By Todd Harrison Nov 23, 2005 12:41 pm
Have a great Thanksgiving!
- Mad Monkey. That Monkey Junkie.
- Keep an eye on the drillers (driller?) as the OSX is off 1.5% and sitting on the previous all-time (closing) high.
- And, not to be outdone, the XAU is off a deuce (2%) as it digests the recent run and gold retreats from the psychologically sticky $500/oz level.
- As we ready for a few soft sessions, Minyanville would like to know what YOU are thankful for. Please let us know and we'll share the vibe on Friday.
- The path of least resistance is higher, we know but for what it's worth, I can't find one person--not one--who thinks we trade off into the weekend.
- After digesting the rapid run of recent weeks, the piggies are trying to lead by example once again. Of particular note is the relative jig in the big cap brokers and JP Morgan (which hasn't looked back since mounting $38.40).
- Move over Rover, let college take over!
- Mini-Minyan Mailbag
Kevin - I have really enjoyed the introduction to the Point and Figure methodology you are using and had a newbie question - when you point out "sell signals" in your column today, both of the dates were excellent buying opportunities (July '02 & Aug '04). Are the buy and sell signals within this context contrarian indicators? Regards, Minyan James
MJ - Great question. Let me clarify those two time periods. The reversal down for the NYSE BP occurred on June 3, 2002. It gave a sell signal on July 23, 2002, which I referenced in the column, and reversed up on August 9. From the reversal down date, June 23, 2002, to the reversal up date, August 9, 2002, the SPX was down 12.7%. More important is the level of the indicator. It gave a sell signal in 2002 at 26%, and reversed up August 9, 2002 from 24%. That is a very, very low level, the lowest level since 1999 in fact.
The second sell signal I referenced occurred on August 6, 2004 at 58% after the initial reversal down on July 28. The NYSE BP reversed up rather quickly, Sep. 13, and a new buy signal was given on Nov. 5, 2004. From the reversal down, July 28, to the reversal up, Sep. 13, the SPX was up 2.8%. I was bearish at that time, as I am now, but the reversal up and subsequent buy signal, even occurring at a high level, kept me in the game, so to speak.
As an aside, the reversal up on Sep. 13 to the next reversal down, March 23, 2005, the SPX was up 4.2%. That 4.2% gain over six months entailed far less risk than the 2.8% gain over six weeks when the indicator was negative. The point is, not all market moves are created equal. Some gains occur with higher risk than others, some losses take place with lower risk than others. I believe that over time, the one who chooses spots when risk is favorable will be better off than one who has no methodology for discerning risk at all. -- Kevin Depew on today's Buzz
- The homies are also flexing in this thin Lizzy of a tape as the HGX builds on yesterday's gains. I'm reminded of the axiom that the ability not to trade is often as important as trading ability.
- How do you protect yourself against looming trap doors? Rolling stops (during the day) or married puts overnight. Option premiums, on the aggregate, are cheap enough to play that way.
- Good luck to Sanjay and Adam on their new digs. Remember, Minyanville doesn't compete--we feature and brand our professors--and we wish them all the best on their new endeavors.
- I'm off like a prom dress as I ready to turn it off and tune it out. Fare ye well into the bell and have a heckuva happy Thanksgiving!
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