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Current Dow Industrials Technical Position
Old 06-05-2008, 12:32 PM   #1
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Current Dow Industrials Technical Position

I don't know much about technical analysis. But uptrends have higher highs and higher lows, and downtrends lower lows and lower highs. A look at the current DJI shows that it is struggling. It's 1400 points down from its high last October, and maybe 950 above the low of January 08. I can't see any clear sector leadership. Many financials rallied this spring, but seem to be sinking back toward new lows. Oil and gas issues are off their highs. Big blue chips like GE and food stocks etc are marking time.

It is still well above the January low of about 11635. Ben has pretty well admitted that he is treating stocks with monetary stimulus and the recession if there is one at all so far looks toothless.

But price action and sector action looks weak. If we get a sharp move down through that January low, IMO it could go much lower, as it would likely signal the perception that Dr. Smug, aka Big Ben, has lost the game.

We may just be waiting for him to create enough inflation and dollar depreciation that some pricing power might return to American business.

So while nominal values might hold, they will be measured in heavily depreciated dollars.

Definitely interesting times!

Ha
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Old 06-05-2008, 01:51 PM   #2
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No conviction and lots of money just waiting for someone to make a decision. I'm about as much a technician as you are, but I'm in agreement with your description in your first two sentences. I think people want to buy and that makes for a weak general up-trend, but a lot of people are taking profits here and there and with the lack of conviction the moves are exaggerated.

I like the "sell in May and go away" philosophy, but here it is June and I'm still holding a few things where I'm overweight and need to take some profits. Maybe I'll just do like everyone else, sell into the pop ups like today and wait for somebody to lead the way before I put more money back to work.
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Old 06-05-2008, 05:28 PM   #3
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The presidential election cycle theory is based on four key assumptions:
  • Stock markets do well in a presidential election year
  • Stock markets do even better in the year preceding the election
  • Years three and four of the presidential term are typically the best performing years of the cycle
  • Years one and two are the worst performing years
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Old 06-05-2008, 07:08 PM   #4
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Well, it wasn't just a bump up day today. It was a rocket up day. Lots of stuff went up today, especially all of that tech stuff I bought last year.
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Old 06-05-2008, 07:14 PM   #5
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Old 06-05-2008, 07:28 PM   #6
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"Thousands of experts study overbought indicators, oversold
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Old 06-05-2008, 08:00 PM   #7
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After examining the relationship between term year and market returns, we might ask if there is also a correlation based on political party affiliation. Interestingly enough, a 2003 study by UCLA professors Pedro Santa-Clara and Rossen Valkanov found that a broad stock index, similar to the S&P 500 Index, going back 72 years to 1927, returned about 11% more per year on average under Democratic presidents versus safer, 3-month Treasuries.3 The index only returned 2% more versus T-Bills when Republicans were in office.


I thought I had read this before and the article confirmed it. Most financial pundits would lead you to believe the reverse is true. Obama supposely wants to raise taxes on capital gains. If he wins the election, are you a seller of stocks or hold for the long haul? History says stocks will be fine. Higher taxes on capital gains scare me. Not trying to make this a political question, just wondered if you plan to do anything different with your portfolio depending on who wins the election.
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Old 06-05-2008, 08:04 PM   #8
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If he wins the election, are you a seller of stocks or hold for the long haul?
Buy and hold no matter which schmuck is elected to office.
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Old 06-05-2008, 08:09 PM   #9
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Buy and hold no matter which schmuck is elected to office.
Good way to put it.
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Old 06-05-2008, 08:17 PM   #10
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I thought I had read this before and the article confirmed it. Most financial pundits would lead you to believe the reverse is true. .
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post hoc fallacy.

Another way of thinking of the information is that the policies of the Republicans came to fruition under the democrats.

For example - was it the policies of the Regan/Bush Admins. that led to the the good economic times under Clinton?
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