Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Archive for June 2010

Be wary of distribution days in a young rally

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The June 2010 rally attempt began June 8, at Point A (see below), as the market indexes undercut the prior low price, but closed higher.  At Point B, June 15, the market gave a Follow Through Day on the 6th day of a rally attempt, which historically bodes well.  (A Follow Through Day is thought of as a confirmation that the correction has ended and a new rally has begun. The Investor’s Business Daily reports that a Follow Through Day on Day 4-7 of the rally attempt is usually a strong signal.)

At Point C, June 21, the market made a strong advance during the day, but retreated and closed lower.  That reversal was quickly followed in three of the four next trading sessions by distribution days of lower closes on volume that is higher than the prior day.  Therefore yesterday’s 268 pt drubbing of the DJIA (and 3% loss in the Nasdaq) cannot be too surprising.

We are in a correction. The plan from this point is to wait for the next eventual and inevitable Follow Through Day signal.

Be wary of quick distribution days after a rally begins

Written by heyercapital

June 30, 2010 at 10:14 am

Can We Get Ahead by Picking Each Other’s Pockets?

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Here is an excellent post from the Mises.org crew.  As a further enticement, here are the mini-headlines with in the post:

C + I + G = Baloney

Victims of a Failed Economic Theory

Government Spending Is a Parasite on the Private Economy

Or, in a paragraph:

The key fallacy embedded in Keynesian economics and the GNP equation is the idea that government spending adds to an economy’s health. In reality, the opposite is true: government spending subtracts from an economy’s health. The real economy is the private economy — there is no other. Government spending must come out of the private economy.

Written by heyercapital

June 29, 2010 at 11:34 am