The March low is THE BOTTOM

Looking at the March 2009 decline and subsequent parabolic rise, there is only one conclusion to draw: we really bottomed at march low. That's just how charts work. Not only is this a traditional double bottom (where the second low is lower than the first low) but look at the accompanying hyper volume, hyper magnitude and hyper slope of the March low and bounce.

Sometimes it's easier to assess the situation by flipping the chart upside down. Go ahead, flip this chart upside down either mentally or with a mirror.

If you had the chart upside down, you would certainly be laughing at the bulls for not knowing the bull market is over. Likewise, the bulls are now laughing at the bears for not knowing THE bottom is in and the bear market is over.

An interesting thing has happened with the chartists lately. Many no longer believe the charts. lol. Instead they have become "fundamentalists" and give hundreds of reasons why our economy is doomed.

Bears Hurtin' Lately

"When the tide goes out...we see who's swimming naked."

Linda Is One Smart Gal

Dear Beanieville readers...

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It could be that she has had continued success in the trading arena for over two decades. It it could be that I am drawn to her superior presentation skills. It could also be that she is a great role model for young women pursuing a career in finance and/or business.

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"Classic Indicators - Back to the Future"

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Free stock trend analysis

UNG is a great buy here

Time to go all-in; if you want to go all-in on one stock this is the one. No options please.

Time to own VMW for the long haul

To tell you the truth, I've followed VMW since it went ipo two years ago and still don't know how the technology works. But having spoken to several IT persons who rave about their product, I decided to put it on radar.

Recent news of a Google engineering director, who originally came from Microsoft, having taken a position in the company and a recent upgrade makes me want to own this one right now for the long run. I will start accumulating a position today. Earnings is next week and I will finish off the last batch buying right after earnings.

VMW is in a hypergrowth phase and raking in lots of cash. Main competitors include Microsoft and Oracle, but VMW still holds 80% market share.

ENER looking good at these levels

I bought some at 12.8 area.

I think this stock has bottomed and is ready to move higher from here.

$15 first target.

2008 Performance Of The Well-Known

2008 performance numbers of some very well known names:

Warren Buffett (Berkshire Hathaway): -43%
Ken Hebner (CMG Focus Fund) -56%
Harry Lange (Fidelity Magellan): -59%
Bill Miller (Legg Mason Value Trust) -50%
Ken Griffin (Citadel): -44%
Carl Icahn (Icahn Enterprises): -81%
T. Boone Pickens: Down $2 billion since July
Kirk Kerkorian: Down $693 million on his Ford shares alone

Most average folks did even worst with their investments.

It's gonna take a very long long time to get back to breakeven as investors (not that short term trading is any better). There is nothing wrong with investing (or trading), except that you better apply some form of money management to have a fighting chance of making money over the long haul.


I use exclusively this money management system.

Owning Starbucks

SBUX recently formed a Golden Cross, both in the SMAs and EMAs. Don't even know what a Golden Cross is? Well, go read the previous post. I have a position in the stock. I've been a Starbucks (and Seattle Coffee, now a subsiduary of Starbucks) coffee lover for a long time but never really owned the stock for any length of time. I think now is a good time to get invested in this company, especially now that it's become quite a cheap stock.

My entry is @13.55

Earnings is in 2 weeks. Long term hold.

The 'Golden Cross' And Where Do We Go From Here

In the middle of June, we had the Golden Cross formed, where the 50dayMA crosses above the 200dayMA on the daily. This is an important formation that historically tends to indicate potentially a multi-year trend change. We had a Death Cross (where the 50dayMA crosses below the 200dayMA) that started about 2 years ago, accompanying the severe recession. Now the Death Cross becomes the Golden Cross last month. Some chartists believe that it's not a valid Golden Cross because this present 200dayMA is sloping downwards. Others, and I'm in that camp, believe it is still a valid Golden Cross despite the negative slope.

Minyanville, in this article, believes that the Golden Cross may not be valid and they bring up the 1932-1933 chart to prove it:



Since everyone seems to like to compare what is happening today to what happened in the 1930's, then July 1932 (from the chart above) is equivalent to March 2009. In both instances, a Golden Cross was formed a few months later when the "low" was hit.

Here's the chart of the Dow Jones today:




The first chart (1929-1932) shows that the Golden Cross, due to the declining 200dayMA, actually reversed and became the Death Cross again as the 50dayMA crossed below the 200dayMA. However, a few months later another Golden Cross was formed and that particular one signaled the end of the bear market.

Similarly, I think the same will happen with the second chart (2009) - a Golden Cross reverses into a Death Cross and back to a Golden Cross, ultimately signaling the end of the bear market.

Note that in the first chart (1932-1933), even though the first Golden Cross may have been invalid, the important thing to note is that the July low of 1932 held. For a few months, the market occillated back and forth from Golden Cross to Death Cross and back to Golden Cross, the market ultimately gave back about 68% of the rally from the July 1932 low before beginning a real bull market with the second Golden Cross. So in the strictest sense, the Golden Cross with the negative sloping 200dayMA may not be valid if we use 1932-1933 as template; however, in 1932, it did signal a real bull market was not too far away.

Likewise, last month's Golden Cross may signal a real bull market is not too far away. If 2009 plays out just like 1932-1933, then within the next 3-4 months the Dow Jones will trade sideways until it eventually hits the 68% retracement at about 7400 before the real bull market begins. And on the SPY, it should hit a 68% retracement to around 77 in a few months before really taking off to the upside.


-Beanie

Get ready to buy buy buy ... GOOG

It looks like we're gonna have a decent-sized rally tomorrow, for two reason:

1) Alcoa (AA) just announced and the stock is higher,

but more importantly,

2) you have to be reading my blog for awhile to figure this one.

GOOG can be bought here afterhours right now or sometime early tomorrow. I bought some GOOG afterhours.

Read the first comment of this post for how the market will likely move tomorrow. Get ready to buy stocks with good setup.