Click chart to enlargeThe 30 day moving average shown on the above chart of FXI indicates that at today's open (27.3 or so), FXI will hit resistance. Moving averages aren't quite as accurate on the way down as they are on the way up, except for the 200 day moving average which is widely used to mark the start and end of major market cycles.
Nevertheless, FXI will either get rejected at the 30dma (as it has the last 4 times it rallied to it), or it will break through it. Of course there is downside risk, but one may consider buying FXP and watching FXI for clues as to its next major move. FXP is double short FXI.
As always, only a decisive close above the moving average counts as a break of it. This would signal a significant change to the rate of the collapse of the index, but not necessarily signal that a bottom has been reached. Only a break of the 200 day moving average is considered to end a bear market.
22 comments:
FXI sure seems like it's in a much better risk/reward area than FXP does at this point. Even if FXI doesn't break through 27.30 this time around, don't the odds seem to favor that outcome over the long run with China's stimulus package now lurking in the background? I was thinking of picking up some FXP on the dip but maybe it'd be wiser to wait to pick up FXI @ 20...if it ever gets back down there that is.
Admittedly FXP confuses me. Last time FXP was at 66.50 the DOW was at 13,000. Now the DOW is at 9,000 and where is FXP? 66.50! WTF?!?!
Just bought some fxp at 66. Over the short term, maybe it goes to 40, a loss of 35% or so, or it goes to 150, a gain of 120% or so.
Pergamon, because fxp doubles fxi's percentage on a DAILY basis, it gets very skewed over time.
Today I Bought more FXP also.
At this price is a bargain.
Hi Snot,
Here is Obama play and making new high: STEM and GERN. Please let me know what you think?
Okay, that makes sense. I didn't realize that's how FXP worked.
Thanks for answering my question Snot and I love the blog!
and btw, is very funny how AIG got bailed out twice.
And Circuit City filed for chapter 11
just GOV'T conection! Too big to FAIL. LOL
Yes, AIG is f#%@$ing angering. I'm glad we taxpayers footed the bill for a $400K party for their top "performers" after they knew they were going under. Every exec in that company should be fired immediately.
Every business is important but GOV'T is hand pick and decide which one should survive! NOT Fair!
Government hand selected Goldman Sachs to survive. It's probably a good long term hold, but look at the chart today - at new lows, it's a falling knife!
Those Obama plays are having their 15 minutes in the spotlight right now. It'll be years if ever before those penny stocks become real companies. They could very easily retreat to their lows after the initial hype subsides, as both of them have negative earnings to date.
We haven't bought any DDM or SSO today. If top of range is 40 for DDM and bottom of range is 30, paying 35 just doesn't make sense right now.
Anyone watching GOOG? Looks like it's ready to break down soon on a daily chart. Good news for Gary's portfolio.
Goog has support of 314 if it break, watch out below...
Where is all the hype for CHINA STIMULUS? Market broke down...
Anon and Snot, yes, you guys are right about staying in the game to keep sharp. If you don't have real money on the line it becomes too easy to become detached or complacent. Snot, in an 'I told you so' moment, we just had yet another whompimg announcement on the weekend! For those holding etf's like FXP over the weekend, good luck. And, yes, Goldman was handpicked to survive, so may be a good long term hold. And, yes, it appears that some folks had prior knowledge of the weekend's coming action. Is there a way to trace back and see who was doing the heavy selling?
Question: AIG gets two fast bailouts (yeah, yeah, can't let those boys fail now right?), yet the Auto's are sucking hind teat all the way. Folks, we are looking at potentially several tens of thousands of jobs permanantly gone. Is this good for our economy? How are we going to work, or produce our way out of this? We can no longer finance our way out as we did before.
The automakers will probably get some kind of a bailout package. There are just too many jobs on the line, not to mention a very severe blow to American psychology if they fail.
Let AUTO INDUSTRY goes BK. They have bad business model. Incompetent executive. They make car that nobody want to buy. They can not compete and keep loosing money. Why should taxpayer keep bail out all the FAIL business...Let the market makes itself out of the trouble then we can call bottom...
It's not quite that simple. Detroit made cars that people wanted to buy. At the same time, they did fail to develop cars that would compete with foreign corps. These massive industries don't turn on a dime, so when gas prices spiked (what really was that all about?) they were caught unawares. But look at where we are now, with prices around 2.20 or so. Think about it: at the very moment when the Big Three are on the ropes, and trying desperately to turn things around, we have this TEMPORARY surge in gas prices. A perfect storm. In this business world, I no longer believe in coincidences.
Snot, here's my short term prediction: we have a little upward tick here and there, but sometime in the next three months or so the big ugly will happen and we test, then go right through the recent lows. Here's why: a) an abscence of any real catalyst for improving market conditions, and b) everybody's broke (including business and banking), and can no longer borrow.
One of the biggest differences between the US and China bailouts is that the US is forced to use all borrowed money, but the Chinese have over a trillion in reserves. Nothing like having money in the bank.
Sounds like a very good prediction. You're right that there's no catalyst. We've already had a million catalysts and none of them have convinced people to jump back into the market.
The fate of the stock market short term is in the hands of Walmart. If people aren't shopping there, they aren't shopping at all. Walmart reports this Thursday. If they disappoint, expect all retailers to sell off in force.
Nobody has $$$ any more. Their house is NOT ATM marchine. All credit card is max out and lender is reduce credit limit. NO $$$.
Snot,
Found your blog several months ago while researching reverse ETF's including FXP, and have been reading most days since. Thanks for your time. I have a question regarding an uncoupling of the DOW from FXP. I see you bought FXP today but I assume you have considered a possible divergence. I am impressed by the China plan. It is a huge amount of well targeted cash. Not enough? Is there enough? Thanks again.
Andrew
Feelin' kind of chatty today. Snot, awhile back you said something about those who read/follow this blog will make a killing in the next bull run. I'm beginning to agree.
Btw, good buy earlier today! I didn't catch it, then procrastinated too long to make much of a difference. What's your take on the markets' reaction so far? As I write this FXP is back up to 74.55. Does this seem to be more of just plain market pessimism?
Post a Comment