Sunday, November 9, 2008

Equivolume Charts -- F, GM, GE, INTC, MSFT

these symbols had the largest volume on Friday of the S&P 500 components, excluding financials.

Ford has a Negative Book Value! yet, it seems to be making some attempt at forming a short-term bottom. if this pushes up at all (which I wouldn't be betting on; a total craps shoot) a target would be the volume gap above 3. in an extremely exuberant mood I suppose a pump to the low-4s could be possible too.

I suppose there is something of a volume gap at 8, but this is just a classic bankruptcy chart. a close below 4 and this is going into receivership (or a bailout which would amount to the same thing) within a month. incidentally, the price objective on the point and figure chart is also Zero (0). take a looksie.

perhaps one of these car makers will survive and not the other. I suppose a lot of the game now in the market and Washington is to guess which one. my first car was a '67 Camaro RS. a couple of my friends had Mustangs but they were obviously inferior to mine. anyways these days I don't drive and I don't care much except to quote the classics:

There is no profit in separating the dross from the chaff. Spinach is spinach, wherever it grows, and we say the hell with it. -- The Underground Grammarian

I'm holdin' out for that gap at 35! kidding. if this ever trades above 25 again it'll be a miracle. but Obama says he's going to spend like $200 billion on alternative energy boondoggles, I'm sure GE gonna get a nice chunk of that. you Know if they use their 'ecomagination'. I haven't watched tv in forever, are they still running those ridiculous commercials?

there's this pseudo-inverse-head-n-shoulders pattern on a lot of stocks now. it's the prevailing pattern in the market. I suppose I shouldn't completely dismiss its potential, but even accepting the potential for a bounce from here, the supply of stock should be overwhelming in the 18 to 20 range. I just saw an ad on yahoo finance from vanguard that said something like 'a long term perspective is more important now than ever.' I completely agree. so don't forget that Intel is down about 80% from its all time high. hell, if it ever goes to 10 bucks (patience) it might be a decent buy. although fair warning that the next era of investing won't be favorable to entities reliant on Intellectual Property protections.

I spoke about the importance of support at 21 last week (click here), and I really just can't emphasis this enough. the price action of Microsoft last week made me very suspicious of sustained gains for the broader market and looking at it this week makes me doubly suspicious. on a positive note, daily volume has been on the decline since the initial bottom last month and declining volume over the length of the formation is one hallmark of a bottom. if it weren't for that I'd have no hesitation predicting this dropping to 18 in a few weeks, cus this chart and the longer-term charts just look horrible.

to summarize, none of these charts look very bullish, although a short-term rally cannot be dismissed out of hand. but whether there is a bounce first or not, it seems probable that these and the majority of other stocks will hit new lows fairly soon. we are looking for a test of the 2002 lows on the S&P. (target in the high 700s.) from there another good counter-trend rally could develop, one that will convince many that the market hit bottom. but another decline late winter or spring should be expected, targeting <700 on the index. (see, I'm starting to believe my own bullshit already...) by that time we hope that there will be so many bankruptcies that the index will have to undergo substantial reconfiguration of components. in other words, the S&P 500 this time next year should be a lot healthier than it is at present.