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Friday, November 9, 2012

Daily update 11/9

I know that some of you have taken seriously my warning that we have made a major top.  I am also pretty sure that there are still plenty of you that do not believe it.  I am going to digress from the usual update for a minute to tell a story.

When I graduated from college as a software engineer the first job I applied for was IBM.  When I went in for the interview, the first thing I did was take what they called an IPAT test.  After completing the test, the personnel guy assigned to me took me around to various managers for an interview.  Each interview was 30 minutes of me listening to the manager telling me what their department did and why I should come work for them.  After the first interview, I thought that was pretty strange.  I went on four more interviews and each one was the same.  When I got home, I told my wife that was the strangest interview I ever went on.  Nobody asked me any questions to see if they wanted to hire me.  I got job offers from all the managers and I picked one and went to work.  A few weeks later I found out that I had scored the highest on the IPAT test the personnel guy had ever seen.  All the managers saw that score and already knew they wanted to hire me.  I am intelligent and up until I went to IBM I was used to being the smartest guy in the room.  I worked with many smart individuals while I was with the company, some of them smarter then me.  However, I never ran into anybody that could debug a software problem faster then me.  I got asked many times to help others find their bugs.  My brain has a way of putting seemingly unrelated facts together to arrive at conclusions others do not.  A coworker of mine was working on a problem where the software would blow up every few days.  The problem was on a system in France and he had set up the debugger so when it blew up he could look at it.  He worked on the problem for several weeks.  He finally asked me for help.  I looked over his shoulder at what was blowing up.  I spent a couple of hours thinking about it and out of the blue it came to me it was a multi-threaded problem.  There was a teeny tiny time window where two different parts of a program might access the same piece of data and make a change that caused a problem for the other.  The window was so small that the application could run for days or even a week before it happened.  He was pretty skeptical, but he changed the code and locked the data so it could not happen and the problem never occurred again.  When he asked me how I figured that out I had absolutely no idea.  It just popped in to my head. 

My point in telling you this story is not to brag or to convince you I am a genius.  I am not.  What I want to convince you of is that I might just be able to see things that you don't.  I warned my family and friends of a major top in 2000 and 2007.  I just warned them again a few weeks ago.  Those are the only times I have warned.  It is not that I just happened to get it right those times and had false warnings.  This top is weaker technically then the other tops and has the potential to have a worse decline.  Maybe you can't see how that can happen, but that does not mean it won't.  Please do not feed the market your hard earned money.  Unless you spotted both of those prior tops while the market was still at the highs I suggest you seriously consider that just maybe there is a chance I am right.  If you spotted one or both of those tops while price was at the highs and do not think this is a major top I would love to hear your argument.  Please email me.

Ok, on to the market action.  This looks like a consolidation day.  A rather poor performance considering the drubbing the last two days.  Here is the daily chart.

Price held in this major support area.  We may continue to hold another day or two.  I would like to see a bounce up to the 1395-1400 area to short on.  That was key support that we broke down from and often the market will go back and retest an important area like that.  There should be a ton of overhead resistance up above there.  I doubt the market can get any higher then that without a major piece of good news.  Lets zoom in to the 60 minute SPY chart.

We hit that lower green support line this morning and bounced up.  I put that line on the chart back in July.  I am sure it was just luck that it stopped right there.  Be warned the next line on the chart below is 132.6.  That is the only support I have between here and the June low.  A break down here will be significant.  Since this area is key support the market may hang around a bit before a break down.  Just keep in mind a break down could happen without much warning.  Kind of hard to say.  I will be keeping my fingers crossed for a bounce to 1395-1400 next week.

Chart practice has been updated with HD the target stock today.


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