Stocks closed lower again. The S&P got hit hard, with a little less of a loss in the Nasdaq. There was over a 300 point swing in the Dow from high to low. It looks like I took the mechanical bull out of the box in the upper left corner a little early. But the bear is still appropriate. Gold rebounded a bit. The Baltic Dry was flat, with a little rebound in the FXI , some rebound in the BIDU bubble, as well as some of the other overseas markets. The chart above is the Nasdaq Composite with the Nasdaq Advance/Decline line in the sub-graph. The cyan line is a moving average of the A/D line. The Advance/Decline line shows continuing deterioration in this market. There were many divergences between advancing prices and a deteriorating A/D line over the last year. Good buy signal are often accompanied by declining prices with an upward divergent pattern in the A/D line, which hasn’t even come close to occurring so far. Every new low in price is accompanied by lower lows in the A/D line. This may be getting a bit overdone on the downside, but the trends are still certainly down. The A/D line on the NYSE, which I use for the S&P, is slightly less in a freefall, but still pointing down. As always, counter-trend rallies in downtrends can be violent and often tradeable, but probably best represent good shorting opportunities.
I just read a pretty good book. I actually read it some time ago and forgot that I had read it, so I ordered it on my Amazon store and quickly realized that I had already read the book, but the second time around I couldn’t put it down. It is called “The Winning Investment Habits of Warren Buffett and George Soros” by Mark Tier. I must say I don’t like the politics of either man. In fact I heard George Soros speak at an event in Seattle a couple of years ago and I got so upset at what he said I wanted to throw a tomato at him. It’s probably a good thing that I didn’t have any tomatoes on me. But it is interesting reading about some of their ideas, or at least the author’s interpretation of their trading ideas. Buffett and Soros have trading approaches that couldn’t be further apart, but there are still many similarities in the way they think. It’s a cheap book, about ten bucks. I have a link on the left side if you are interested. I think it was well worth reading, and twice so far. I think it is much more relevant than the many trading psychology books that are on most traders must read list. I think most of those books are useless.