Safehaven | So Many Cups, Yet Nothing To Drink

October 24, 2006

So Many Cups, Yet Nothing To Drink
by Boris Chikvashvili

Our Proprietary Indicator BUY-SELL-PRESSURE/EARLYBREAKOUTS and others are neutral, but lack energy. The Sentiment indicators point to the upside, but are not extremely bullish for the market (I mean bearish, of course (:J :)). So, they could turn quickly. Fibonacci ratios are nothing short of amazing I could get tired depicting graphs of major indexes and stocks that show golden ratios. For one example look at "Catch 22"... Did You? S&P Graph.

Mar2000High-Oct2002Low 132 Weeks
Oct2002Low-Nov2006High? 213 Weeks
Total Weeks 345, can you permute 132? -> 213, can you count 12345?
There are 987 Fibonacci Weeks from Oct-18-2006 to Black October 1987
Oh! Yes, Almost forgot 213/132 = 1.61363636... Solid GOLD.

Talk about confluence of the cycles...
We will leave rest to your observations and imaginations.

Now, look at QQQQ CUPS above. First cup is from 10/16/2006 to 10/24/2006-today.
Second cup is from May/2006 top to today.
Third cup is from Jan/2006 to top in April/2006.

The QQQQ has been making these cups for the entire year, but everybody that bought it is still thirsty. No gains. In fact QQQQ gave only single digit gains to investors for last 30 months. Not even beating the inflation. It will most likely top or has already topped first among the indices. Remember it has led up and will lead down. All the while, scared investors are hiding under the skirts of DOW/S&P etc.

SELL QQQQ TODAY with a stop above last weeks high you are risking nothing, but could gain everything. Do not know how to short-term trade? Then forget it.

When the leaders of this market falter, then the music will stop.
Watch the following drivers of this market.
BKX 114.60 Resistance
JPM 48.85 Resistance
MER/GS/BSC/MS 1.5-2.5 % from Resistance.
UTIL 1% from Resistance. Is this sacred cow destined to fail? Retire on that!

Last but not least AAPL and GOOG the darlings of the new investors.
AAPL 2-3% from Resistacnce.
GOOG 4-10% from Resistance.

I am amazed how many industries and stocks are at the resistances. At the same time, please remember that we are, technically, still in bull market and the last/sucker legs of the markets are difficult to trade. Most of DOW cyclical bull market legs cover about 13-15% rise (high probability) or 50% rise on the average and almost nothing in between, now you know why I think the end is near with the DOW up 13% from July Low or the suckers will have few more days and 35% (highly unlikely) up in the sun before it all explodes in their faces..

Oct 18 2006 ±2 days Probability 25%
Nov 03 2006 ±2 days Probability 50%
Nov 18 2006 ±2 days Probability 25%

Oh, yes, did you see the baby cup of BKX underflow? As the banks go....
There should be few leftover trades left and I recommend keeping 25% of those positions. Especially that is true for TRUSTS (up 7-20%) and OIL Services (up 5-15%) as well as XAU that is holding remarkably.
No changes to long-term portfolio. How about those pipelines?

Boris Chikvashvili
borisc.blogspot.com

In short... I was supposed to be a theoretical physicist (Russia+Jerusalem Hebrew University, MS Physics, with distinction, toyed with QUARKS). Somewhere on the road to PHD I have discovered, first the Computers - at Carnegie Mellon University (MS EE, Fathered UNIX, adopted WINDOWS), and second Finance on Wall Street.President ITI,(Computer/Finance Consulting Firm) Consulted AT&T,IBM,SUN,CITIBANK,JP MORGAN, LEHMAN, MICROSOFT. Designed/implemented Trading Systems - BLOOMBERG LLP. There is nothing more to say professionally speaking.

Please Note: The opinions expressed here are only for education purposes and do not constitute the advice in any shape of form.

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