Ian Woodward's Investing Blog

How High the Moon…Follow Up

Thanks to those who gave me comments, including Charlie who is looking for a Winky Winky handed to him on a Platter.  Charlie Wrote:

Charlie Willey Says: January 27th, 2013 at 6:43 am   edit

Ian – Thanks for the multiple scenarios you send along with your discussions.  You provide much stimulus for thought on this end.  Still, you stay ahead of me.  But I know to look for the little ‘winky-winkies’ along the way and sooner or later I say, “There’s one, oh, and there’s another.”

- Charlie Willey

Charlie, I gave it right there for you to decipher, but the question for you is “Do you have the stomach to watch the Markets all trot down five buckets and you are prepared to sit and wait one more day?”  Now it’s a case of your stomach, and only you can know that.  Sad to say that you must wait one more day to know whether History Repeats itself for the 3rd. Year in a row or this time on the day after the Indexes all head down 5 buckets (say), it goes down further.  Don’t curse at me and say “Coulda, shoulda, woulda” old buddy.  So the choices are simple:

1.  If you have a weak stomach and want to preserve capital even if it is a Fakey, you take it OFF during that very bad day or

2. You say, no I will give it only one more morning to see if the markets bounce back that next day:

a. If they bounce up one bucket, you stay to watch the next day and with luck you breathe a sigh of relief and the market hops back up one bucket and then four buckets as it did in both 2011 and 2012 and you have not been faked out, or

b.  It continues to trot on down and you know this is no Fakey, and you better run for the hills or turn to shorting.

Now you are saying “Come on Ian, where on earth did you conjure up that Winky-Winky?” and I say sometimes I want you do some homework, because in this case we are talking about stomachs and NOT MARKETS and I have drummed it into your heads “Every stomach is different”…and that is what the Big Guns prey on!  Just stare at this chart and you will see the tea leaves tell you what I have just told you:

Moon Pat 2b

I’m sorry I didn’t paint the upper bounce green for the next day after the big 5 bucket drop in 2011, but you can see that in both cases they bounced UP one bucket and then a hefty 4 Buckets the following day.  Coincidence you say,  I say fine, but that is all I need for a clue.   It’s called Reading the Tea Leafs as well as enjoying the tea…the bigger picture related to Fear and Greed.

Now Charlie, I am still waiting for that 3rd. Million, and sad to say no one has sent me that yet!  They all say they are still working on that 2nd Million for their wife!

Best of luck,

Ian.

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