Technical analysis is an extremely helpful discipline for stock investors. Whereas
fundamental analysis tells us what financial people are thinking, technical analysis tells
us how people are actually voting with their money. Without doubt, both forms of stock
market analysis are critical to success and profitability.

Source: Market Edge Weekly Commentary of November 23rd

Last edited on: 11-23-2007 11:21 pm

ssboy, i agree with you about the #5, that's what i actually meant originally, there is
nothing magical about it. I add that because many people follow Jim strictly on his 5
holdings advice, while at the same time not listening to him about 5-10 holdings. So i
just threw that in there.

Michael - typically, IPO does stand for Initially Priced Outrageously. But if you're able
to be in, actually in on the IPO, you can get information on the company. When Jim
mentioned the MA IPO i jumped on it. So it is not to say im against speculation, but it is
not for every market or for every person. Perhaps Biotech speculation works here, but i
cant think of much else.

I disagree with everything domestic being speculative, in fact I'm somewhat the other way
around, but is always something that is debatable.

if your against speculation then I take it you don't invest in IPO's? after all there is
no data on them other than what they do to make money....if they make anything.

By 5, I meant 5 positions. Not 4 or 6 positions, but 5. I don't agree with diversifying
into 5 different sectors if only 3 sectors are performing. In that case I would consider
2 of those positions speculative, even if those stocks showed themselves to be winners,
bucking the trend. In one respect, I don'tagree with Cramer's idea of speculation (or
maybe I misunderstand it). However, in a market like this, one could argue that any
position is "speculative". ... Shorting ETFC is very brave.

I don't bash techies. If what they do makes them money, more power to them. We bash what
we don't understand.... I'm a fundie and fundamentally, I see a lot of great stocks out
there. However, the market just isn't willing to pay for them. A techie can better
dissect the psychology behind it than any fundie. ... BTW, know of any good books on
technical analysis by chance?

So where am I invested? I'm 80% in foreign. Anything domestic is speculative (including
seculars)

Just play the tape if you want to win in this market.

Last edited on: 11-23-2007 02:03 am

and those that dont or refuse to are often in the dark when it comes to day to day moves
(which is to say if they dont care about day to day moves, there isnt as much need). I
remember earlier this month we couldn't hold above 1520 on the S&P500 and i said time to
sell, and i know a few people who are strict "fundies" who just blasted me for it, on
answers and friends of mine. Then the next day we broke 1490 and i said get short the
market, and some guy on here sent me a message saying i was, and i quote, "a stupid techie
who was short the market and just wanted to scare people and i must be bitter about the
FACT that we were going to 1600 on the S&P".

im not quite sure which of us was the bitter one, considering i prefer to be bullish,but i
thought it was a great highlight to how hurt many investors are who totally ignore
technicals. I love fundamentals, just scroll up to see how much i believe in book value,
but i believe knowing key support levels on the indicies is very valuable

so that's just my style, and i think everyone has to find their own. So if you're
absolutely comfortable with your style, in this market, I'd hesitate to change your style
any. I personally, if i were to imagine myself a long only, i would not only get more
conservative in a recession but for a retirement fund i would be more conservative
anyways. But once again, that's just me, i know people who win in all kinds of ways, if
your way works for you that's fantastic.

as for technicals, ive often felt those who follow Jim in their hatred for technicals
don't quite grasp where he is coming from. Jim often talks about reading the tape, and
that's technicals. Does it mean you find what to buy based on technicals? absolutely not,
ive only met a very few technicians who subscribe to that belief. I'd like to say that
knowing the technicals will help anyone understand why the market is at where it is on a
given day.

ssboy - "What makes the number 5 the center of debate?" do you mean my fifth point or 5
positions in a portfolio? Allocation of capital is always key. What I would say is right
now is not the time to speculate, I'd prefer that money in cash or fixed income of some
breed. I've actually never liked speculation in the way Jim Cramer advocates. I have
nothing against doing it, just not for me. As someone who shorts, uses derivatives, plays
risk arbitrage when possible, I have enough "speculation" in my portfolio as it is.

As for my allocation, I'm 80% invested, but im also 40% short. Essentially, if I were to
pick away at some financials (which i have been considering), id have the same amount of
capital in shorting the XLF or holding SKF. Or something I am doing, have continued to do,
I'm long MA and short COF. Another example of this play is long SCHW short ETFC.

as for zladyoh's question on the banks, ill answer it this way, i think there is value
there (and plenty of value traps). Many of these large banks are not leaps and bounds away
from trading at book value. And hell, BSC is trading below its TAGNIBLE book value, they
even wiped off all of their book that was not tangible. This could be telling in one of
two ways, either bear is the best value play of the decade and bill miller is right on, or
even the tangible book highly questionable. So I think, given the right homework, you can
find true value in that name anywhere below $90. I could give you PNC, trading 1.87
book/market and 1.6 Price/book with a 3.71 yield. So i can find value in the banks in
select names, but i can't find any real "safety" in this market. So i can find value, the
rails have it too, will they trade down? probably.

as well as reduce your beta or market exposure. This isn't to say you cant lose doing
things, just ask those runing goldmans global alpha fund. But i believe if one is to start
in the market right now going 30% long, 30% in SH (which has a 5% dividend as well) and
10% fixed income, 20% cash, that they could beat the market (that of which is not to say
they will make money, just not lose as much if they are long only).