Thursday, February 10, 2011

The Violent Declines the Follow Overbought Rallies

I am as skeptical as the next guy about technical analysis, maybe more so, so I was kind of intrigued when Robert McHugh of Main Line Investors wrote an essay titled “Time Analysis of the Coming Market Top.”

He writes, “We have identified when an extended overbought rally has likely reached its expiration date.” And what is this time frame? “Two and a half months,” he says.

This “two and half months” time frame is particularly intriguing to me, as this is the approximate time it took for my wife to realize that marrying me was the worst mistake of her Whole Freaking Life (WFL).

Without showing the usual sympathy that my wife gets from her friends and family, the parallels are eerily obvious when he goes on that “once this condition reaches the 2.5 month age, the rally not only ends, but a sharp, sometimes violent decline begins.”

Violent declines! That’s it! Of course, there are those who say that since she did not actually hit me with anything that she threw at me, it cannot be termed “violent,” although nobody is contending that it wasn’t a “decline” in our relationship. (more)

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