I use technical analysis to help make investing decisions, and I thought you might like to know how I’m going to play this chart. In investing I almost always (except when I am stupid) follow the trend. Clearly Bush’s popularity has been in a downtrend, but that may be changing. Notice that the recent lows are higher than the May 2006 low.
Click for a legible version.
There may be a double bottom forming, which would signal the start of a new uptrend. However, his approval rating needs to climb above the October 2006 highs before I’ll have anything good to say about him. Preferably it will break out above that resistance with high confirming volume of people participating in the poll.
As you may have noticed from previous posts, I’ve been short Bush since the first election. 9/11 put me way underwater on the trade, but unlike the sissies that ran for cover, I stuck with my position and rode it out. In fact, I added to it. By the beginning of the Iraq war, I was all in. I’ve been loathing the Bush administration with everything I’ve got ever since, and it’s been my best trade of all time.
But, since crowd sentiment has turned so negative on Bush, it’s time to cover my short. One more piece of really bad news could make the bears capitulate, and set up a perfect double bottom. Exiting the trade at that point would maximize my gain, but I don’t want to be greedy.
Like I said, I’m not going to start liking him yet. At this point, that would be catching a falling knife. I need to see some evidence of a new uptrend first. I’m just going neutral. That frees up a lot of emotion that I can put to work somewhere else. I’m looking for something to invest in on the long side. Barack Obama seems to be in a pretty steady uptrend.