- how one technical call lost a lot of people a lot of money;
- why Ben Bernanke is out of ammo; and
- a calm, cold analysis of what could happen to Caterpillar shares.
The 200-Day Rally Posted at 6:31 p.m. EDT on Friday, June 8 Pathetic that what made you the most money this week is exactly what might have cost you most of your year for the last three weeks. Some people aren't going to like this, but what I think was the worst call in a long time was anyone who said, point blank, that the 200-day moving average is all that matters and when it is taken out then you are going to have a big decline. If you remember last week every trader and his brother talked about this concept. We had a guest on CNBC who said that this was it, that you had to sell because of it and he is a highly respected trader. He gave his prognosis after speaking to tons of other traders and the groupthink is totally odious. > > Bull or Bear? Vote in Our Poll I think when we look back at this week we have to remember exactly how irrelevant the charts are at some very big moments. In fact, I am calling this the 200-day rally because it was probably precipitated by all of these know-nothing shorts who bet against the market and then were forced to cover because they heard about the secret deal. It was a week that I wish we had more exposure on (notice I use the traditional term, "exposure," not "risk"), but that's exactly what would have wrecked us for the last five weeks. There was lots of scrambling these last few days and, once again, it defied a lot of patterns. Nothing in the book said we should have had another good day today. After a week like this, frankly, we should just throw the book away or at least the chart book, because the main thing you needed to know to trade positively this week was that many people shorted off the 200-day claptrap and then Spain got so bad that a deal became necessary.