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November 09, 2006

Mirror, Mirror On The Wall
by Boris Chikvashvili

11/9/2006 5:57 AM

What Looks Good?
Nothing,
Sell Them ALL!

11/09/2006
SPX - 1404.00 resistance, fluctuation away
BKX - 114.60, 120-122 resistance, Watch the banks, Virus anyone?
JPM - 48.85 resistance , Ever so close , ever so far?
XAU - 122, 103-105 support, 122 is still holding, like Stalingrad.
GOLD -555, 470 support not relevant soon, Vulnerable until Feb 2007.
TNOTE - 4.0 keep thinking unlikely, but could get there?
$Dollar - 94, resistance, yeah, very unlikely
Our Proprietary Indicator BUY-SELL-PRESSURE is at the extreme and others are neutral, but lack energy. The Sentiment indicators (Absolute Values) point to the upside, but point to possible top on relative basis (Some people foolishly expect the sentiment to get extremely bullish in the secular bear market). Also COT (Commodity Traders Commitments) data points to imminent downturn. 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.

Mar 2000 High - Oct 2002 Low 132 Weeks
Oct 2002 Low - Nov 2006 High? 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.

Well the time and price are on the collision course with the bull market.
Total Progress of the Indices has been minimal since our last article So Many Cups, Yet Nothing To Drink. You know the drill... When the SELL-PRESSURE gets extreme, we need 1-4 days of churning and market goes down. We are within the range of possible top days:

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

SELL TODAY when QQQQ approaches this year's high 43.31 and/or market starts to show weakness. Stops should be very tight (miniscule risks). If the short-term trade succeeds turn it into the long-term trade. If you do not know how to trade with low risk then forget it.

The leaders of this market have struggled and the music could stop any minute.
Watch the following drivers.
- BKX 114.60 Resistance, We alerted you to this level more than a month ago!
- JPM 48.85 Resistance, Ditto here.
- MER/GS/BSC/MS, These have advanced to the designated limits.
- UTILities turned down around 450. Anyway, who can retire on 3%
- AAPL is at the resistance.
- GOOG is at 2-7% from the resistance.

STOCKS
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 ~14% from July Low or the suckers will have more days and 35% (highly unlikely) up in the sun before it all explodes in their faces.

BONDS
Bonds are range bound for a while, but will move up when the market falters.
Keep some short durations for insurance.

DOLLAR
Still in the range, but on the weekly sell.
Keep the short (EURO long) with the stops as per http://borisc.blogspot.com.

GOLD/OIL
There should be few leftover trades left and I recommend keeping 25% of those positions. TRUSTS should have stopped out better/at breakeven (Never trust any government that is the rule). The some OIL and OIL services stocks (up 10-25%) as well as XAU (up ~15%) are still held with stops as per http://borisc.blogspot.com.

The long-term portfolio is...

70%CASH+SHORT-TERM-BONDS
10%GOLD
20%TRUSTS+PIPELINES

World INDICES
TA100-Tel-Aviv 100 Index, 940 Resistance reached ~930
DAX/FTSE, are at the resistance.

Sectors:
Will update next time.

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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