Friday, January 18, 2008

 

Ok, now buy stocks

So I was a little lot early last week. Corrections are tricky things to predict which is why I shouldn't have tried with my triangle scenario. We are at the point where either the action in the market is setting up for a big down move or the correction is over. This mornings rally is a perfect time to go long and put in close stop at 12,150 on the Dow. Its a big enough rally to break the most recent downtrend lines but not so big that a close stop isn't possible. IOW, low risk, high probability of success. It doesn't get any better than that.

The Dow is currently at 12, 291 and I won't be extremely optimistic that the correction is over until we cross over Dow 12,500. If the Dow goes under 12,150 we have to start entertaining doomsday scenarios i.e., rate cuts won't work and the deflationary spiral I expect to come later this year is here now.

Update: Well that was fast. Time to start working on those doomsday scenarios.

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