Bottom or bear rally?

[Jess9]

Bought a few shares which look well oversold. P's MSI of Dow and S&P were enough to entice me back into ASX today. That said will be watching these very very carefully.

[ratkin]

The great share sale is about to end , must be time for you all to buy back the ones you recently sold. Your brokers will be pleased.


I went shopping for a plasma with the wife yesterday

Wife: Oh look that tv is 100 dollars cheaper than last week , its on sale.

me: Never buy in a downtrend , we will wait for its price to recover, then buy it

Wife: But that logic is crazy

Me : Thats what they do on sharechat , and they know everything

Wife : No wonder the markets are screwed



Good news !! We went back to the shop yesterday , and the price of the TV i was after had risen in price 10%. I couldnt believe my luck. I quickly strode over to the sales assistant and said , i would like to buy that TV

Salesman : Wise choice sir , its the last one left , its been in great demand, its price is rising by the day , people cant get enough of them

wife : What about those over there , they are half the price

salesman : They are at factory price , nobody wants them , they are seen as dull and boring

Wife : But the pictures the same

Me : No , if you look carefully you can see the sky is bluer on the expensive tv. We are not buying the cheap one , its cheap for a reason


As we were loading our brand new, state of the art tv into the car my wifes mood seemed to soften

wife : It is a lovely looking tv , it should last us for years

ME : Dont be silly dear , you should never fall in love with your tv . If its price falls again we shall have to sell it on trade me.

Wife : thats madness

Me : You never hold on to something thats falling in price , thats what they say on sharetrader , and they know everything

Wife : when we get home im putting you on trade me

[Hoop]

A must buy stock...falling in value ...fraction of its old price .. to make one now would cost x100 times the price so FA says buy...a steal...average down and buy many many units and wait for the upturn ..wow got to be good value...TA has got this one wrong, get in now before the market for this stock corrects.

Diana Rigg (http://en.wikipedia.org/wiki/Diana_Rigg) for The Avengers series...what a gal back then. She's 71 now


2406

[evilroyrule]

dow going gang busters today. what a shame we closed. despite the recent return to strength, my portfolio has done bugger all. that will learn me for nall my money into spec stocks. sometihng to be said for diversification. oh well, at least they stopped going backwards!!!!

[Jess9]

Yes. Nice to see all leaders (dow, S&P and FTSE) all over 1% today. Might be that leg up starting with MSI's change to strength. All back in now. Will hop back out if P call a red. A heads up will be appreciated sir!

[Hoop]

dow going gang busters today. what a shame we closed. despite the recent return to strength, my portfolio has done bugger all. that will learn me for nall my money into spec stocks. something to be said for diversification. oh well, at least they stopped going backwards!!!!

No shame... .patience Evil...you only have to wait until Monday :cool:.....

[STRAT]

A must buy stock...falling in value ...fraction of its old price .. to make one now would cost x100 times the price so FA says buy...a steal...average down and buy many many units and wait for the upturn ..wow got to be good value...TA has got this one wrong, get in now before the market for this stock corrects.

Diana Rigg (http://en.wikipedia.org/wiki/Diana_Rigg) for The Avengers series...what a gal back then. She's 71 now


2406Nice comeback and a nice TV hoop. I can see clearly why the sky would be bluer on that one too :D

PS what ever you do dont post a current pic of Diana Rigg. That one is purdfect

[JBmurc]

US MARKETS



Sovereign debt hangs like an albatross around the necks of too many countries. There are 17 medium-size to large countries that are close to, or are bankrupt. Many are being kept solvent by using two sets of books and by marking to model. As you know we expect these bankruptcies to take place by the end of 2011. That will be accomplished at meetings such as we saw in the 1970s at the Smithsonian, the Plaza Accord of 1985 and the Louvre Accord of 1987. There will be a realignment of currencies.



America, like many other nations is mired in an inflationary depression, and even if the economy were to return to where tax revenues accelerated, we would still have a deficit of 6% to 8% of GDP. In order to have real recovery we need a public debt to GDP ratio of 3%. The problem is government refuses to cut deficit spending. Such policies curtail investment and lasting productivity growth. An economy cannot long endure a government that represents 24% of GDP. In the late 1960s we had government spending at 20% of GDP. There was a run on our gold dollar backing and on 8/15/71 gold backing had to be abandoned. Thus, you can see how difficult todays problems are. In fact during the depression it was only 10%. As you can see what we have today is a monstrous situation. Government is destroying our country and worse yet our debt can never possibly be repaid. A federal deficit of 10% of GDP cannot long be tolerated. Quantitative easing is supposed to end this month. If it is not foreigners will probably totally stop buying dollar denominated assets. That means more Fed secret buying, more monetization and more inflation to accompany the M3 increase of 29.5% in money and credit. Those actions surely will put pressure on Americas AAA credit rating. America has joined the ranks of nearly bankrupt or bankrupt nations. Americas finances are a giant fraud and over the next two years it will be plain for all to see.



The three best plays investment wise is to be long gold and silver related assets and to be short the general stock market, as well as bonds. Over the past two years the treasury and the Fed have spent $12.7 trillion and are liable for $23.7 trillion, so says our inspector general. Things are not getting better they are getting worse. What does government do after the stimulus and quantitative easy ends? If they do more of the same the problem will just worsen. They have no permanent solution. They are like a ship without a rudder in a stormy sea and the rocks are not far away.

[ratkin]

Why are people so fond of picking out the most extreme , bearish articles to copy and paste? There are enough extremists/fanatics on the internet without seeking them out.

Wake up and smell the money , all the charts going green, sun is shining and its going to be a wonderful day , be happy

[JBmurc]

Too right ratkin why do we need the truth,we should listen to the experts like some did before the GFC 9 out of 10 analyst's stated on CNBC the US economy was strong an freddie an fannie were going to be fine, GM motors wouldn't need tax payers money ,world credit was sound,gold was over brought an a relic of old times An what happen in the past history of man an easy credit wouldn't happen again because it's different this time!!! I really hope the market get very bullish over the next month so I can sell down some holdings for a tidy year profit just as long as investors know the crash of 2010 is coming with out doubt the only shares I'll be holding will be gold& silver an the odd very oversold energy play ROC etc

by the why I am happy-- I'm happy because I'm ready this time tis the reason I post so other can be as well.

[evilroyrule]

yeeha! we could be growing legs on this rally. china up a whopping 2% tonight!

japan 1.85%!

[STRAT]

yeeha! we could be growing legs on this rally. china up a whopping 2% tonight!

japan 1.85%!US Markets are all over the place. Will be an interesting day.

[evilroyrule]

yes. foot in mouth disease. ill refrain from any further posts.

[STRAT]

yes. foot in mouth disease. ill refrain from any further posts.How so.? I reckon you are probably right Roy ( legs ). Even if you do get your No10 stuck in your gob which I have done countless times someone will help you get it out :D

[peat]

hey JBMurc you'll love the latest from Colin Twiggs

"Having survived the global financial crisis, are we on the road to recovery or are we like the proverbial twin-engined airplane: when one engine cuts, the second will carry you to the scene of the crash. The GFC itself is far from over.....
http://www.incrediblecharts.com/tradingdiary/2010-03-09_economy.php


However I want to state that even though I'm a gloom and doom merchant etc etc it is worth pointing out esp in this thread that in a recent Elliot Wave article it was pointed out that some markets are still in impulsive UP phases eg Sensex, Taiex, Kospi and less certainly ASX.

[STRAT]

Morning yall
Would any of you old hands like to comment on what appears to me to be lighter than usual volume in this rally we are enjoying right now?

[Hoop]

Morning yall
Would any of you old hands like to comment on what appears to me to be lighter than usual volume in this rally we are enjoying right now?

Strat..Not an unusual event to see declining volumes in a rally as it progresses and nothing to get worried about. Look at it this way..its a bit difficult for an investor who is 100% in this market rally to buy more without mortgaging something... and as volume is decreasing obviously there is no panic selling either.... a period when everyone is in enjoying the party.

I see you are using incredible charts program....so for your own peace of mind...click 2 on your volume indicator (left hand side), then pick a time period (very top left hand side/middle) I used 1 year, then click on the rewind button (the top right hand side) and scroll back in time to the other cyclic bull market rallies and note the similarities.... there are two classic examples 2003 and 1993........ but other times its mainly just ebbs and flows during a cyclic bull market. ...Note the seasonal declines the JJA summer months and Xmas and the odd exception during a crisis.

[drillfix]

My thought would be, plenty of money sitting on the sidelines or has shaped up to be that way.

Kinda like one foot in, two feet out. Rich b@stards can afford to have 3 legs now cant they :P

[trackers]

Strat..Not an unusual event to see declining volumes in a rally as it progresses and nothing to get worried about. Look at it this way..its a bit difficult for an investor who is 100% in this market rally to buy more without mortgaging something... and as volume is decreasing obviously there is no panic selling either.... a period when everyone is in enjoying the party.

I see you are using incredible charts program....so for your own peace of mind...click 2 on your volume indicator (left hand side), then pick a time period (very top left hand side/middle) I used 1 year, then click on the rewind button (the top right hand side) and scroll back in time to the other cyclic bull market rallies and note the similarities.... there are two classic examples 2003 and 1993........ but other times its mainly just ebbs and flows during a cyclic bull market. ...Note the seasonal declines the JJA summer months and Xmas and the odd exception during a crisis.

DJIA seems to be on a sharper uptrend than S&P200 as well? Or am I just dreaming

[STRAT]

Thanks for your thoughts fellas

Trackers I dont appear to have the S&P 200 but heres the DIA with the S&P 100 and 500 over the last year. Pretty close eh?

[Dr_Who]

Markets back up to positive territory again. A wild ride on the Chinese market with it down nearly 7%.

Companies are reporting good results. The economy in the US is back on the path upwards, for now.

[newbe]

Yes will be interesting to see if the closed airspace will start to have an effect on markets. Goods must be spoiling and also stocks must be running low in some areas.

[JBmurc]

think I might take some more profits today so I can have some spare cash for a CFD short on NAB,QAN

[Dr_Who]

Looks like the bears won this round for now. Hold on for a wild ride. Euro zone looks to be in deep poo poo.

[digger]

Looks like the bears won this round for now. Hold on for a wild ride. Euro zone looks to be in deep poo poo.

The bears will win every round from now on.It is all about Peak Oil which world goverments will never admit but can fight it best by engineering finanical crises.And needless to say there are no end of govertments and individuals who in good times will spend 1-40 for every dollar they have,so ready made crises are always at hand when needed.Energy is the real currency and it is getting short.

[Huang Chung]

Hmmmm,

Gold up sharply
Oil down sharply....

[evilroyrule]

geez, everything looking cheap compared to yesterday! doc will be having a field day. guess we gotta wait till days end and see the where the dust settles. interesting

[Dr_Who]

geez, everything looking cheap compared to yesterday! doc will be having a field day. guess we gotta wait till days end and see the where the dust settles. interesting

Yeah mate. I am tempted to pick up some cheap stocks, but this time round I am gonna be discipline and wait for awhile. I have a feeling the bad news for the Euro zone is not yet over.

[STRAT]

The bears will win every round from now on.It is all about Peak Oil which world goverments will never admit but can fight it best by engineering finanical crises.And needless to say there are no end of govertments and individuals who in good times will spend 1-40 for every dollar they have,so ready made crises are always at hand when needed.Energy is the real currency and it is getting short.Yeah Digger and if all that fails start a war somewhere eh? The bigger the better. Funny how the biggest seem to come after a depression/resession.

What do you reckon fellas? another decade of killing followed by a roaring 20's mark 2 :p

[digger]

Yeah Digger and if all that fails start a war somewhere eh? The bigger the better. Funny how the biggest seem to come after a depression/resession.

What do you reckon fellas? another decade of killing followed by a roaring 20's mark 2 :p

Yes STRAT that is about the way it goes.The cycle repeats and the only thing we learn from history is that we learn nothing from history.

[STRAT]

US bouncing back over night but Europe is sure lookin grim

[Jess9]

Any colour changes yet?

[evilroyrule]

hey i got the nikkei and hang seng on fire tonight, each up over 1.2%. what gives? i was epxecting a dip tomorrow? still might come i guess. still, asia up.

[trackers]

I wonder if the MSI has gone back to green yet, a great overnight result for SP500 and DOW

[Phaedrus]

The DOW and the SP500 have been dark green throughout. As you can see, the two plots are virtually identical, including their MSI ratings. Recently, the AllOrds has been weaker than the US indices, but the trend "ribbon" has remained Bullish, more or less in tandem with the US indices.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/dow54.gif

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SP54.gif

http://i602.photobucket.com/albums/tt102/PhaedrusPB/AllOrds54.gif

[fihr]

Thanks for posting that, Phaedrus. I was looking forward to seeing it. Not panicking at this stage then. :) Not shorting the index either.

[winner69]

Oh dear ...DOW sinks on Greece default worries

Why worry .... Greece will default .... one day ... no hope

Its a case of managing through the mess that will eventuate

Here's an interesting view

The Titanic is SINKING

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/04/28/macro-europe-the-titanic-is-sinking.aspx

[trackers]

Hey Phaedrus, thanks for posting an update! With last nights action in the US, and what I imagine will be today's action in AUS, think I'll be offloading most of my shares today (unfortunately!)

[Dr_Who]

The market is now focusing and concern about the domino effect Greece will have on the rest of the highly geared nations.

[JBmurc]

Hey Phaedrus, thanks for posting an update! With last nights action in the US, and what I imagine will be today's action in AUS, think I'll be offloading most of my shares today (unfortunately!)

so will much of the market Glad I sold a good amount of my positions weeks ago--
Not going be selling anything till it's higher even if it means waiting a couple months or years the companies I've invested aren't at all expensive or been hyped up like some
Not even worth looking at the shares today

[Corporate]

so will much of the market Glad I sold a good amount of my positions weeks ago--
Not going be selling anything till it's higher even if it means waiting a couple months or years the companies I've invested aren't at all expensive or been hyped up like some
Not even worth looking at the shares today


Same I'm only holding CFE, and TSV (regretably). Rest in cash waiting and ready.

[Dr_Who]

so will much of the market Glad I sold a good amount of my positions weeks ago--
Not going be selling anything till it's higher even if it means waiting a couple months or years the companies I've invested aren't at all expensive or been hyped up like some
Not even worth looking at the shares today


I hear you mate.

I am also please to be out of most resource stocks with the exception of rural sector stocks and recent buy of IRN. Holding abit of cash and waiting on the sideline abit. I still think the market will over react to Euro zone and they will come and bail out Greece. They have to, they have no choice. If they dont bail out Greece, the EU is history.

[peat]

I still think the market will over react to Euro zone and they will come and bail out Greece. They have to, they have no choice. If they dont bail out Greece, the EU is history.
I think the point needs to be made that they HAVE bailed out Greece... its just that market (a) doesnt believe that it will work, and (b) sees the problem as endemic across Europe esp Club Med's but even Belgium and France, and even, unbelievably German, let alone UK (not Euro but still part of the problem). We do have a systemic crisis that is much larger than Lehmans.

[JBmurc]

I hear you mate.

I am also please to be out of most resource stocks with the exception of rural sector stocks and recent buy of IRN. Holding abit of cash and waiting on the sideline abit. I still think the market will over react to Euro zone and they will come and bail out Greece. They have to, they have no choice. If they dont bail out Greece, the EU is history.

Still would have be real good if I'd gone through with plan A which was to sell even more shares down an have 20% out to pay tax + house dep. 10% in cash in my call account plus some 5% in my CFD account setup on the short side (I was thinking BHP,NAB shorts) would have made a mint ----instead plan B was 20% tax House dep --- focus toward gold jnr put of futher selldown till july/aug which is where I'm at

[remy]

so will much of the market Glad I sold a good amount of my positions weeks ago--
Not going be selling anything till it's higher even if it means waiting a couple months or years the companies I've invested aren't at all expensive or been hyped up like some
Not even worth looking at the shares today



Hey JB, you still holding/watching STX?

[JBmurc]

Hey JB, you still holding/watching STX?

yeah be holding for over 4yrs now my long term share
think over the next 6 months we will see some strong re-rating if STX can keep up their very good drill success rate

[Dr_Who]

Anyone scared yet?

Anyone picking up cheap stocks?

[evilroyrule]

i bought some today. im not a trader though and these are pretty long term holds. if i had more money id still buy some. may have been hoop or even you who said we will have a roller coaster of a trading range likely this year. aiming to buy in the dips. timing not always good, and maybe im not buying right at the bottom of the dip and perhaps thats where p's traffic light is useful. but like i say, no day trading so hoping it may even out. gone are the dreadful penny punts this year. if stocks are strong with cashflow im reasonably positive. although i do admit to being down for the year to date. interesting times. good data coming out of the states about recovery today. cld be up tomorrow if greece is sorted. till the next country provides the next buying opportunity. thats my 2 cents

[Dr_Who]

I think you maybe right there Evil.

I wanna pick up more stocks, but will wait abit longer and see how the EU pans out. US has bottomed and recovering. China is growing too fast and have to slow down. The only problem child so far is the EU.

[STRAT]

Anyone scared yet?

Anyone picking up cheap stocks?Yup and hell no. When the chart is saying it may be time to dump the lot again on Tuesday and Wednsday the last thing Im thinking of doing is buying on Thursday. Good luck with that plan fellas.

[MrDevine]

DOW down -412 as I type. GFC part II. I'm all out, was thinking swing trade on BOW on Tuesday, but meh I'm not setup for tax on trades.

Sell in May and go away seems prescient this year.

Mr D.

[skeet]

That was the craziest hour, DOW dropped 500+ points in an hour went below 10,000 and then in 15 mins goes from -9% to -6% for the day. Oil down and gold up. Ive never seen anything like it!

Its a fast market and the will be bargains out there today, I hope some of you have some spare cash!

[STRAT]

Check it out

[soulman]

That was the craziest hour, DOW dropped 500+ points in an hour went below 10,000 and then in 15 mins goes from -9% to -6% for the day. Oil down and gold up. Ive never seen anything like it!

Its a fast market and the will be bargains out there today, I hope some of you have some spare cash!

This is big. Just a reminder of the GFC mass in Jan 2009. It was just as bad, although down 600 points is rare. Our futures point to a 200 odd points fall. Ouch!! Tomorrow - 2 thing, sit in front of the computer to buy some bargain or crawl into a hole.

[MrDevine]

Someone made a whoa load of cash on P&G from -31% all the way back up to -1.5%. I think some freaky high frequency trades or outright fraud went on as the DOW dropped to -918pts at one stage! Madness!

Traders paradise today on the ASX, stocks will get absolutely smashed at open, but expect to rebound later in the day.

Not a market for 'investing' but for speculating. Gamblers polish your dice.

[Stranger_Danger]

To do list for Phaedrus : find a redder shade of red?

[trackers]

Wow, crazy night - There must have been some nervous US investors in that one hour particularly... Mass stop loss triggering?

For once I actually called it right, the US was trading at complete odds with every major stock market that I've been aware of over the last couple of weeks. The headlines this morning crack me up "US falls on Greece concerns"... Please guys, thats getting really old...

Perhaps this is a mini capitulation point

[skeet]

Trying to get my head round what happened today, a correction some are saying, Greece crisis, fat fingers, Spain .....
Crazy times ahead. ASX will take another hit today. Lets hope its nothing like what happened here though: Only 173 stocks rose on the New York Stock Exchange Thursday while 3,002 fell. Volume came to an extremely heavy 2.57 billion shares.

[trackers]

ASX200 futures down almost 4%...

[ronthepom]

That was the craziest hour, DOW dropped 500+ points in an hour went below 10,000 and then in 15 mins goes from -9% to -6% for the day. Oil down and gold up. Ive never seen anything like it!

Its a fast market and the will be bargains out there today, I hope some of you have some spare cash!

Yep people will panic, some good buys at the moment ie bul wcl vpe etc gonna be interesting.

[STRAT]

See what happens when people let computors do their trading for them. What a hoot. Will be interesting to see what BS the investigation comes up with. How ever it turns out, Euro debt aside last nights sell off in the uS is looking like a glitch in the machine. The big question I guess will be deliberate or not???

http://www.marketwatch.com/story/stocks-sell-off-leads-to-faulty-trade-probe-2010-05-06?siteid=yhoof

[trackers]

All Ords hugging a mid term trendline quite nicely... Can't see it breaking out from it anytime soon though *frown*

http://iforce.co.nz/i/stu4rltj.bmp

[Hoop]

All Ords hugging a mid term trendline quite nicely... Can't see it breaking out from it anytime soon though *frown*

http://iforce.co.nz/i/stu4rltj.bmp

Trackers .I'm more optimistic....there's a 59 day falling wedge ..plot it from the bottoms 24 May & 5 July and use the existing trendline for the other side of the wedge...There have been 5 touches... 3 up and 2 down the next touch (in theory;)) will be the breakout ...up breakout is the more favoured scenario than the down.

..also the copper chart had a symmetrical triangle breakout upwards today...

all little bits of good news helps :)
http://i458.photobucket.com/albums/qq306/Hoop_1/Coppera21072010.png

[Footsie]

Hoop you think we need to fall back one more time to around the 4300 level first.

also not sure if anyone else has noticed lately.
Since 1 May 2010 ALL major indexes appear to be in a consolidatoin phase. There is positive divergence on the MACD and it looks like an inverse H&S formatoin.

[trackers]

Hey Hoop, interesting! Good to see the amount of reaction highs that formation forms.

Bulkowski reckons that the price target is the peak of the reaction highs, above 5k? Cool.

[STRAT]

Trackers .I'm more optimistic....there's a 59 day falling wedge ..plot it from the bottoms 24 May & 5 July and use the existing trendline for the other side of the wedge...There have been 5 touches... 3 up and 2 down the next touch (in theory;)) will be the breakout ...up breakout is the more favoured scenario than the down
Good call Hoop.Reckon we will get a nice bounce today off the short term upward trend line. May even beak out from that wedge of yours.

[trackers]

Good call Hoop.Reckon we will get a nice bounce today off the short term upward trend line. May even beak out from that wedge of yours.

Yeah seconded, good call Hoop.... Will be interesting to see where we head from here (might have to do a review of Bulkowski's chart patterns in the weekend!!)

Looks to me like all ords needs about 25 points to push through the trendline, and futures are up 60+

[evilroyrule]

respect to the hoop man

[Footsie]

market looks safe to go back in again here to me

[upside_umop]

I reckon its hard to say what it's going to do. P has stated himself that in a sideways market, other techniques are best used rather than his MSI, or other long term trending analysis such as the Golden/Death cross.

Here are some statistics in a more volatile market between 01/01/95 - 31/12/2001. This is if you were to act on buying the XAO S&P/ASX 500 ASX All Ordinaries Index on the 'Golden Cross' and exited your position on the 'Death Cross' (50 day MA crosses above the 200 day MA and vice versa).


Test Range: 3/1/95 to 31/12/01

Net P&L: -399.27
Percent Net P&L: -20.96%

Number of Trades: 8
Average P&L per Trade: -49.91
Percent Winning Trades: 37.50%

Total Days in Test: 1778
Percent Days in Market: 74.69%
Average P&L per Day: -0.22

Max Drawdown: 984.77
Reward/Risk Ratio: -0.405

Buy & Hold P&L: 1,455.00
vs. B&H P&L: -1,854.27
vs. B&H Percent P&L: -97.34%
vs. B&H Reward/Risk Ratio: -3.014

Current Position: Long
Open Trade P&L: -4.86
Traded Last Day: No

Or even worse, those who shorted the index as well on such a strategy between this period. I.e. short when you exit the long position into the 'Death Cross' (Stop and Reverse).



Test Range: 3/1/95 to 31/12/03

Net P&L: -1,657.80
Percent Net P&L: -87.03%

Number of Trades: 18
Average P&L per Trade: -92.10
Percent Winning Trades: 33.33%

Total Days in Test: 2285
Percent Days in Market: 99.26%
Average P&L per Day: -0.73

Max Drawdown: 2,441.80
Reward/Risk Ratio: -0.679

Buy & Hold P&L: 1,401.10
vs. B&H P&L: -3,058.90
vs. B&H Percent P&L: -160.58%
vs. B&H Reward/Risk Ratio: -2.506

Current Position: Long
Open Trade P&L: 252.60
Traded Last Day: No


Here is the chart for the last strategy, with the equity line below. It shows the relative points profit from each trade and also the equity line below (think of that as your bank balance). For some reason it has started it at 1993....but you get the point, as the profit and loss ends well in negative territory on the chart, even though it started off in a positive equity position.. This strategy only works in well trending markets....and not too volatile ones.

http://farm5.static.flickr.com/4083/4833566347_54b7bb83fe_b.jpg

[Lizard]

On the same theme, I liked this article from Minyanville this morning:
http://www.minyanville.com/businessmarkets/articles/jeff-cooper-djia-transports-investment-strategy/7/27/2010/id/29323

Especially the last comment: "If you have an opinion in this market, you're wrong."

[dumbass]

this thread seems to be relevant again.
a little discussion on the dow thread, heres my post


reviewing the SP weekly chart, which shows nicely the major trends over that period, i would say you could draw the following conclusions

1 you need to trade the market , if this was a stock we would rightly say its in a trading range from 1997 to present day.
if you held from 1997 you be at break even.

2 any significant trend change has dispalyed a divergence on the rsi, currently no divergence on weekly or daily charts too.

3 the market is no where near oversold on rsi

4 if the market was to rally from here and continue the bull market it would far exceed any other correction in a bull market looking back over the last 17 years
the only similar situation was a sharp correction in 1998 ( circle in chart ) where trendline was broken but this was a secondary trendline not a primary trendline and the magnitude was not as great as this drop and the divergence from the trendline is much more significant.

5 the market is close to rallying from here but in the context of this chart it will be a rally in a confirmed downtrend.

in summary it looks like the start of a bear


http://i183.photobucket.com/albums/x107/joicey9999/sp500weekly.jpg

[mark100]

The US market is in a secular bear market but is the Australian market? Not from the charts I am looking at although it wouldn't want to drop below GFC lows

[dumbass]

From a fundamental perspective KW, i would not view the US economy as anything other than very weak at the moment. they are predominately a consumer led economy with 70 % of gdp, consumer generated. Consumer sentiment is at a 30 year low (univ. of mich. released on friday ) which will be the driver to recessionary impact on companies.
yes 75 % of companies beat estimates but those estimates are from a back drop of heavy cost cutting in a heavy stimulus enviroment that may not represent a true picture of the economy.

gray areas on senntiment chart signal previous recessions


http://i183.photobucket.com/albums/x107/joicey9999/consumer-sentiment.png

on tuesday the FED relesed its market update which paints a picture of an economy in trouble, at the bottom of the release it states 3 members of the commitee voted to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.

Press Release

Release Date: August 9, 2011

For immediate release
Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period

[winner69]

The US market is in a secular bear market but is the Australian market? Not from the charts I am looking at although it wouldn't want to drop below GFC lows


Secular bull and bear markets are based on valuations - not the traditional price. A secular bear market is when the market PE falls from a high to a low (usually about 8) - a secular bull when PE goes from the lows at the end of a secualr bear to another high (usually over 20)

A chart showing the historical PEs for the ASX is shown in this article
http://www.asx.com.au/resources/newsletters/investor_update/20101214_five_reasons_why_shares_will_rally_in_201 1.htm

See how the PE has been falling from over 20 in 1999 to its curent level - a secular bear market

During GFC the ASX PE did go down for a while to a about 8 - the other day it fell below 10 which 'triggered' that 7% odd turn around in the afternoon.

One might say that this secular bear market has already ended .... and from the low PE of a few years ago it is now on the way up - but those dips came as shocks .... and secular bear markets do not generally end when a shock occurs .... they tend to grind punters down until most give up .... with low PEs occurring for a year or so

My read is still a few years of pain to come - probably witht he ASX about where it is now (earnings going up but valuations coming down) .... but there will be several bull rallies to make a bit of dough in the meantime .... but keep an eye on those charts as Mr P says what the amrket giveth the market can also taketh away

[drillfix]

Interesting stuff.

Good post winner, some good theory there.

[drillfix]

Seeing alot of upward price move on Relatively Low volume.

Could this be seen as Bearish Volume as it is sometimes said? Anybody else notice this?

[drillfix]

Not sure what you mean exactly KW. Isn't Volume just Volume, no matter if its computer, trader, investor or algo Bot trading a stock?

Alot of the stocks I am looking at show low volume and if I look at the order book, there are not very many, if any Bots there. (as in Bots that buy 1 share or 10 shares etc etc.)

Maybe I should have said, it seems like there is lots of tip toe through the tulips type trading going on today...lol :P

[moimoi]

And following on from KW..

Today i have abruptly found my self wondering about the validity of charts..

Today Sumitomo announced that they have taken a 5.80% holding in ALL...this is approximately 35Mill shares and according to the SSH notice the buying began in early April.

When i look at a chart of ALL for the past 6 months...1) its been in a downtrend 2) OBV doesn't look to have given an accumulation signal 3) RSI has been largely negative 4) money flow has been largely negatively

I Dunno, i suspect a machine which buys and sells to itself manipulating the price to suit could possibly throw some of the "indicators" out the window.

I hasten to add i ain't much of a chart reader, but i do find myself concurring with KW on..

"At some point we all may need to reassess the technical indicators we use that rely on volume to pinpoint trends, as they no longer reflect the psychology of market investors but simply the trigger points of a computer algorithm. "

[Financially dependant]

And following on from KW..

Today i have abruptly found my self wondering about the validity of charts..

Today Sumitomo announced that they have taken a 5.80% holding in ALL...this is approximately 35Mill shares and according to the SSH notice the buying began in early April.

When i look at a chart of ALL for the past 6 months...1) its been in a downtrend 2) OBV doesn't look to have given an accumulation signal 3) RSI has been largely negative 4) money flow has been largely negatively

I Dunno, i suspect a machine which buys and sells to itself manipulating the price to suit could possibly throw some of the "indicators" out the window.

I hasten to add i ain't much of a chart reader, but i do find myself concurring with KW on..

"At some point we all may need to reassess the technical indicators we use that rely on volume to pinpoint trends, as they no longer reflect the psychology of market investors but simply the trigger points of a computer algorithm. "

The smart money accumulates in at the bottom of a down trend, the key indicator is the volume. Buying on bad news allows them to buy up large without pushing up the price. The ALL chart shows 46.6 millions shares traded on the 23/6/11 and the share price hardly moved, I bet there was a poor announcement that day! Think French banks rumours before the markets go up....

[Hoop]

This is a good discussion ...I wonder if it should have its own thread.

Bots are programmed by Humans ..therefore its probably safe to say that human group behavioural actions still apply...Charts movements reflect human group buy/sell behaviour. TA creates indicators to monitor this chartered Human group market investor behaviour... so group behavioural history and its TA tools will still be relevant..

Its just that now and for the next few years in the future, investing with computer aids will make the investment world spin increasingly faster but humans and human behavioural influences will still be in control and therefore I assume TA will still function as it has done in the past.

Now...there will a bluring point when, say as an example Quantum computers become the next generation computers using nanotechnology. They become smarter quicker and start to "think" for themselves...Then mankind will eventually lose control when we can not keep up with the exponentially increasing pace of technological and other systemic (modernisation) change..... Then it could be said that "this time it is different" and TA and its tools will evolve into something that we atm can not comprehend.

Always been fascinated about Technical Singularity (http://en.wikipedia.org/wiki/Technological_singularity)

[elZorro]

That might be true if all market participants were equally represented but they are not. Only 2% of the market brokerages are responsible for 73% of market volume. So you are not getting a reflection of group behaviour, just what those top few hedge funds are thinking and doing. If they decide that they are going to short the market then it will fall, consequently when they decide to cover their shorts, the market rises. So all you know is that today a lot of shorting and short covering is going on - its not going to help you figure out the long term trend. And when the market tries to rise naturally, those same firms will simply start a rumour in order to retrigger the shorts - think Italy default, French bank bankruptcy....

A lot of the HFT decisions are made by computer, in a "black box" set up, where human traders have no idea what its doing, as the technical programming is done by mathematicians not traders. The banks actually have more Maths/IT guys on the payroll than they have real traders.

Hi KW, I have started to come to the conclusion that many shares are controlled by insiders, the SPs usually only go up or down when they want them to, when they're ready. This extra level you espouse just makes it harder, leaving the smaller illiquid shares that might be of no use to the big players to manipulate. Unfortunately the small shares are often set up by businesses that just need the capital from the market, and would rather not have listed, except things aren't moving fast enough (read: running out of cash, or had no cash in the first place).

Hoop will not be swayed from the flawed TA path - just jesting with you Hoop - which leaves me thinking what fun you could have with the programmes of these buy/sell robots if you could find their trigger points.

[Hoop]

KW...you are thinking too selectively and too deep.... the stock market been around for many hundreds of years nothing has changed a market is a market... manipulations are a part of the market....remember KW ... for hundreds of years markets were used by only a very few powerful players and merchants all used dodgy tricks of the trade and they had Royal and political interference and interventions when those markets became too dodgy or bad for the economy/ the other market places or for the good of the common people just like today. There is nothing new in short selling its been around for 400 years as well. Short selling gets banned during capitulation events in the bear cycle with the same old excuses and get reintroduced during bull cycles and history repeats itself...

Its only been in recent times with better communication tools (computer etc) that many small individual players have been able to access the marketplace successfully...but they are all of the human species with the same human behavioural actions and flaws and all are governed by the herd behaviour...

You can plot charts noticing repeat behaviours going back 600 years or more...why?...because Human survival instincts are "hard-wired" in the same way with every proceeding generation. Looking at these 600 year charts I still see H&S patterns S&R lines etc...there's nothing new here...except maybe the flash crash due to fat fingered technology but that's been debated about by TA experts.

There has been and always will be market manipulations but in the end that fleeting rare balance seldom gets restored and only happens between the swings backwards and forwards from overbought(overvalued) to oversold (undervalued) market oscillations. These oscillations are all a part of market behaviour the combined behaviour of the good the evil the manipulator the optimist the pessimist the sucker,,, the market is seldom in equilibrium because each type of player has dominance at certain times e.g the sucker/the optimist during bear market rallies which fleetingly replace the fearful investor who demand very high yields to offset the high risk at those tough times of the bear market cycle and again this is nothing new. Same with adverse economic environmental climate when powerful people or governments intervene to attempt to stable the markets...this behaviour is also recorded by charts over the centuries and is a part of chart history.

TA is used to correlate the relationships between markets and economy, inflation, intervention, control etc and then relate the economic periods when these events occur...some are highly significant behavioural events other events aren't...After centuries of correlated data an astute TAnalyst can look back and see the various correlations back then and the behavioural similarities now and can "best" guess a near future outlook using probabilities with history repeating itself.

You could say that the DOW is manipulated atm with QE 1 . 2 . Its all part of the market process..and nothing new as QE happens after nearly all recessions going back 600 years... it all shows up as a chart pattern...so history repeats itself ..eh

The TA is not on a flawed path (hi ElZ;)) TA is a discipline with a large set of tools with new tools being added all the time e.g Phaedrus MSI TA Indicator.... it's actually a living discipline and will adapt to improve itself like all living species..its evolution.

[Hoop]

The flash crash was caused by HFT - nothing to do with fat fingered order entry.
http://en.wikipedia.org/wiki/Flash_crash

Ooops ..forgot about the big Famous one KW...yeah..Ok I give in:(... I concede that one was a HFT problem... but fat finger was their first thought.

When writing my post I used flash crash in a general term sense as there has been many.


.........the recent DAX flash crash on 1st August 2011. .. they were not sure what started this one off...fat finger is the current hot favourite cause atm.

...and some that were not real and were harmless I think...To this day I still can't get a descent long term chart for RYM due to a flash crash event on the 26 Jan 2007 screwing up the scale and all the related price TA indicators...I can't remember it happening so maybe it is still an uncorrected fat finger data entry from the Yahoo data feed...some one out there may know and post an answer.

[elZorro]

Betcha it was also HFT. Dax has been the most volatile of the Euro indices, so figures that's where they are all hanging out.

I had a quick look at the Flash Crash article. Amazing that a bit of equipment posting delayed prices as current, possibly started this off. Fat finger problems can easily be stopped in code, sounds like they have systems for that. This would simply look for a variation in the buy/sell offer from the current, and discard or warn if too far off. The algorithms used by the HFT machines are another thing altogether. There should be strict limits on those parameters, but how would anyone enforce it? The 2010 flash crash was stopped by a 5 second halt in trading, at which point things stabilised enough for the remaining HFT machines trading, to return to more normal prices. Maybe these halts should occur more quickly, if the HFT programmes are that dangerous.

It looks like HFT machines with inappropriate programmes are the main ones left trading when prices take off downwards in a big way.


Thanks for your posts Hoop and KW, always something to learn on ST.

[Hoop]

Betcha it was also HFT. Dax has been the most volatile of the Euro indices, so figures that's where they are all hanging out.

Hi KW ElZ I think HFT was ruled out as the culprit as all the trades were legit and actioned.
anyway....
check out this article http://seekingalpha.com/article/243758-ready-for-another-flash-crash it may answer part of your question with your post#1715. Low volume price rises over a length of time have always been viewed by investors as an action to be viewed with caution...Often if you analyse a bit more deeply using TA into this type of situation you may see a price increase with price/volume sensitive TA indicators such as the OBV or the money flow indicators such as Chaiken or Colin Twiggs showing decreasing trend hence a bearish divergence event....often in the past even before hi-tech programs the market eventually corrects the situation and sometimes suddenly.

So the question is whether a new up trend with low volatility is indicative of a bear or bull market?
Answer: it's both.
Volatility as measured by the VIX shows limited data but as time goes on the emerging results are showing high volatility and high volume around changing of cyclic cycles such as Bear to bull and it seems so far it could also be a cyclic change from bull to Bear also during the very brief steep down trend events (capitulation events) within the bear cycle. High volatility high volume events are also seen around bull market corrections.
There are low volatility events with low volume during the steeper rising up trends parts of the Bull cycle and during sucker rallies parts in a Bear cycle,,,,,,so a mirror image effect is observed of the actions comparing the bear and bull market cycle....and...when you think about from a human behavioural point of view it all makes sense because when the market becomes unsettled fear creeps in and the investors are keen to get out and quickly...and vice versa.

So with reference to this thread ....was this a bottom or are we seeing a bear rally...As the bear cycle seems to be just starting, it's a good chance that we are experiencing the first bear market rally and there will be more to come.

[airedale]

Looks like you are on to it, Hoop. Colin Twiggs is calling it a DCB at the start of a Bear.
http://goldstocksforex.com/2011/08/15/dead-cat-bounce/

[trackers]

Looks like you are on to it, Hoop. Colin Twiggs is calling it a DCB at the start of a Bear.
http://goldstocksforex.com/2011/08/15/dead-cat-bounce/

I'm with Hoop and you on this one

http://iforce.co.nz/i/mkz51esb.osu.jpg

[Hoop]

Is there something called a "TA Trap"? ... If so ... I see one forming :) .... (Reference to the link which provides plenty of references to tealeave reading but no fundy or macro analysis at all!)

Hi Belg..your trap??..does it look like this? :D :D ...enjoy

http://www.imageurlhost.com/images/j1pccgtfbrbm9u6wy.jpg

[airedale]

Hi Belgy, is it necessary to do fundamental analysis on the DJ index? Price, volume and direction {downwards} tell the whole story.

[trackers]

^ Thats really interesting KW, I'd never thought that increasing volume on the DOW could be a sign of weaknesses, but it could be the case :/ I guess its no surprise investment banks play the downside so much, given that falls are much sharper than rises, relatively....

Sold some more shares today to keep some powder dry in these uncertain times

[JBmurc]

^ Thats really interesting KW, I'd never thought that increasing volume on the DOW could be a sign of weaknesses, but it could be the case :/ I guess its no surprise investment banks play the downside so much, given that falls are much sharper than rises, relatively....

Sold some more shares today to keep some powder dry in these uncertain times

you been selling your HLX trackers been buying a few of late might have brought you shares off ya

[trackers]

you been selling your HLX trackers been buying a few of late might have brought you shares off ya

Yeah :/ I got 8.8c for the majority of them, somewhat luckily.... Glad its on the up and up, nice JORC gold added to the mix today.

[JBmurc]

Yeah :/ I got 8.8c for the majority of them, somewhat luckily.... Glad its on the up and up, nice JORC gold added to the mix today.
right yeah not me then -yes HLX has a nice portfolio of Gold /Iron ore/copper assets . this latest Jorc takes HLX jorc Gold to round 500koz if you include their Tunkillia holding ...

[trackers]

Thats why I raised the issue - I dont think volume indicators have the same meaning in the face of HFT traders, who contribute up to 75% of volume on down days, and who trade 5x as much on those days as they normally would. Any significant trend outside of HFT is lost in the noise. And they play the downside because there is greater volatility in the dips, which is what triggers their increase in trading. Quiet up days dont give as much margin.

Which begs the question - if we all think that the indicators are showing a bear market, because we are looking at indicators which are now being manipulated by HFT, then perhaps we need to look at things differently. What indicators are good ones to use, that do not include volume (or volatility) in their calculations?

Through backtesting individual stocks on the ASX over a few years, stochastic oscillator (optimised) was the best result for me... a non-volume indicator.

Not as much use of HFT on the ASX (and particularly the stocks I'm primarily interested in) I'd expect.

Might do some backtesting of the ASX50 to see if the results are different (suspect not).


the stochastic oscillator (http://en.wikipedia.org/wiki/Oscillator_%28technical_analysis%29) is a momentum (http://en.wikipedia.org/wiki/Momentum_%28technical_analysis%29) indicator that uses support and resistance (http://en.wikipedia.org/wiki/Support_and_resistance) levels. Dr. George Lane (http://en.wikipedia.org/wiki/George_Lane_%28technical_analysis%29) promoted this indicator in the 1950s. The term stochastic (http://en.wikipedia.org/wiki/Stochastic) refers to the location of a current price in relation to its price range over a period of time.[1] (http://en.wikipedia.org/wiki/Stochastic_oscillator#cite_note-0) This method attempts to predict price turning points by comparing the closing price of a security to its price range. The indicator is defined as follows:
http://upload.wikimedia.org/math/4/c/c/4cc9716a850f6f94be4e31565fd381e9.png where H and L are respectively the highest and the lowest price over the last n periods

As an aside, the other components of the MSI don't use volume also