Turbulence

Might want to think about fastening those seat belts if, like me, you're up in the middle of the Sydney night following the markets. On the basis of one wizzard's estimations, the US stock market's support levels are "10,400 for the Dow Industrials, 1210 for the SPX and 2100 on the Nasdaq." (http://bigpicture.typepad.com/comments/2005/09/finding_a_floor.html) With the meter running out before landfall and the lovely meter reader on her way, the markets are flirting with those levels; indeed, the DJIA and Nasdaq have been marginally pierced as I write this (at 2:20 a.m. my Sydney time).

Years ago, when support levels were approaching, I tended to sell, in panic anticipation of the breach. But that legend of the night desk at Ords, Billy Burton would yell at me, "you're selling support?! That's why they call it "support" you idiot!" It's only if support is broken that you should sell, and that's why they have stop-loss strategies.

Of course, all that is theory and assumes we can really define support, effect effective stop-loss, etc. Do you remember that Star Wars scene where Yoda raises Luke's spaceship from the swamp with a mighty lifting of his arm? In this case you have to contemplate a bigger imponderable of support: the Greenspan put. If those levels are indeed "good", this may be a great buying opportunity. Remember what happened when Katrina came ashore? Hint: http://guambatstew.blogspot.com/2005/09/heartless-mother.html and remember the PPT? Hint: http://guambatstew.blogspot.com/2005/09/cant-you-just-picture-alan-greenspan.html

Update, postscript, re-post, whatever: It's now 3:45 a.m. my time. The DJIA has turned around, up 55+ points. That Billy Burton dude was a legend.