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When looking at major trends, check in with some trending indicators.


Yesterday Prof. Pepe suggested that when looking at different time frames, the longer periods (weekly) must be given greater weight than a shorter period (daily). Below are daily and weekly charts of Google (GOOG) and the Philly Housing Index (HGX) with indicators that build on Pepe's concepts.

Let's start with Google (GOOG). The daily chart is not looking too spiffy at first glance and "momentum" confirms the "heavy feel" to this name over the last couple of weeks. But despite the lagging momentum, the bullish trend - as shown by the DMI yellow line - remains intact. Switching to the weekly chart, nothing suggests that the tear GOOG has been on since its IPO is anywhere close to ending.

Bottom line: If we threw our critters in the ring, the best Boo could argue is that Hoofy is starting to get greedy and may need a slice of humble pie in the form of a quick 10-15% correction. That is unless our little bear gets impaled first as Hoofy does his best impersonation of Forrest Gump (" and he ran, and he ran, and he ran. . .").

Boo's Plan B would consist of looking for friendlier landscapes, like . . .the homies!! (shocking I'd mention that, I know). Here we have almost a mirror image of the GOOG juggernaut.

On the daily chart it is easy to see the difference between the bullish mojo of days gone by (1st rectangle), the October spanking (2nd rectangle) and the current udder state of confusion (3rd triangle). The only constant over the last two months is that any degree of trending is disappearing faster than the Casper the Friendly Ghost, notwithstanding the recent rebound in the price.

Is this just a temporary rest in the ongoing housing orgy? The weekly chart does not give us a definitive answer, but we can say that the price action alone seems to be lying. While the trendline remains as support, the price momentum is now outright negative, and as the DMI intensity (yellow line) slinks ever lower, the power surge of October 2004 to July 2005 is being relegated to Hoofy's scrap book . . .and my recurring nightmares.

Bottom line: precisely what Prof. Pepe offered - going long the HGX here looks like a dollar bet to win nickels. Trending indicators are flashing red on multiple time frames. Hoofy is in "hope mode", as in "I hope they don't push me off the cliff", while Boo looks to be making his list and checking twice.

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Position in HGX
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