Think about this in terms of an airplane pilot who is flying through heavy fog. His senses may tell him that he is listing or that he needs to adjust up or down but under the circumstances he must ignore his senses and fly according to what his instrument panel is telling him. In other words, his senses are unreliable and he must not follow his instincts but rather his training.
Likewise, instinctually the market is telling us that we must sell but the charts are saying buy, buy, buy. A QQQQ failure at $42 and an SMH breach below $35.75 would negate the buy signals here, but we must buy here and react to a market breakdown if and when and only when such a breakdown occurs.
"Ours is not to reason why, ours is but to do and die" -Alfred, Lord Tennyson's Charge of the Light Brigade.
Saturday, April 01, 2006
Despite a Feeling of Weakness, the Charts Say Buy!
From a daily perspective Friday’s weak close left much to be desired. The semiconductors especially look weak at this juncture. Panning out to a weekly view however the picture changes and a more bullish perspective starts to emerge.
Note the fact that the SMH, though performing poorly on Friday, merely closed out the week with a doji at long term support. Indicators (not shown) reveal a strong buy signal on the MACD histogram and improving money flow into the sector. As weak as this market has “felt” lately there can be no clearer point where a market demands to be bought.
Think about this in terms of an airplane pilot who is flying through heavy fog. His senses may tell him that he is listing or that he needs to adjust up or down but under the circumstances he must ignore his senses and fly according to what his instrument panel is telling him. In other words, his senses are unreliable and he must not follow his instincts but rather his training.
Likewise, instinctually the market is telling us that we must sell but the charts are saying buy, buy, buy. A QQQQ failure at $42 and an SMH breach below $35.75 would negate the buy signals here, but we must buy here and react to a market breakdown if and when and only when such a breakdown occurs.
"Ours is not to reason why, ours is but to do and die" -Alfred, Lord Tennyson's Charge of the Light Brigade.
Think about this in terms of an airplane pilot who is flying through heavy fog. His senses may tell him that he is listing or that he needs to adjust up or down but under the circumstances he must ignore his senses and fly according to what his instrument panel is telling him. In other words, his senses are unreliable and he must not follow his instincts but rather his training.
Likewise, instinctually the market is telling us that we must sell but the charts are saying buy, buy, buy. A QQQQ failure at $42 and an SMH breach below $35.75 would negate the buy signals here, but we must buy here and react to a market breakdown if and when and only when such a breakdown occurs.
"Ours is not to reason why, ours is but to do and die" -Alfred, Lord Tennyson's Charge of the Light Brigade.
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