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Noting all the support/bear rally chat on the list for the major
stock indices, which is a direct contrast to the "overvalued hence
short" messages prevailing on the list when the bull was in full
force:
Those inclined may want to train their software to dry run their
analysis on the following out-of-sample test charts on a walk-forward
basis starting - say - Feb this year - and see where the projected
bottoms lay, where you would have thus gone long, and what you would
do once confronted with these trends/ congestion breakouts as of
today:
CRB Index $crb.x
May Heating Oil HOK1
June Aussie Dollar ADM1
June Canadian Dollar CDM1
June Japanese Yen JYM1
July Coffee KCN1
July Corn CN1
July Cotton CTN1
July Copper HGN1
July Oats ON1
July Orange Juice OJN1
July Silver SIN1
July Soy Meal SMN1
July Soybeans SN1
July Wheat WN1.
Perhaps the traders would gain some perspective from this exercise,
albeit a lengthy one for the uninitiated.
Perhaps they would see the similarities in the above charts with
those of CSCO, INTC, NDM1, the G7 equity benchmarks.
Rising money supply and falling core & industrial commodity prices
are generally indicative of deflation. This is not the scenario the
world is preparing for. Simply put, deflation kills most financial
assets and benefits those that ensure return of principal. The
runaway uptrends in most fixed income and Eurodollar contracts is
further evidence of this.
In any strong trend, surprises generally seem to happen in the core
direction of the prevailing trend.
As Stanley Kroll belabors to point out, price makes the news, and not
vice versa.
Perhaps the safer thing to do, then, is to figure out how one would
take advantage of the prevailing trend in the stock indices without
getting whipsawed by the normal reactions within that core trend.
While on the subject of quoting famous traders: Listmember NW is on
record as saying 1130 SPX by Friday close or Monday Open. For my
money, he is already within a couple % of those numbers. My
congratulations.
Gitanshu
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