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The market is in a psychological “yoyo” period…

August 14, 2010

Obama’s economic policies are a mix of new order and old chaos. The stock market is reacting by speeding up the alternations between support and resistance. This phenomenon provides an opportunity for the savvy investor to make money. Follow my example:  I plotted January 1, 2010 as my standard 100% (support level) and found out that on April 21 I was at 136.6% (resistance level), on July 4th I was at 118.7%, and today I am at 126%. My strategy for the rest of 2010 is to buy close to my  support level and sell close to my resistance level. Bingo!

This observation is one of about 10 general psychological timing formulas for stock trading. It can provide  guidance only to savvy investors. Calculating what specific shares to buy or sell requires new knowledge of behavioral economics, probably available only in my books, websites and blogs. For a 100 years economists told psychologists to stay away from analyzing market behavior, and most psychologists obliged, becoming sensitive to this turf war. I don’t!

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