issue (or excuse) at hand is the Fiscal Cliff but I personally think it will get resolved in Obama's favor sooner or later. If Obama has his way then taxes go up for only the $250k+ income households, if Reps refuse to make a deal on the ground of refusing higher taxes then higher taxes automatically kick in anyway on Jan 1st for everyone and they will be blamed for a likely recession and eventually lose congress in 2 years. This is why Boehner came out just a few hours after the election to offer to work with the President, he knows they're bargaining from a weak position.
Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bullish
Have a Great Weekend!
Long Term Portfolio: 100% Long (China and HSI Only)
Short Term Trading Strategy: Bought 1000 XIV @15.67 as of 11/08/2012 on margin. Margin positions in gold initiated 11/06/2012.
Last but not least, I dedicate the video below to those people who don't like my calls whenever the picture doesn't favor their short or long positions.. lol. It's of Karl Rove, a very smart man having a denial meltdown on live tv on news Obama won. Sometimes smart people fail to see things for what they are.. and perhaps this phenomenon (people in the media and on the Rommey camp who where "shocked" by results because they were selective on data they believed in) will be studied for years to come.