Currently the market remains in a short-term correction that has taken the indexes down all of 2% from their recent price peaks
We have reported on MLNX as being actionable on the long side a number of times as it had a number of pocket pivots
Exactly how big is Apple, and how has its popularity as a mainstay of institutional portfolios affected its influence on the overall market?
Technology companies are probably the best levered to benefit from any inflection point that the market may be perceiving here as the potential for real "change" in November could set in motion a change in tone when it comes to the oppressive economic policies favored by the current Administration and Congress.
Based on present technical action, the uptrend in Apple Computers is alive and well.
When a country or company is bankrupt, they're bankrupt. A country should not deny it and try to prop them up. Obey reality.
In terms of our own performance, we focus on reporting in real-time on potentially winning names that can be pyramided as they move higher though such names have been few and far between since such quality trends have been very rare over the past year.
We see potential for another type of sell-off or at least continued choppy consolidation for the first part of the year. As we approach summer the market should begin to discount the coming 2012 election, which we believe could provide a rationale for a bottom to all of this correcting and consolidating and a new bull phase to begin.
While we are trend followers at heart, pyramiding allows us smaller losses on false (unprofitable) buys. We also use tools and experience distilled into systematic rules that allow us, at times, earlier entry and exit than other trend followers.
One of our favorite formations is the “head & shoulders” formation, a pattern that investors should be aware of during environments where former leading stocks have begun to falter. Historically, leading stocks have often formed such a pattern before rolling over for good and plumbing to new lows.
The narrowing price band in the NASDAQ Composite and S&P 500 from October 27 to November 15 led some to logically believe that a tightening price structure could result in a new uptrend. Such was not the case as is the nature of frustratingly noisy, trendless markets.
The market's rally over the past few days as of October 14, 2011 illustrates quite clearly how the short side can cause one headaches, but persistence is often required. Not many have the requisite psychology, and some might say you have to be downright crazy to short.
While there are plenty of trading “systems” being promoted on the Internet and in the mails, most involve the use of high-cost, high-risk trading vehicles and require frequent and precise timing in shifting direction or moving in and out of the markets in order to garner decent returns – assuming they work at all.
Ultimately, the fundamental backdrop continues to look as disturbed as ever. The Greek bailout situation is looking dire, and new Euro-dominoes could topple in the European fallout with countries that are "too big to bail" such as Italy and Spain. This could make the Lehman bankruptcy that occurred in the U.S. back on September 15, 2008 seem small by comparison.
No it's not a hypothetical study. I have used the model to keep myself on the right side of the markets since 1991, and it is largely responsible for my KPMG audited track record which contains a number of years where my returns were in triple digit territory, or above +100%.
We remain long term bullish on gold and long term bearish on the dollar. Money printing/quantitative easing could prop up stocks, but we could also be in for a period of stagflation.
You will note that in late 2008 when the market had its slow motion crash from September through November, nothing was safe, with most stocks and commodities losing typically between 50-85% of their value peak-to-trough. Gold was perhaps the most robust out of all vehicles, but still sold off over 25% peak-to-trough.
We are in the third year of Obama's administration, the year before elections, so the Obama administration does not want to make any unpopular moves, thus will do everything to prevent a financial crisis.
Difficult periods to come to an end, and new trends do begin. It the meantime, it's wise to keep an eye on the markets, and keep taking shots, though with perhaps smaller positions, until the market proves itself.
Should we have lower inflation on the horizon, the fed has the comfort zone of keeping rates at current historically low levels, which they hope will eventually spark growth, though the spark will probably be just that, a spark, not anything more.
