Finding the boundaries of a new trading range
Steve Cook on Disciplined Investing


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   This Week’s Data

    Corporate profits declined over 16% in the fourth quarter:
    February personal income fell .2%, in line with expectations, while February personal spending rose .2% versus estimates of a .3% increase.

    Here is a different look at personal income from an annualized point of view:


    A look at the current state of protectionism:

    This article provides insight into how the markets in toxic assets work and how they caused so many problems:

    The nonstatistical economic headline yesterday was Geithner’s drive to get an uber regulator to oversee risk in non bank financial institutions.  Of course, we had a regulator of risk for banks.  How did that work out?  It does no good to have another layer of bureaucracy to regulate risk if you have no concept of how to define it; my problem is that no one seems to be focusing on that.  A more practical, less intrusive though less encompassing step would be to create a federal regulator for the insurance industry (AIG) versus having 50 (one for each state).



More absurdities from the political class:

  International War Against Radical Islam
    Obama’s foreign policy:

The Market

    Short interest is up:


    Yesterday the DJIA (7924) followed the S&P (832) and most of the other popularly watched indices through its October 2008 to present downtrend.  As you know, I have been of the opinion that stocks are no longer in a downtrend; DJIA’s move just confirms it.  In my simplistic application of technical analysis, stocks are now in a trading range with a lower boundary defined by the March 2009 lows (DJIA 6432, S&P 666).

    The unknown is the upper boundary.  I see three easily identifiable candidate levels: DJIA 8294, S&P 874; DJIA 9036, S&P 940, DJIA 9628, and S&P 1004.  I haven’t a clue which one might end up defining the upper boundary of the trading range or if some other level ultimately proves to be that boundary.  However, for the purposes of managing our Portfolios cash position, I am for the moment focusing on the DJIA 9036, S&P 940 level as the most likely upper boundary, frankly, for no better reason than it is in the middle.

    A contrary opinion:

    I want to reiterate that our investment strategy has moved from a 30-50% cash position to a 20-30% cash position; as of the close yesterday, our Portfolios’ cash position stood at 28.5%.

Posted 03-27-2009 8:38 AM by Steve Cook