When I finished writing my history book (which is coming out in February), I had a much deeper perspective on some of the great manias in financial history. In the modern age, Bitcoin has provided us a new South Seas, Dutch Tulip, and John Law all wrapped into one, and I’ve been stunned at the doe-eyed innocence that the press has given the “currency.” Its recent loss of about 55% of its value in the span of a few weeks is no huge surprise. My guess is that, within a year, this will be $100 or so once more. People. Never. Learn. (more…)
As boring as the Dow Jones Utility Average might sound, it’s actually a fascinating little beast. It provided the most gorgeous topping pattern imaginable back in 2007-2008, and it behaves itself quite well with respect to its trendlines and Fibonaccis. Observe the chart below and take note of the Fibonacci fan lines, which date back for many years. This particular line has acted like a magnet for the entire recovery, and recently it has been banging against it, respecting it as support each time. (more…)
Just a quick idea to throw into the hopper – Steelcase. They announced earnings this morning and went flying higher. I shorted into strength and already have a nice little profit on this one. With the risk of the earnings announcement out of the way, I like the risk/reward on this one.
Back on the 10th, I had offered up the Brazil fund ETF as a short idea, based on its clean pattern and neckline. Well, yesterday’s explosive rally did nothing more than affirm the strength of this pattern, because the neckline was challenged but not breached. This morning, we opened lower, and I have even more faith in this idea than when it was first suggested. (more…)
I was saying yesterday morning that coming into Fed day just under clear pattern resistance augured badly for bears, and so it turned out. After a test break above SPX falling channel resistance SPX pulled back, made a new RTH low immediately after the Fed announced tapering to start in January, and then broke up for a massive short covering rally as people realized at last that cutting bond purchases from $85bn to $75bn per month wasn’t really much of a change after all. The move from the post Fed low into the high just before the close was an impressive 45 handles as a lot of traders were forced to eat their shorts. (more…)