Wednesday, October 8, 2008

$SPX 783 is in Play, Ladies and Gents

Using the Fibonacci Fan study on my it is amazing how we have stopped precisely on the 78.3 retracement line drawn from the low of 2003 to the high of the Fall of 2007.

This, to me means, if we break this last fan, its down to the low of $SPX 783.

I've been keeping small and have sold a bull call spread with the SPY at NOV 86/84 and I'll probably sell another this am.

In my 401K at work I've been dribbling out of my 60% US Treasuries position taken last Spring, figuring this is the sale of the decade (my time horizon on my 401K is about 20 years.)

Look for volume to start drying up (decreasing), caused by the last of the baby boomers selling their overweighted stock positions, the last of the hedge funds to liquidate, etc. At a certain point there will only be us long-termers in 401Ks, IRAs, pension funds and Warren Buffet types who will not sell.

All in all, as a 39 year old, I really appreciate this sale which is allowing me to take advantage 2003/2004 prices in my 401K.

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