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Thursday morning update
By Rob | February 28, 2008
Last night I participated in a meeting of the Investors Business Daily group at MIT-Boston. The room was packed with fellas, most of them equipped with laptops and ready to hear the latest craze in the markets. In interest of the truth, Basil Chapman presented his wave on the markets and according to many participants from the past he has been very correct in calling the January bottom. While I am suspicious of any wave theorist, Basil is a member of this network of respected market analysts and honestly, looking through it I found some people I know are really good.
As the group took a sentiment pulse around, close to 100% were bullishly predispositioned and expected the market to go up 3 months from now. No wonder, after a good 3-day rally.
Now, fine with the optimism, I understand that in the long run you cannot go wrong with buying the market here. (not the toppy commodities, but depressed financials and home-stuff). At the same time, remember there are rallies in bear markets that last months. At the present we broke out of a pennant and held the S&P 500 level well. Bernanke helped with a few rate cutting comments. But watch out, commodities are looking overbought, Jim Rodgers is still around waiting the a big recession, and PowerShares DB Base Metals Fund (DBB) is making new highs. Regardless of how bearish I am in the short run, I also have to keep in mind, that the market today is looking at the year-end, not at tomorrow.
So, the S&P 500 reached its 50-day moving average which is impressive and yet, pay attention to this average, because a lot of institutional investors make decisions here. There is support now at the 1370 level.
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Best books to read:
- The End of Oil: On the Edge of a Perilous New World
- Profits from Natural Resources: How to Make Big Money Investing in Metals, Food, and Energy (Wiley Trading)
- Here is a good book to learn more about solar investments
- The most influential investment book to read in 2008: by ex-Soros legendary fund manager Jim Rodgers “Bull on China
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- Technical Analysis by Murphy
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This chart below I courtesy of Chris Perunna and shows how IBM did following on its giant $18B buyback announcements.
I also want you to read this article on life in China. A friend posted it and is a great summary of his experiences there.
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In addition cell phones have reached the point where demand may slow down. What do you mean, everyone already bought an I-phone? 
Another new tool for aggregating your favorite websites to an one page. I use for this purpose Only2Clicks, and Hyperigo, both of which allow you to organize your favorite websites on one tab-supported page. They come equipped with a few token sample offerings in place, but both are easily customizable for the main purpose: adding your own stuff!
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This below is the state of the market thanks to Dan’s chart:
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The ranking of Chinese stocks: The green is the 1-month price % change, while the blue is the 5-day % change. The yellow is the 1-day % change. Everything is sorted by the 5-day change in order to see the strongest performers this week. I only like SNDA, NTES, CMED and CTRP. BIDU just broker through 20-day moving average which was positive. CEO and LFC are starting to set up. In addition the Chinese ETF is also starting to set up and closed above 20-day and 200-day moving average. Curiously, it is not a clear story yet, because the 50-day MA is hanging above it. While China still has the Olympics growth to look forward to, here in US we have a nasty political debate over why a woman or a person of colour shoud/should not win the elections and Bush’s oil administration that have no clue how to grow the economy or invest in our child’s future. Make sure you don’t take too many trips to Europe this year. I don’t think you will find many bargains there, with the crappy state of the dollar.
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