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Sunday, August 28, 2011

Borrowing From Warren Buffett.....a Good Thing?

The major spin last week was the fact that Warren Buffett lent Bank of America $5 billion. But Warren is no fool, who wouldn’t want to get 11% on their investment guaranteed. Well, that’s pretty much what Warren got with Bank of America.

So what does that tell us, (1) that Warren is a very shrewd and hard nosed investor, and (2) Bank of America is in serious trouble, and is willing to pay that kind of interest for new funds. Just think about it, you only get 2% on a 10 year treasury.

It remains to be seen whether or not Bank of America is a good stock. Right now our Trade Triangle technology still indicates that the trend is down and has been for quite some time. If you are a member of MarketClub you can clearly see this on the charts where our Trade Triangles indicate exits or short sales. Sorry Warren, as we do not yet have 5 billion dollars to invest, we are sticking with our tried and true Trade Triangle approach to the markets.

The 4 week losing streak in equities came to an end last week with a positive bounce of 4.74% for the S&P500. With a positive bounce for equities, investors decided gold and silver had rallied high enough and decided to take some money off the table. That action created heavy selling and profit taking in both metals. By weeks end, gold had managed to recover much of its losses and closed out the week with a loss of 1.34%.

Crude oil and the CRB index both rose 2.99% and 1.84% respectively. The dollar index lost ground for the second week in a row, but remains above key support at 73.50.

Now let’s go to the weekly charts and see what happened last week in the major markets according to our Trade Triangle technology.

S&P500: Change for the week: + 4.74%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Positive
Combined Strength of Trend Score: = – 75

Silver: Change for the week: – 3.68%
Monthly Trade Triangles for Long-Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = + 85

Gold: Change for the week: – 1.34%
Monthly Trade Triangles for Long-Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Positive
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = + 85

Crude Oil: Change for the week: + 2.99%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 70

Dollar Index: Change for the week: – .76%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = – 55

CRB Index: Change for the week: + 1.84%
Monthly Trade Triangles for Long-Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 70

Here's our week ending video....


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