Levels Matter

I’ve been having an ongoing debate with a
friend (he manages a sizable mutual fund) about technical levels; He’s a fundie
guy who looks at earnings, listens to conference calls, speaks to management
(Ha!) and does channel checks.

Out of all of those activities, the only ones that have value to me are the
channel checks — they are objective data points.

His takeaway on today is: "Oil’s up, and the Fed will keep

My view: the Bulls have been unable to get over the resistance
hump — at least so far– and each failed attempt weakens them.

That’s why one
never anticipates a breakout, and waits until it occurs. I said earlier I was
"back to watching my levels, and getting ready to flip more bullish (on a
closing basis) as necessary."
That remains the plan. That said, the day is
still young.

Regardless, for those of you who may not appreciate the technical side,
recognize that charts include, encompasses and reflect all the activity that the
fundamental side is doing — especially the big institutional players.

I think of charts as the elephants’ footprints . . .

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  1. anon commented on May 6

    Ready to flip bullish after your much publisized and reiterated bearishness? Come on now, stick in there. Where do you think the market is heading, even if it breaks out. Your bear call came at 10400+ (end of march). Surely you can withstand the same 4% rally above your call to stay on the cautious side. If not, then it was not really an intermediate call as you went out of your way to indicate.

    As for your mea culpa on GM and Mr. K, check your facts befpre you accuse, and not pander to getting a headline comment. It will serve you better to take the time to research before commenting.

  2. muckdog commented on May 6

    You don’t think we already had the follow through day on wednesday? That’s what the IBD techies say.

  3. Barry Ritholtz commented on May 6

    Bear call came on March 29, the move to cash on April 7 — much higher in price — over 2000 on the Nazz, 10,550 or so on the Dow, and SPX 1188 or os

    (See this: http://bigpicture.typepad.com/comments/2005/04/cash_is_king.html)

    ON any trade, I have my line in the sand — since much of my thesis had to do with dropping below the prior trading range, a re-entry into that range is bullish.

    I’m still out, but watching the levels closely . . .

  4. John commented on May 7

    Better to be a willow than an oak? I believe so. It may seem counterproductive to get more bullish after a rally, however if that rally is part of a break out of an expected range it is disciplined to change/question one’s view.

    In my view however it ain’t a break til it is. And I would need confirmation from the NDX. IBM’s chart says that’s unlikely.

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