Oct 22, 2007 - Issue #081

Optimum Time To Buy?

Optimum time to buy? Absolutely Not!

The optimum time to initiate a new long position, according to Jesse Livermore, is after a pivot point low has been put in place. We ain't there yet!

How will we know when the time is right? At the risk of alienating that great economist/fundamentalist Larry Kudlow (CNBC'S Kudlow & Company) whom I love and respect, the market will tell us (through good ol' fashioned chart reading) when the time is right. And that time is definitely not now.

What does a bottom look like? What have they looked like in the past? A long tailed candlestick with a close substantially above the open would be nice. Followed by a rally and then a successful retest of the low creating a higher low would be a good scenario. Or perhaps a strong double bottom. Maybe a 'cup and saucer' or an inverted 'head and shoulders'. Important bottoms take time to form. It takes a lot of time, study and effort to recognize.

Even then, pros are careful in putting on new positions or adding to existing ones. Long or short, 'Walk when iniatiating or adding to a line, run when liquidating'.

You must have a trading plan based on sound money management and trade management (they're not the same thing).

In real estate, it's 'location, location, location'. In the market, it's 'timing, timing, timing'.

In the market, patience is not a's a weapon!

Or you could, at reasonable cost, join MarketClub and use their 'Giant Footprints' Triangles for your timing signals. You could do worse. A lot worse.

Dow score card for the week ending 10/19/07.

DJ-30: 13522.02 -571.06 -4.05%. The Real World DJ-30: 55.45 -2.34 -4.05%.

UP: 3, Down: 26, N/C: 1.

Trends (weekly charts): This is the subjective part.

Rising (Generally Higher Highs/Higher Lows) 11 (-5) 37%:


Consolidating (Generally Lower Highs/Higher Lows) 12 (+1) 40%:

AA, -*CAT, -*DIS, -*HON, JNJ, JPM, -*MMM, MSFT, -*PG, T, -*VZ, WMT.

Declining (Generally Lower Highs/Lower Lows) 7 (+4) 23%:

AIG, -*AXP, -*BA, C, -*DD, HD, -*PFE.

+/- denotes change of direction.

* denotes change of category.

Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!

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