TTT Market Update
In early January 2010 TREND Technical Trader readers were shown a chart of the Dow Jones Industrial Average (as tracked by the ETF symbol DIA) and we warned that "while many say the bear market is over, those who reject complacency will notice it remains fully in effect per the indicators we've shown on the DIA weekly chart [in this issue]."
Almost immediately a major sell-off began and less than a month later the market was over 8% lower. Those who hedged with out inverse ETF suggestions were unconcerned, perhaps even profiting.
In late March TREND Technical Trader readers were shown the revised chart below of the Dow Jones Industrial Average (as tracked by the ETF symbol DIA) and we warned that while it seemed the black downward-sloping trend line of the bear market had been broken, in fact the true resistance was just above at the red line and blue line 200-week moving average (the same indicators we'd warned of in early January). We have since seen a few market commentators mention that moving average, but only in hindsight, and weeks or months after us, which does their audience little good.
At the time that 200-week moving average was at 111.31 and the subsequent high in DIA was a month later at 112.58 All during the months of March and April we warned readers stridently that markets were very likely making a long-term top and that months of gains would be wiped out in mere days. Of course the rest is history, and that history proves us exactly correct.
As of this writing on June 08 2010, the market is over 12% lower than our March call and 9% lower than our January call, yet all the mainstream analysts are wildly bullish.
To hedge in late March we suggested shorting Goldman Sachs, before the SEC investigation was announced, and that position was recently covered for a 21% gain in just weeks. We further advised being out of long positions if the DJIA fell below 10820. On May 6th the DJIA did fall below that level, then fell another almost 1000 points that same day during the so-called "flash crash".
After the rebound from the "flash crash" we cautioned readers not to be fooled into buying on dips, and today the DJIA sits below 10000 and we reiterate that global markets remain within a multi-year bear market and investors should not be fooled into buying on dips or into believing that present equity prices represent "value" pricing nor will they any time soon.
TTT readers are currently well-hedged with short and effective short positions, and on average have been consistently and steadily profiting on both the long and short side during these wild market gyrations.
Original charts, forward-thinking commentary, and hedging strategies such as those we offer are very useful to investors during calm markets, while proving practically priceless during volatile times like these. It's not just about how much you make but how much you save, and we are grateful that charts like this can save prudent investors a lot of money and grief.
