All is calm on the western frontier...

So lets get an update of the long term picture - a rehash of a post of the ALSH chart which previously showed where technically some pretty heave resistance lies.

 As one can see a second test of the resistance is underway. Will it break - possibly although short term probably not. The market as it stands has been climbing relentlessly and it is in need of a breather. It it does break it could be an aggressive climb higher although lets not bank on it. The resistance (which previously was support) managed to buoy the market four times, while building a kings crown of a top.

With Marcus cutting rates to everyone's surprise, I'm expecting even more cuts as inflation will be muted and the economy IS going to struggle. Pressure from unions and from horrible growth figures will force her hand. Another surprise is looming  just around the corner - shares are heading for a hiding. I know I sound like a broken record but even though markets can blissfully ignore fundamentals these will EVENTUALLY come home to roost.

Gerald Celente an eccentric forecaster is predicting a crash of 2010 and really has a gift of putting across complex scenarios in a very clear and concise manner. Have a look at this clip and you will see a pretty ugly picture. China which is now SA's largest trading partner is really not such a goldilocks story and if they experience pain down the road we will experience it doubly so.





Good Trading

Charts for previous post....

Still a big bear on track!

It has been I while since I wrote but I have been following the market closely during this time! The break of huge rising wedge turned out to be bearish for a bit and the market turned again to test the wedge (this is my thinking at this time). I am so glad I caught the down and recently caught the reversal thanks to the inverted head and shoulders that I spotted quite early. The only reason I found this formation in our market is because the S&P500 and the FTSE100 were leading here, both with inverted head and shoulders with good breaks to the upside.

Even having had made money recently, I found myself making schoolboy errors in my trading which I would like to share with you.

1. Haste makes waste - I saw the rising wedge for ages but did not take a major long position for fear of loosing cash. If I had traded the channel and waited for the break out I could easily have double or even tripled the money I made now.

2. Wait for the break then trade - I can really could more than 3 times where I was convinced the wedge was at an end and shorted the crap out of everything. Need I say more.

3. Big downs have big corrections - After the market's tanking I shoulkd have known there was going to be a retracement to at least 50%. Once 38% was passed I should have gone long.

4. Ten minutes spend on economics is 9.5 too much - Watching Bloomberg and the Fed's statements all day will cripple your trading. Watch if you investing for the long term!

Finally, where to from here? The market broke through 61.8% retracement of the recent bear move, which was also the head and shoulder neckline, and today the 71.4%. This market is going one direction in my opinion and that is up, up, up to test the rising wedge. I believe it will fail there, but lets ride the up for now.

Good trading.