Stock Trader Man

LOU”S VIEW                                         Friday 16th January

Dow Jones up 12 @ 8,212

Oil down $2.42 @ $34 .86 (Opec reduced its demand forecast for 2009)

CRB Index down .30 @ 218.9

Copper(PhD in economic forecasting) up .95 @ $149.75 lb

Gold up $8.6 @ $817

Spi up 19 @ 3523

The Hindsight

The U.S banking sector collapsed on fears that Citi needs to be nationalised and Bank of America is seeking loans and guarantees from Uncle Sam to the tune of $150 bln (CNBC sources). It’s almost surreal! …$150 bln. Yet nobody knows who else and by how much they need, not help but actual resuscitation.All economic data is being ignored so tonight’s CPI, Industrial Production and Consumer Sentiment Index will be greeted with a “so what’s new”.

Last night the price action in the Dow Jones was classic Fibonacci. We have previously rallied from 8000 on November 20th which was a 61.8% retracement (the golden number) and yet again we tested it in the early trade and managed to bounce off this critical level 8,000 to end some 200 points higher(as mentioned in yesterdays report). This technical price action isn’t coincidence, it simply illustrates the following and power of Fibonacci levels when traders actually apply it. Believe me it works, rather than guessing or trying to quantify fundamental analysis.

My real concern is if we break and close under this critical Fib’ number then I would expect another 500 points off the Dow Jones very quickly; thus sell any Index future and enjoy the trade! However I believe this has confirmed the double bottom and expect a 20% rally as we did from Nov 20th. Our market also in November hit a low of 3201, a near perfect 50% retracement from the recent highs…again no coincidences just Fibonacci working in the market price action as do his numbers work in the basis of nature and life itself. The guy makes Leonardo Da Vinci look dumb!

Domestically we saw unemployment rise to a 2 year high and total carnage in shares. This is overdone. Think Fib’ and buy…via futures,cfd’s or whatever,just get long we have seen the bottom.The only caveat I’ll put on that is exit if the Dow closes under 8,000. Trust me I’m a Doctor!

The Foresight

We have seen the lows.I’m not going to churn out again why(see previous reports) as nothing has changed only last nights confirmation of the 61.8% retracement. I have never been this bullish on anything in 28 years of trading. If I’m wrong I’ll stop writing and retire!

Have a great one,

QUOTE OF THE DAY ” To be or not to be.”   Shakespear.        “I do therefore I am”  Socrates.              “Do be do be do”  Frank Sinatra