Thomas
DeChastelain
Memorial Archives

Getting Down To The Short Strokes
posted Jul 19, 2004 at 06:52PM

I have spent a lot of time talking about liquidity or the lack thereof. Market action, for the most part has conveniently supported that view.

I say conveniently because one could argue that recent market action is simply standard corrective action and there is no problem with liquidity.

One way or another we are going to find out soon. Charts are reaching critical junctures that could very well determine what is going to happen going forward into the elections.



In bull markets supports hold and resistances are overcome. The Nasdaq is nearing critical multi-line support, and getting there in good (i.e.oversold) technical shape, and, ironically just in time for the Fed's "soothing" words.

If the bull is alive then this should hold. If there is liquidity in the system then it should hold, because it is such an "obvious" buy point...if it breaks then the forecast calls for pain and lots of it.



Similar situation except on a slightly shorter term timeframe. We have trend-line and moving average support with bullion reasonably steady. Again an obvious buy point..if it doesn't get bought it smacks of just not enough money being out there.



CDU is one of a number of stocks that I trade/track.

Lean on fundamentals (earnings, proven reserves) but with blue-sky moonshot potential. It is the kind of stock that thrives on hyper-liquidity, bullish sentiment environments, and shrivels in illiquid, bearish sentiment and tends to lead the sector in one direction or the other.

I have been watching the triangle develop as a check on my own views...if I as wrong then this stock should be resolving the triangle to the upside..with very nice measured move targets.

Today's action has done nothing to change my mind. To me, from a trader's perspective this is clearly a case when it is safer to buy this stock at a higher price once it has broken the resistance trend-line.

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