Tuesday, September 13, 2011

Small teats and feats

FAZ: megaphones and pennant

10:21 am (Hawaii) No reason to get up early, so I enjoyed a night's rest, got up around 6:00 am, went back to sleep, got up 8:00 am. First thing I did was look at the FAZ chart. Sure enough, today's trading range fit precisely within the near-term pennant, which is now narrowing drastically. With lower volume, range is also shrinking. Volume in FAZ is much stronger even today than it was back in May and June. But since I started charting FAZ on Friday, the megaphone and pennant perspectives have helped immensely.

More than that, they're providing some entertainment value. There's no way to predict anything in this stupendously insane market. Maybe it's the algo space tech machines that are forcibly maneuvering FAZ into this pennant. Maybe we really are just a day or two away, according to the pennant development, from a huge event that will move the financials, and thus the market, drastically to the upside or downside. Nothing would surprise me.

All I know is, the mid-range line of the megaphone(s) proved to be a point of resistance yesterday. Today, the lower line of the pennant proved to be support when FAZ fell to 58+. At 60, it's right in the middle of those closing pennant lines. If we get no major event soon, volume could continue to decline and price could level off here. Consolidation. But really, with the PIIGS and debt crises on both sides of the Atlantic, I'm not expecting May-June type action in FAZ. The fan is spinning at full throttle, ready chop and slice any piece of news out of Washington or Euro land. The fan can't stop, let alone slow down, because it's fueled by debt, trillions and trillions of dollars of debt, and the US banksters have poisoned their 'friends' across the pond, spiked their drinks, tainted their pate and caviar.

Most of my urges to scale in have been tempered by these morning visits to Chartsville, inspired by masters like Professor Turd Ferguson. I'm not worried that I'm no guru like him because charts are not predictors and I'm not reading crystal balls. Perspective is key and it's good to have a balanced one.

That being said, if Turd is right and PM's have bottomed, scaling in here wouldn't be the worst thing.

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