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Tuesday, 9 October 2007

The Shape of Things Now - A Follow On Letter 3 of 2007.

First published on the 15th March 07

Interesting times eh? I won't delve into the complexities of what caused the moves in the markets, you are probably getting to the point of saturation with all the speculation as to the whys and wherefores. So instead I'll just do a quick update, mostly involving charts. As I am an unknown "uurg" let me point you to the original article that this letter is an update to:

So, as you have just read, I am following a wedge type pattern that I referred to as the shape. This shape has occurred at various times throughout market history, in various classes of assets. Over on I have a bulletin board running where I posted up charts as the pattern completed its topping action, in various markets. I was not surprised by the global drop on the 26/27 Feb.

Okay - that?s enough patting my own back, let me redress the balance - I got silver wrong at the time, a timely warning in the current environment and it cost me 50 points. You can imagine my somewhat peeved attitude when it finally did let go from its recent high....gurus eh? I'm just glad I didn't charge myself subscription to give myself a duff call. It does however point out that patterns. shapes and fractals are only good until they are not. Blindly following someone else can cost you money. A lot of money. (and if anyone starts on about FRNs, fiat this, unbacked that, I shall ignore them, I use the term money in the uneducated sense.)

Now I am waffling, enough! Here are some charts:

The Nikkei 1997-2000 was drawn up by Dan Basch.

Want some more? Of course you do....

The "or" count is the alternative for this chart, please take a few seconds to realise what I think may happen.

The following chart is the FTSE 100, what I liked about this one was the small pattern/shape that formed from the 3rd March, the chart was posted on the 12th.

The call was to re-visit the low.

So we are at the stage now where, if the pattern is going to break down, it'll happen very soon, we are either going much lower imminently or, if that R2K pattern plays out, a new high and then a revisit the 2003 lows. Simple observation will show us the way. I do like inflection points in the markets, don't you?

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