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Sounds kind of dirty, right? Actually, it's because of a clean visual that technical analysts use this term. Technical analysts like charts (hence their nickname of "chartists"), and they like to give certain patterns they see neat little names.
Such is the case with the double bottom, which looks on a chart like, well, a double bottom. Think of three mountains (on a chart reflecting a rise in values) separated by two valleys (representing dips in value). The troughs of the valleys, and the size of the first two peaks, are generally the same, so the chart looks like the letter 'W.' The appearance of those two valleys represents a double bottom.
So what? Well, if you're one of those folks who believes in the power of the charts, seeing a double bottom suggests a long-term trend is about to reverse. So, if a stock chart shows shares falling for several months, then seeing a double bottom, chances are good (according to the chartists) that the shares will rise. And vice versa.
But, beware: charts can be a great tool, but they're more art than science. Use any charts with caution.
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Thursday, July 17, 2008
Report: Wachovia Raided by State Regulators
FOXBusiness
![Wachovia Branch [276]](/images/stories/wachovia_branch.jpg)
Federal regulators arrived at the St. Louis headquarters of Wachovia Bank on Thursday, demanding documents and the ability to do interviews on the bank’s auction rate securities department, The Wall Street Journal reported.
Shares of Wachovia (WB) briefly sold off on the news, but rebounded soon after the market had a chance to digest the report.
The investigators included regulators from Missouri, Illinois, Massachusetts, New Jersey and other states, the Journal reported.
According to the Journal, The Missouri Securities Division launched an investigation into Wachovia in April regarding the collapse of the auction-rate securities market. Regulators said Wachovia did not fully comply with the states’ subpoenas, prompting regulators’ visit to the bank’s headquarters today.
Action rate securities are long-term loans that are borrowed at short-term rates. Investment banks would hold auctions for the securities weekly or monthly, but after the credit crunch took its toll on the banks in February, the market seized and investors were unable to sell them. The clients who primarily purchased auction-rate securities were cities, states and other government-related entities.
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