Chart Spotlight

We have been noticing signs of a bottom beginning to form. We sensed that much of the liquidations and margin calls hedge funds and others encountered are abating. The sentiment is so extremely negative right now and that is often a positive indicator. The volatility last week looked similar to the type of volatility we had at the March lows? For the last several weeks every rally was met by intense selling. Late last week we started to notice that many pullbacks were met by buyers with a little more staying power than before.

Above is a chart of the Nasdaq 100 and the inverse ETF (Exchange Traded Fund) for that index. As you can see the NDX made a double bottom last week and the second bottom the MACD (moving average convergence divergence) was moving higher, this is a positive sign. The PSQ made a double top with the second top showing a lower MACD, what is called a negative divergence. This to us is a decent piece of the puzzle that a bottom is forming. We believe we will see more confirming data this week and could be in for higher prices in the coming weeks. If the SEC helps out with enforcing the naked shorting regs and reinstitution of the uptick rule we mentioned, the size of the rally could surprise many.

Did You Know…

When Ben Bernanke took over a vacant slot on the Federal Reserve’s Board of Governors in August 2002, he was required to set aside the 120 pages he had written for a book that he began 2 years earlier. A New York City publisher had paid Bernanke an advance on a book that was to be titled “Age of Delusion: How politicians and central bankers created the Great Depression” (source: Wall Street Journal, Federal Reserve).


Final Thought

“There's no trick to being a humorist when you have the whole government working for you” – Will Rogers