And away we go!
We have finally broken through all of our breakout levels and no one is more surprised than I am to see this coming without a pullback (perhaps David Fry – see chart on right). We will, of course, remain cautious through the weekend but we’re already preparing to throw caution to the wind (sort of) as I’ve posted a primer for our Buy/Write Strategy, so we can start picking up the stocks we want at roughly 15-20% discounts. This is why we can afford to be patient as we wait for our breakout levels – WE DON’T MISS ANYTHING! At PSW, we can STILL buy BAC for $14.41(16% off)and C for $3.43 (27% off) and PARD for $3.79 (51% off) and now that we have made our tops, we feel a lot more comfortable working in at those prices than we would have when the market was 20% lower in early July.
Hopefullythat floor holds (Dow 8,000). We’re looking good so farasour breakout levelshave been Dow 9,600, S&P 1,030, Nasdaq 2,038, NYSE 6,700 and Russell 577 and now they form a floor we will be able to watch so we’ll know when to be worried that the rally is running out of steam.
We are also well-protected with our disaster hedges from the Aug 24th post and, if you don’t have any – it’s still a good idea to get some (and cheaper now too!).Only 2 33% (off thetop)levels remain and that’s 1,056 on the S&P and 6,959 on theNYSE and we will be officially raising our mid-point from Dow 8,650to9,500 if we can take those out and hold them for a day or two, which will make 9,000 our new expected floor on theDow and that means we should be buying here! There’s no point in having watch levels if we don’t act on them.
The dollar continues to fall and that’s supporting oil and gold but not the Nikkei, who fell 100 points off their open and finished down .666% for the day as the dollar failed to hold 91 Yen against the world’s mightiest currency. Even a 50-point “stick save” into the Nikkei close couldn’t paint a positive close for the day. A 100-point boost into the close was enough to give the Hang Seng a 91 point gain on the day, capping off a 700-point week (3.5%) and exactly 10% off the September 2nd low at 19,500, matching the Aug 4th…
