Monday, December 29, 2008

Child-like Mischief

Some things are just too troublesome to write about in detail when you stand so close to the events in question. Suffice it to say that this year I decided to get a Toy for Christmas. I purchased a Sony PlayStation 3 (PS3).

In a way this was an act of madness. I bought the player but I owned no games, no
Blu-Ray discs, and no HDTV. I bought it out of anticipation for the release of the Neil Young Archives in 2009.

I plugged the PS3 into my stereo and listened to samples from my music collection. Just by replacing my old DVD player with the PS3, the same music on the same stereo with the same connections sounded better. Significantly better. I was amazed and it was out of that amazement in the improved quality of sound (not image) that I became a child again. I was spontaneous, in the moment, blazing a
karmic path to maximize my PS3 experience.

The path soon included a 42-inch HDTV. This brought with it some complications that I don't care to flesh out. Let's just say after spending an entire Sunday dealing with various issues everything works fine now. (If anyone ever tells you an HDMI cable can't go bad, don't believe them.)

The Earth in Space screen saver that is available while you play music on the PS3 is a high-definition work of art. And it's just a screen saver. (It was because it looked so cool on my old TV that I decided nothing short of a full upgrade would suffice.)

It is amazing to me that the PS3 is suffering in 2008 compared with competitive formats. We have owned a Wii for about a year, for example. It is nothing compared with what the PS3 can do.

My daughter asked for a game to play with it. She got to pick out what she wanted.

This thing is so much fun. It's a Toy.

(But in the background I can't help hearing the echoed voices of Roger Waters, Harlan Ellison, Derrick Jensen, and Kalle Lasn all haunting me in chorus like the ghosts of Christmas, like the wind, timeless Christmas. Get away! Get away! I am a kid! I'm just a kid!)

Thursday, December 25, 2008

Thursday, December 18, 2008

Boink! (At the 50-day Moving Average)

No one knows.

After receiving
a very bearish Dow Theory confirmation in November the stock market immediately turned sharply upward. I was hoping to buy in to a major rise in the markets but I just didn't realize it would rebound so quickly in the face of so much significantly dire global economic news.

I'm certainly no professional at this.

But, as I mentioned in a earlier post, this is the other edge of a high VIX. The market can jump in either direction rather rapidly. From October into November the Dow essentially lost 2500 points. Then from November 21 to December 8 it gained back about 1500 points.

Like a bouncing ball.

A very quick simplified course in chart reading: The chart above was created by me with BigCharts. It shows Dow activity from late September until today. The "blocks" are candlesticks, ways of showing how much the Dow was up or down on a given day. Dark blocks are down days, clear blocks are up days. The two blue bands framing the blocks are the Bollinger Bands. Well over 90% of all stock action occurs inside the Bollinger Bands. The thin tan or brown line sloping gently downwards is the 50-day moving average. I have selected the day in November that the Dow hit its lowest recent low. You will notice immediately after the lowest low the market rallied up.

From there it hit the 50-day moving average and stalled as indicated in the zoomed in portion of the chart below...

The important thing to note from a chart reading standpoint is that the Dow is struggling at the 50-day moving average. You can clearly see that the action from the past few days has hovered right along the descending line of the average. If this is a bear market rally (a secondary move up in the course of a general move down) at some point the Dow has to rise above and remain above this average. So far, it hasn't had enough umph to do that. The good news is that as long as it wanders around the average the market most likely won't break down in the near future.

The primary trend remains bearish, however. The secondary trend is now perhaps bullish.
The Dow Theory bearish confirmation from November remains meaningful and still holds until the market confirms a trend reversal further up - around the 9600 range.

Unless the market remains above the 50-day average then the average will continue to slowly drop. A couple of weeks above the average, however, will cause a shift. This would not be out of the question in the first quarter of 2009.

If the market manages to raise the 50-day moving average trend line then the next average to watch is the
200-day moving average. This average is much more significant as it reflects a longer term view. Generally, the longer the trend, the more accurately it reflects the conditions of things.

Let's pull back now and look at the last two years of the Dow, this time the thin brown or tan sloping line is the 200-day average.

As you can see, the market was pulling the 200-day average up as it rose bullishly, but then the trend curved lower as the bear took over late in 2007. I have selected the most recent highest high for the market on this chart which was over 14,000 last October. Quite a drop in one year.

But there is reason for hope in this graph as well. According to Dow Theory and many charting theories, the further the market drifts above or below the 200-day average, the sharper the pullback will be toward this average. Taken at face value, if we can get beyond the 50-day average, we could be looking at a ride toward the 10,500 range in the Dow before
resistance is met again at where the 200-day average will be at that time.

The VIX is much lower today indicating stabilizing conditions. We are either building support for a greater bear market rally or we are pausing at resistance before the next drop down.

It might turn out the
Jack Schannep's call for a buy in was right after all. Perhaps the Dow is building support enough to break the bear. The best indication might be a trading range around 8500 give or take 500 points. No meaningful Dow confirmations in that scenario.

And that is what the Dow has been doing since December 8.

No one knows. But it is fascinating to watch.

Saturday, December 13, 2008

Time for the (Rain) Deer Flag

I put out our seasonal holiday flag last weekend and we got five or six inches of rain here over two days soon afterwards. I don't remember the last time it rained like that. So, thanks to the flag for bringing us plenty of badly needed rain.

With the holiday season, I lean toward Rudolph (with his nose so bright). Been decorating the house and playing some Christmas music. My Favorite Christmas CD is a classic from the Vince Guaraldi Trio - the music from A Charlie Brown Christmas. Very relaxing but with a nice, jazzy groove to it.
The other CD I enjoy is Burl Ives: Have a Holly Jolly Christmas. I have danced to the title track with my wife and/or daughter at the start of every holiday season since my daughter was born. She used to love me carrying her and twirling around to the music. Now that she's a bit older she acts somewhat disinterested and we have to dance semi-ballroom style. She ends up giggling anyway at the end, however.
So, you put up with the feigned complaining from her along the lines of: "Oh dad not THAT one again" - as if it were an every week thing.

Sunday, December 7, 2008


Well, it being a very substantial dessert, GMC’s fruit cake is still putting up a fight at our home but we are slowly whittling it down. I must confess that the longer it sits the better it gets. We keep several tablespoons of bourbon sealed in the Tupperware container with it. When you open the container now your olfactory organ is treated to a delightful fruity aroma more potent than it was more than a week ago. The stronger tinge of bourbon while eating the cake is most satisfying.

Yesterday, my daughter attended her cousin’s spend the night birthday party about 2 hours south of here. To save time in retrieving her, I met my sister today a little over half way at the locally (and regionally) famous Varsity Restaurant in Atlanta for lunch.

It’s been some time since I’ve had the pleasure of dining at the Varsity. The old joke among my friends was that you need to periodically eat at “the greasy V” (as we call it) to recalibrate your taste buds back to zero.

The Varsity used to serve their take out food in bags that proudly proclaimed “No Food Over 12 Hours Old.” The restaurant (also billed as “the world’s largest drive-in” for those preferring a curbside epicurean delight) is the quintessential definition of “fast food.”

It has a large sprawling dining area that can seat hundreds of people, all emanating from long central ordering counter. You walk up to any of about a dozen ordering stations, wait in line for a bit and then be on your mark when it’s time to place your order.

The Varsity cashiers and cooks aren’t geared for hesitancy and reflection. You best know what you want before your turn arrives. Being a Varsity novice, my daughter couldn’t really decide what she wanted. So she ended up going last instead of first.

“Whatdaya have,” was offered to my sister and I as more of a command than a question. We ordered while my daughter vacillated, which only gave her an additional 30 seconds. She blurted out something unsure of what she was even getting. The cashier grunted.

I had a Number One. That’s two hot dogs covered in their special spicy pulverized chili with a Coke. But the highlight of the meal was the onion rings. Leaving a tiny puddle of grease the bottom of the small paper bowl containing them, these onion rings are the finest you’ll have anywhere.

All three of us had the rings. Ordinarily my daughter detests onions but she scarfed these down without so much as leaving me an expected leftover to enjoy.

It’s a good thing I don’t eat like this every week but there’s nothing like the greasy V.