Big Chart Update

How are we doing?

When I have to view the market from 4,000 miles away I find the good old Big Chart to be a particularly useful way to check the vitals:

		Day’s	Must	Comfort	Break	Next
Index	Current	Move	Hold	Zone	Out	Goal
Dow	13,463	35	13,000	13,300	13,500	14,000
Transports	2,891	57	2,800	2,900	3,000	3,250
S&P	1,476	9	1,470	1,505	1,530	1,550
NYSE	9,606	52	9,400	9,800	10,000	10,250
Nasdaq	2,561	14	2,525	2,550	2,600	2,750
SOX	493	-1	480	490	500	560
Russell	774	7	810	830	850	900
Hang Seng	22,394	486	20,250	20,750	21,000	22,000
Nikkei	17,029	107	17,400	17,700	18,300	18,500
BSE (India)	15,264	331	13,500	14,100	14,725	15,000
DAX	7,557	43	7,300	7,600	8,000	8,200
CAC 40	5,620	0	5,750	6,000	6,100	6,300
FTSE	6,349	40	6,400	6,550	6,600	7,000

It’s a little earlier than usual so perhaps someone can edit this later as Europe isn’t even open yet (BBD wondered how I find time while on vaca but you’d be amazed at how much time one has if you only sleep 4 hrs a night!). Today is a big travel day though so I will leave you with these thoughts:

Dow – Up just 41 points (from the weekend chart)
- …and we are excited about WHAT exactly???
The NYSE actually lost a few points
AND the Nasdaq
AND the SOX
The Russel is 36 points BELOW crisis levels
Hang Seng is still down 50 points after gaining 486
Nikkei gained a few but still redder than red
India is breaking out, if it sticks and the Nikkei follows there is hope!
DAX barely even
CAC still way off and way red
FTSE still way red

On the whole, I think I picked an excellent time to go on vacation! I’ve missed three days and, on balance, NOTHING happened except a bunch of people rushing in and out of positions – great for day traders, not for investors!

If you fancy yourself an investor, a chart like this is invaluable, as it can serve to remind you how little a 400 point gain or loss can be in the grand scheme of things. Don’t let a day’s move in the market’s guide your "invesments." If you think you see a bargain, go for length – you may not make a killing by establishing an ’09 but you will certainly avoid being killed by the whipsaw moves.

In a choppy market, if you can’t be satisfied with taking a (using an example from a comment I just made) 5% one-month profit on a SBUX Jan ’09 $30 then you need to look deep inside yourself and realize that you are not an investor, you are a gambler who can’t live with 60% returns while some of the best fund managers on the planet are losing their shirts.

Rule #4 (trial run) – Remember WHY you entered a position. That means have a goal AND a plan for reaching that goal. Recognize whether that plan is on or off track and realize there is no shame in taking a small loss and reassessing the situation in a crazy market like this.

If you LOVE WFR at this price then why wouldn’t you love 5 ’09 $60s for $14.60 rather than 20 Sept $60s for $3.20? You have 15 more months to make gains, you can hedge all or part by selling closer calls and a $5 dip from here will only take about 20% of your position, vs 50% on the Septembers. After the last 2 weeks I think few of us have the ego to think that we know what’s going to happen after lunch – yet alone after 6 weeks!

Big travel day for me so please, please, please – be careful out there!

– Phil