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Minyan Mailbag

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If I can take out BKX 800, I'll really give Boo some food for thought!

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Hey Todd,

Remember last January, when you were thinking out loud about how a rampage
was "out there," but 1st needed one final whoosh lower capitulation?

I liked the call and think you are/were right but the timing was a bit
pesky, no? Of course, we now know there was a nice wartime run-up this
spring sans the whoosh. The HAND???

Its got me thinking. IF this market is headed lower for the medium term,
could it be that the retreat will happen without a hysterical spike
preceding it? Just an unexciting thud on the ceiling before an agonizing
drift lower?

David Gwatkin
Vermont Adventure Company


David,

Yes, I vividly remember the discussions we had regarding the ramp potential, particularly the "Shim Sham" thesis which, ironically enough, came to complete fruition. Sometimes, when staring at the screens all day, there's a tendency to overthink the action and I suppose, in hindsight, that's what I did. Still, the thought process was lucid -- traditional trading bottoms (not to be confused with cycle bottoms) are typically accompanied high volume reversals or basing patterns. As we edged towards the invasion of Iraq, Europe had "broken" and our tape was drifting towards a similar pattern. It stood to reason that the stateside markets would follow which, in all likelihood, is why we didn't.

Regarding the "hand," I've been careful not to pen too many conspiracy theories as it's a dangerous topic. Suffice to say that I've had my fair share of conversations regarding its legitimacy (at some level). The Bank of Japan has a long history of intervening on behalf of their currency so the conceptual notion isn't foreign (no pun intended). However, IF (big if) Mr. Hand was involved and it wasn't communicated to the public, that's not intervention -- it's manipulation. Not saying it happened, mind you, but I'm not saying it didn't.

Finally, as we learned on the mirror image of this move, capitulatory action isn't a necessity when probing for an inflection point. I've long felt that tops are processes (vs. bottoms as points) due to the psychological inertia (fear of missing). In other words, the investing public is more likely to buy up (vs. down) and that sometimes buoys the averages after the spirited sprints.

I hope this helps and I thank you for taking the time to write. As your email was chosen for the Friday mailbag, we'll be sending you a Minyanville tee of your choice. Pick a critter and wear 'em with pride! Have a great weekend and happy trails on the Minxy mountain.

Toddo

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