Monday, August 03, 2009

President Obama: Mission Accomplished

Over the weekend I heard bits of Obama's announcement that 2nd Quarter performance of US GDP was, quote, "...better than expected." I immediately thought of all the government intervention that seemed to pull the S&P unrealistically out of the hole it was in back in March. During the whole rally I was in disbelief, and was even financially rebuked for my beliefs until I set myself back on the strait and narrow. Like they say, a rally climbs a wall of worry, and now I know what they mean.

Back to the Big-O, when I heard him say the above quote I pictured him in my head saying, "Mission Accomplished." The government intervention does well to explain the 'unbelievable' behavior of the rally of the Markets over the past few months. And I view this regardless of my personal political opinions; because the $750B Stimulus program was started by President Bush right before he left, and then completed by the next president. The politicians are just trying to recover tax revenues by encouraging the morale of the country, touting success to get consumer spending back up, GDP in growth, and strength back to the Dollar.

However, I'm in the camp that fears that all this spending is going to come back to haunt us soon. All this stimulus is acting like a defibrillator, trying to jump start consumer spending back into full swing. But I think that American business in general is still carrying too much fat to keep pace. I fear that there needs to be another correction, but I don't know if it will be within one year or 5 years. But I do believe it will happen within that time range.

As for the S&P and this great rally we've been having since March, we have finally arrived to the major line of resistance, going back to the peak in Oct. 2007. In a sense, this recent rally has been a correction of the oversold condition that started in Oct. 2008. At about 2:25 pm today, it appears that this resistance was tested and respected. The next few days might be rather interesting.

I'm thinking that the S&P resistance will break, but not beyond the Fibonacci retracement around 1053. That is my perceived line of resistance, and I'll be truly optimistic (bullish) if this line gets shattered.

Here's one of my current holdings, ZIXI. I bought-in around 1.65, right before the recent spike-up. We're pushing resistance right now, and I'm hoping for a breakout. My stops are not far below the support line of this rising triangle, but far enough to avoid most stop-sweeps.

I'm also hanging on to KLIC. This one is starting to wear old, but has behaved itself otherwise. My patience is beginning to get tested.

I'm looking at JAZZ, thanks to a tip from Trader Stewie. This one shows a little more promise than my other two holdings. Thanks, Stewie!

One more potential rising triangle is CHDX. I don't like how it penetrated support today, but I'll be watching it tomorrow morning for signs of life. That last line looks like a bull flag.

I noticed that I've also missed the boat on a few other stocks I put on my watch list last week, like OMX and CCO. It may not be too late to get a piece of those, but I haven't figured how to tell if they still have life in their runups or not. Meanwhile, I'll be continuing my studies under Constance Brown's All About Technical Analysis.

No comments: