Waiting for Policy and Technical Resonance

2008/8/28 15:10:21

Right now, neither policy nor technicals alone are sufficient to construct a genuine medium-term bottom. We must wait for the two to produce a resonance effect. On the policy side, efficiency remains low. On the technical side, even the most basic moving average systems haven't been properly repaired. Therefore, forcing the issue has little meaning.

Under current conditions, from a medium-term perspective, the possibility of hubs at various levels continuously expanding and overlapping to complete a bottom formation is growing. In other words, first the market moves sideways, then waits for the resonance moment to arrive, generating the first impetus for a breakout.

Tomorrow enters another period of anticipating news. Last week's participants already showed flagging enthusiasm — what about this week remains to be seen. Then comes another cycle: if there's news, we gauge short-term oscillation strength by its weight; if not, that provides an excuse to test downward. Of course, just like this week, ending up in yet another equilibrium pattern wouldn't be the least bit surprising.

Right now, the only thing needed is patience. For short-term sprinters, there are actually quite a few opportunities, particularly among individual stocks. For those with a medium-term outlook, continue making short-term trades to keep reducing overall cost — that doesn't require much effort. As for those with zero feel for the market, just sit on the sidelines and wait at least until the bottom formation is thoroughly established before doing anything.