The Chart du Jour
Just a decade ago in the summer of 1990, I can remember leaving the doors of Goldman Sachs on a balmy afternoon and wondering if Citbank (now Citigroup) was a bargain at $10 a share, or conversely was it perhaps going out of business. The latter part of that query may sound a bit silly in these rarified banking times, but it was a reasonable thought back then given all of Citi's Latin American debt problems. The advent of Brady Bonds solved all that of course.
Now, ten years later I look at the stock of Xerox at $15 3/4 a share (a level we prognosticated would be seen back on June 18th). With that prior Citi missed opportunity in the back of my mind, it's pretty tempting to give this current fallen darling a shot -- even if we are equity bears at heart. After all, the stock was above $60 just nine months ago. This company's intrinsic value can't have changed that much in so short a period of time -- or can it? Its Fibonacci and Elliott rhythms also look nicely complete. Assuming one just gets a bounce at some point, might it not be worth buying 300 shares here at 15 3/4, looking to scalp out of 200 at $23 or so, and keep the other 100 shares thereafter effectively for zero cost?
Meanwhile, of course, Citigroup's valuation is now a joke, and its long term Fibonacci rhythm is largely complete or very close to being so. What a difference a decade can make. It's time to dump this one now, and look to get short here or just a tad higher.
Finally, for those who debunk astrology and its relevance to earthly markets, let's try a small experiment. I write this at 11:45 p.m. Wednesday evening for the record sake.
In his monthly letter written several weeks ago, Arch Crawford says of the day July 27th: "an extreme day for inflation hedges generally. BUY on the open, SELL on the close, or hold for higher on Monday." He then sees "individual emotional balance swamped by mass hsyteria" forthcoming on July 29-31, and a "damper on large mergers" commensurate with the partial solar eclipse on July 30-31. All that sounds pretty nasty, and given Wednesday's equity slide, downright worrisome. If it plays out a la Arch and you hear CNBC reporting on some busted merger deals at month end, remember Arch's sole forecasting method in this instance: the planetary alignments. Then ask yourself if the old expression "as above, so below" doesn't perhaps have some strange validity for reasons unknown to us.
We certainly still like the look and feel of the "spring pattern" evinced in the chart of gold miner Anglogold (shown below).
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