A77, too small to read. Can you pls post a larger one or a link? Cheers.
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A77, too small to read. Can you pls post a larger one or a link? Cheers.
...the text:
>
My partner Kevin Lane is fond of saying “Stock price direction is a function of several factors; valuation, future expectations, sentiment and liquidity.”
That last component, liquidity, seems to be most dominant lately since buying power (or lack thereof) determines if stocks go up or down.
Typically, liquidity is strongest when expectations are the most negative and people have already dumped equities; It is weakest when expectations are most optimistic.
Why? At market tops, investors tend to be “All In” — their expectations for the future are most optimistic, and that means their liquidity is spent. By the time investors go “all in,” things are about as fundamentally bullish as they are ever going to get, and stocks are fully valued. Indeed, at these “all in” junctures, valuations are typically highly stretched, with no room for earnings misses or weak forecasts.
With investors “all in” there is no buying power left in the aggregate to push stocks higher. The opposite occurs at bottoms: Investors become so pessimistic about the future they move large amounts of cash to the sidelines. We get the added benefit at this point as valuations typically have contracted as well and are now attractively priced.
With large sums of cash moved to the sidelines, valuations attractive and selling exhausted, there is no where to go but up — even if its only for a period of weeks or months.
The chart above looks at how far above or below the 21-year average allocation of 60 % invested in stocks individual investors are presently. As seen above when stock allocations drop 15 % or greater below that 22-year mean, (red circles) which has occurred only 3 times in the last 22 years (1990, 2002 and late 2008/early2009) it has equated into significantly higher stock prices 3/6 months up to several years later.
Even given the extent of the current rally, investors remain 6% below their mean allocation to stocks, and significantly below fully invested levels of 10-15 % above the mean. Sideline liquidity remains strong, investors are still not fully invested, and dips have remained fairly contained.
Anecdotal sentiment also echoes the under-invested theory as most investors expect a correction and refuse to invest as the market melts up. Typically investors talk their positioning and under investment breeds statements of caution.
Kind Regards
The AAII (American Association of Individual Investors) has some good stuff on their website.
Have to join to see the stuff though..there are 3 levels of membership one level is free and this level has some good free stuff in it (incl some investor software)..so worth the 5 minutes it takes to join up.
...SPX 500 seems consolidating beneath the 11 month High set Fri September 11th *1048 in a range most likely featuring the Sep 10 Congestion *1026 and *1050 barrier.
...assuming *1026 is successfully defended, the market will likely break-out and deal with the Oct 7 High *1072 and the 50% retracement of the 2008-2009 Break *1119 further up
...on a cautious note, a market top becomes more and more likely as the index pushes towards the 50% retracement of the 2008-2009 Break *1119
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
The 1005 breakout of the S&P500 a month ago has been confirmed by the DOW this morning...but only just!
This is bullish (and technically important) news that hasn't been widely communicated from the media today.
http://i458.photobucket.com/albums/q...OW14092009.png
Nice chart Hoop
More I look at it surely the DOW has to continue on its current trajectory to 12000 ... and then slowing down a bit as it heads to 14000
(12:07) Almost there, 10-yr back to a 3.424% yield
(10:26) Coming back following SFEF $4.5B 5-yrs
(9:55) Pulling back from lows, but 10s may make run at 3.495%
(8:12) Tempering sell-off, but pressure remains
(8:34) Sold off on run of better data with the curve swinging steeper still
---Core PPI: Actual 0.2%, consensus 0.1%, prior -0.1%
---PPI: Actual 1.7%, consensus 0.8%, prior -0.9%
---Retail sales: Actual 2.7%, consensus 1.9%, prior -0.2% (revised from -0.1%)
---Retail sales ex-auto: Actual 1.1%, consensus 0.4%, prior -0.5% (revised from -0.6%)
---Empire Manufacturing: Actual 18.88, consensus 15.00, prior 12.08
---Business inventories: Actual -1.0%, consensus -0.8%, prior -1.4% (revised from -1.1%)
---Fed bought $2.049B of $7.004B
Advancing issues outnumber decliners by roughly 3-to-2 in the S&P 500, helping the benchmark index preserve its gains. Of its 10 major sectors, eight are trading higher; only health care (-0.8%) and consumer staples (-0.7%) are in the red. Materials, now up 2.2%, continue to sport the best gains.
Airline stocks are also performing exceptionally well this session. In turn, the Amex Airline Index is up 3.5%.
...SPX 500 mildly higher so far and as long as Monday's 14th September Low *1035 holds, the market will likely break-out and deal with the Oct 7 High *1072 and the 50% retracement of the 2008-2009 Break *1119 further up
...on a cautious note, a market top becomes more and more likely as the index pushes towards the 50% retracement of the 2008-2009 Break *1119
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Looks like the markets will trek higher.
Ending on a high is a good sign as well eh Dr Who
That chart of Hoops is looking even better --- DOW at 1200 by Xmas at least .... you can see the formation forming nicely
...US Bonds
(13:24) Backed off some with long end still leading
(11:14) Clawing back in lightened trade
(10:33) Trading off hard with the 10-yr taking out the 3.485% and looking at 3.495%
(9:43) Back to negatives with a size spike in size
(8:21) Bonds back off highs following run of data
Core CPI: Actual 0.1%, consensus 0.1%, prior 0.1%
-CPI: Actual 0.4%, consensus 0.3%, prior 0.0%
-Current Acct Balance: Actual -$98.8B consensus -$92.0B prior -$104.5B (revised fro$101.5B)
-Net Long-term TIC: Actual $15.3B, Consensus $65.0B, prior $90.2B (revised from $90.7B) -Capacity utilization: Actual 69.6%, consensus 69.0%, prior 69.0% (revised from 68.5%)
-Industrial production: Actual 0.8%, consensus 0.6%, prior 1.0% (revised from 0.5%)
-Fed bought $1.799B of the $16.391B in the 2010 to 2011 maturity range
...NYSE Data (see attachment)
...SPX 500 Close *1068
-new 11-month High-
-immediate additional upside to Oct 7 High *1072 (+)/ *1082 likely
- bearish divergences in daily momentum appearing
-risk of a minimum shake-out back to *1027/*1035 congestion increasing
-downside risk versus upside potential becoming unfavorable short to medium term
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Hi Ananda,
I'm a newbie and I have a question.
I find the data on "up" and "down" volume, number of advancers and decliners interesting. Would you know if these data are available for ASX or NZX? Also is the "up" and "down" volume for each counter available?
Cheers
-Initial jobless claims: Actual 545K, consensus 555K, prior 557K (revised from 550K)
-Continuing claims: Actual 6230K, consensus 6100K, prior 6088K
-Housing Starts: Actual 598K, consensus 583K, prior 589K (revised from 581K)
-Building permits: Actual 579K, consensus 598K, prior 564K
-Philly Fed: Actual 14.1, consensus 8.0, prior 4.2
... SPX 500 set another 11-month High *1075 early; after that, the market decided to go for a light profit-taking retrace supported at intraday Low *1061; as a consequence, *1082 remains an immdiate target
...at *1082, risk increases for a minimum shake-out back to *1027/*1035 congestion, given the worsening bearish divergences in daily momentum
...downside risks are starting to dominate upside potential
...as far as the NYSE concerned, values are touching top of channel and breaking out of the channel would mean Blow-Off Territory (see attachment)
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Any idea on how Mr Bernanke's statement on the recession will have on the US markets?
And I could not help noticing that you employ hedging and I was wondering whether hedging costs will be higher than say internet brokerage.(During "down" months, my brokerage as a percentage of net profit/loss is pretty high.)
Tee:
...just to give you an idea how the market reacted to the Bernanke/Buffet Ramp yesterday, take a look at the NEW HIGHS compared to the SPX 500 in 2007 and now:
(see attachment)
...all important liquidity inflows (thanks to Fed pumping) remain at extreme high levels at present creating a possibility of upside run-away gaps if Institutions don't start some profit taking
...at the same time, the major US indexes are developing negative MACD divergences currently not playing out due to very high short term RSI data
...markets are stretched and this sort of short term strength will be difficult to maintain
...consequently confident, hedging will pay dividend soon; by the way Tee, hedging in upward trends > neutral = no/minimal cost; it is only when markets become top-heavy that hedging is applied; cost on profits according to hedge book 10% at present;
Kind Regards
Bond Market:
16:01 ET 10-Yr: -23/32..3.469%.. USD/JPY: 91.4180.. EUR/USD: 1.4701
Slammed: Treasuries were hit on the session with the mid-curve leading the move lower as the market considers the record supply on tap and players squared-up into the weekend. The auctions kick off Tuesday with the $43B 2-yrs, $40B 5s and $29B 7s with $27B 1-yrs Tuesday, $29B each of 3-and-6-mos Monday. The session saw wafer thin trade and was knocked lower with no data or other market movers to help things along. The week saw big size in corporate and sovereign issuance and trade is setting up for more of the same next week on top of the government offerings. The economic calendar starts pretty slow, with the FOMC kicking off Tuesday and junior league data through the week until Thursday. The curve came in flattening but unwound into the late session to take the 2-10-yr yield spread to 248, but the bias remains on the flatter slant. The dollar was given a breather from its recent sell-off, although it did nothing impressive and the index was stalled near 76.50. The euro was battling to hold over 1.4700 and is expected to return to the recent highs early in the week while holding near the month's best on the yen. The yen will likely have a little more trouble staying bid as the safety plays continue to pull back, but has been able to remain near the 7-mo highs. The Fed will be in doing a single bond buying operation Monday, getting into the 2013 to 2016 maturity range. The day has only leading indicators (10) while Fed-speak should remain on hold through the FOMC statement Wednesday.
NY Fed purchased $4.05 bln in agency debt maturing from Oct 2010 - Sep 2011
Stock Market:
...SPX 500 trading mixed below the September 17 High *1075 on quadruple witching Friday; despite the fact that the index stayed in positive territory after laboring back from intra-day Low *1064, the whole market was neutral at best; as a consequence, the immediate target *1082/*1090/*1119 is still in play for next week
...at this level however, risk increases for a minimum shake-out back to *1027/*1035 congestion, given the worsening bearish divergences in daily momentum and negative MACD in the major US indexes
...the implication of the correction could be the start of a double top process which would be confirmed by a second test and subsequent failure of the *1082/*1090/*1119 level
...as far as the Fed Ramp of the Stock Markets is concerned (see attachment)
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Hi Belgarion, although tend to agree so far, there are a couple of things I like to point out, which makes the whole show suspect
Headwinds:
-lack of income growth
-wealth destruction
-credit tight as ever
-Green Shoots may be no more or less, than correcting an over correction in business activity during the worst of the crisis when business cut back production to hard -plus a bit of stimulus induced growth
Stocks:
-valued on far to over optimistic earnings expectations at present
-prices driven up really hard by hedge funds, zombie banks, and power brokers using their superior market positions and (illegal) trading strategies like Flash- and HFT trading
-instead of using the funds the Fed is virtually paying them to borrow and channel them into the economy, they use the funds for speculative purposes only
-when valuations are at a point that even the most deluded punter realizes it is time to quit, it is them who take the opposite side of the trading and drive the whole show down
Revealed: The ghost fleet of the recession anchored just east of Singapore
http://www.dailymail.co.uk/home/mosl...-Singapore.htm
Kind Regards
BDI index down for the 7th day in a row, doesn't bode well for commodities. Also of note is that the BDI index bottomed Dec 08 started to rise about 3 1/2 months before the march 'rally'. Peaked beginning of June and has been trending down for the 3 1/2 months since.
US Calendar:
Sep 21 10:00 Leading Indicators Aug 0.6% 0.9% 0.7% 0.9% 0.6%
(The leading indicator index does not provide much information on where the economy is headed. It is composed of 7 key economic variables that are known prior to the release and 3 estimated components. Therefore, the only differences between the actual indicator and the consensus is due to the estimation techiniques for money supply, new orders of nondefense captial goods, and new orders for consumer goods. Usually the differences between the leading indicator estimates and consensus estimates for these variables are minor and do not effect the overall index)
Bond Market:
15:33 ET 10-Yr: -02/32..3.471%.. USD/JPY: 92.0225.. EUR/USD: 1.4684
Clinging to Gains: The dollar has backed off its better levels but is still holding at better levels on the majors in slowed, holiday infected trade. The index has gotten caught near 76.75 after its early push through 77. The euro has been holding near the 1.4683 level on the buck, while being able to tick back up to get 135.20 yen per euro. The yen has been stalled out near 92.00 on the buck, ticking either side in a quite Japanese holiday session. The pound remains under pressure, trading near September's lows, with extended "quantitative easing" talk with the BOE due 9/23. The general short covering rally on the buck may see some follow through Tuesday with the FOMC sitting in the wings and players continue to square-up, but there is no chance the Fed will be doing anything on rates, and the statement will likely offer little for dollar trade. There‘s little in the way of EuroZone or Japanese reports due. Gold and crude continue to suffer as the buck gets bid with spot now 1003.40 (-4.20) while crude is on offer with November closing 69.93 (-3.56)
-Fed bought $4.050B of the $15.299B dealers dumping in the 2013 to 2016 maturity range-
Stock Market:
...SPX 500 still below the September 17 High *1075 trading with a slightly more bullish tone in Monday's session; maybe the Japenese holidays could be blamed for the restful attitude of the market since the index manages only a recovery from intraday Low *1057 and closes down at *1065;
...although decliners leading advancers more than 2:1 on quite negative volume, there remains short term strength in the market to achieve the immediate target *1082/*1090/*1119 level still in play for later this week;
...on a cautionary note, the market seems to loose more and more momentum and the outlook for a topping process strengthens
...consequently, at *1082/*1090/*1119 risk increases for a minimum shake-out back to *1027/*1035 congestion and the implication of such a correction could be the start of a double top process which would be confirmed by a second test and subsequent failure of the *1082/*1090/*1119 level
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
US Calendar:
U.S. FHFA home price index rose 0.3% in Jul, but fell 4.2% vs year-ago reading
Bond Market:
15:58 ET 10-Yr: +09/32..3.446%.. USD/JPY: 91.1800.. EUR/USD: 1.4800
Bid in Face of Supply, FOMC: Treasuries were able to come back from early selling with the 5-yrs leading the way higher ahead of a record $40B auction tomorrow and the FOMC statement in what should remain thinned trade. The market is once again running with stocks, trading higher even as riskier plays are renewed and supply crowds the bond market. On top of the record 5-yr issue there remains another record sized $29B 7-yr set to go off Thursday, the only of the big, new coupon issues on the week to get in behind the Fed's updates on stimulus plans, exit strategies and economic outlook. The statement will not likely be drastically changed, but there will be some note taking of better general numbers and some reference to the soon-to-be-over, dwindling, bond buyback operation (there is no meeting between now and the end of October) and potentially some talk of additions to the mortgage related programs set to end year-end. The market has become fairly well accustomed to supply and, possibly, a touch overconfident in the face of the deluge as offering after offering goes smoothly if not well. The market got a little spooked after the early 1-yr bill went only OK, but recovered well on the 2-yrs highest demand ratio in 2 years. The curve was ultimately swung well flatter with the 2-10-yr yield spread now 248.7 from near 252 in early trade. The dollar has been taken back down, seeing a year low in the index and against the euro, while flirting with its worst on the yen in 7 months. The euro took out 1.48 but couldn't hold while the yen was able to keep itself near 91. The day ahead has the FOMC (14:15) statement and the $40B 5-yr auction (13), meaning a potential snoozer, or crazy, indefinable, low-volume swings.
Stock Market:
...SPX 500 still below the September 17 High *1075 with bullish sentiment becoming more apparent in Tuesdays' session; it seems the upside break-out is almost a fact, maybe it is the Japenese holidays holding it back at present;
... the index found renewed support above yesterdays' Low *1065 and remained range bound consolidating comfortably between *1057/*1075 support/resistance
...advancers outpaced decliners 2:1 and as long as a positive accumulating tick indicates continued buying pressure within this level, the market will achieve the immediate target *1082/*1090/*1119 level later this week or during next weeks' trading; although NYSE up/down volume is strongly positive, NASDAQ up/down volume diverges negatively to almost 1:1 towards the end of the trading session
...on a cautionary note: downside risks are starting to overshadow upside potential and a possible failure at *1082/*1090/*1119 increases risk for a minimum shake-out back to *1027/*1035 congestion and the implication of such a correction could be the start of a double top process which would be confirmed by a second test and subsequent failure of the *1082/*1090/*1119 level;
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
US Calendar:
FOMC left rates unchanged (0.25%), elevated econ view, inflation tame, MBS pace slowed
Bond Market:
14:52 ET 10-Yr: +03+/32..3.431%.. USD/JPY: 91.0875.. EUR/USD: 1.4807
Buck Beat Down: The buck got taken out following the FOMC, with the promise of continually low rates in a slow, plodding growth scenario, the index was clocked to make new year lows and trade back to early August 08 levels. The euro was flung back through to near 1.4845 on the news. The yen took a delayed reaction run back through to 90.85 from just off the session high near 91.50 while paring some of its losses on the euro in the process. The run-off on the buck allowed the gold to make a run at session highs with spot now 1015.00 (+0.50) while crude was unable to get much back in the face of prolonged slow domestic, demand, now 68.99 (-2.77).
Stock Market:
...as expected, SPX 500 traded higher into lower end of immediate target *1082/*1090/*1119 level after FOMC statement; at this stage, a brief slip back of the index to affirm the current *1057 trading range floor is possible
...the US economic calendar features Initial Claims tomorrow 24 September and disappointment could threaten the *1057 support; failure at this level would increase risk for a minimum shake-out back to *1027/*1035 congestion and the implication of such a correction could be the start of a double top process which would be confirmed by a second test and subsequent failure of the *1082/*1090/*1119 level;
...on a cautionary note: downside risks based on momentum and VIX cycle studies are starting to overshadow upside potential and possible failure at *1082/*1090/*1119 (see attachments)
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Vic continuing its cycle up as you say A77, currently up 5.62% and approaching 25. Fed announced it is scaling back 2 stimulus methods, firstly the amound of money available to the banks in the short term under TAF.
Secondly it is scaling back the program where investment firms can swap dodgy securities for safer treasury ones. Sales of exisiting homes fell for the first time since march, 2.7% drop in august.
On the other side 7 year bond went well with bid to cover at 2.79.
This joker says its all over
http://www.nzx.com/news/2894152/S-P-...-tumble-starts
US Calendar:
U.S. initial jobless claims 21k to 530k, below median 546k for Sep-19 week
U.S. existing home sales sank 2.7% to 5.10 mln in Aug, below median 5.35 mln
Bond Market:
15:36 ET 10-Yr: +12/32..3.374%.. USD/JPY: 91.2400.. EUR/USD: 1.4656
Ramped Up: Bonds backed off the highs on profit-taking heading into the close, but are holding the best levels in a week on the shorter end and in 2 weeks on the 7-30-yrs. The market is done for the week as far as big events are concerned and came through with, if not flying colors, parasailing ones. The record $29B 7-yr offering today went very well, coming on the back of an OK 5-yr and solid 2-yr. It helped that it is the final big offering for the quarter, buffered by other window dressing buyers and general newly minted safety buyers. The day's data was a mixed bag, but mostly bond friendly. That the Fed and assorted central banks are saying they are reeling in (via baby-steps) some measures of liquidity-pumping, which is giving hope that they will be able to wiggle out of the bailout mess without blowing things up. EuroZone bonds also got boosted, with added push as the deteriorating housing report put some doubt on the recovery story. Treasuries will likely be giving some back into Friday's session, with little in the way of market movers on tap, but with a recess from large supply and general safe-haven concerns there will be a floor under prices and the 10-yr should be able to stay clear of the 3.475% yield level. The curve was generally flatter, but in a fairly tame range with the 2-10-yr yield spread 243.9. The dollar took off as safety buyers stepped in, stock slumped and commodity prices crumbled. The index was able to get back to the 77 handle as the removal of funds is a step toward higher rates. The euro was clocked back to the 1.4630 area after topping out just over 1.4802, while backing off eventually on against the yen from a mid-session 134.30 to 133.60. The yen was backed up 1.4% from overnight levels on the buck, but spent the last hour working back some ground. The pound got slammed to a 5-mo low as officials show little concern over its dropping value. The day ahead has durable orders (8:30), revised UofM sentiment (9:55) and new home sales (10), while Fed-speak is popping again with gov Warsh speaking on the economy (13).
Stock Market:
...as expected, the economic data set out this morning disappointed and the SPX 500 extended the downslide
...short term support *1057 taken out decisively but the market stopped short to affirm Aug 28 High *1039/ Sep 14 Low *1035 and the market is mounting an attempt of a recovery on intraday Low *1046
…...the first market top of a possible double top process is in place and rest assured, this top needs to be tested for the market to stake out its future territory; considering the bearish undertone in the market at present, it is very unlikely however, that a sustainable bottom for a second test of the *1082/*1090/*1119 level could be in place without a thorough test of *1039/*1035/*1027
...further 'undercover' indications for a possible topping process: institutional buy/sell spread narrowing with a new High in selling (see attachment)
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
US Economic Calendar:
U.S. new home sales rose 0.7% to 429k in Aug, below median 445k vs 426k Jul
U.S. durable goods orders sank 2.4% in Aug, below median 0.5% vs 4.8%
U.S. consumer sentiment (final) rose to 73.5 in Sep, above prelim & 70.4 median (Sentiment readings are a reflection of a variety of events rather than an accurate tool for forecasting consumer spending. Gas prices and political events can have an outsized impact on sentiment. In general, these data are of very little economic value)
Stock Market:
...SPX 500 traded back from intraday Low *1041 and as a result, established the upper end of the Aug 28 High *1039/Sep 14 Low *1035 range as first line support
...possible contributing factors to the result:
-liquidity inflows remain strongly in positive territory
-(+1088) Tick buying power on the NYSE past the intraday Low
-end of Q3 window dressing may have kept stocks elevated
...the relative shallow sell-off so far starting two sessions ago and todays' relative strong performance could indicate a second test of the *1082/*1090/*1119 level in the not too distant future
...a cautionary note from Kevin Lane (Fusion IQ): (see attachment) and considering current fundamentals or 'funnymentals' as mentioned in some trading circles, a double top between the *1082/*1119 level should trigger a sharp 20% (+) sell-off during most of Q4 that should affirm its July Low *869 before stabilizing
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
US Calendar:
empty
Bond Market:
Treasury yields rangebound near lows amid holiday-thinned trade, despite firm stocks
USD-JPY rebounded back above 89.0 vs 88.2 trend low, half-year end flows abating
USD index bounced 0.4% to 76.90 despite stock rally and firm bond market
Stock Market:
Marketwatch:
Recouping last week's loss
Wall Street plays off fresh merger activity as Abbott Labs and Xerox announce multi billion-dollar deals
...SPX 500 defended the upper end of the Aug 28 High *1039/Sep 14 Low *1035 range and surged higher in what could turn out the early stages of another bull run towards the *1080/*1090/*1119 range in the near future
...the advance featured so far today:
-NYSE advance/decline ratio ~ 4:1
-NYSE strong up-volume within unspectacular total volume
-market direction neutral to bullish
-(-460/+226 buying power) diminishing towards day end
-selling into the most bullish market phase apparent
...as a result, until the index closes above the Sep 17 Peak *1075, the early stages of the envisioned bull run could include a second testing of support with a downside break-out possible
...looking ahead, a double top between *1080/*1092/*1119 should trigger a sharp 20% (+) sell-off during most of Q4 that should affirm its July low at 869 before stabilizing
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
It's amazing how we miss your posts when you don't check in. I guess there are more of us lurking and reading than one realises. Maybe we are becoming to reliant on your updates. :)
...too busy even to fit in a proper update until around 10th October but try to post if there is a dramatic change in trend
...taking out SPX 500 *1075 still relevant for a bullish turn around with the minimum hurdle being *1069; trading under *1069 Close is bearish; trading above *1069 start of bullish sentiment returning for a second test of *1080/*1092/*1119 range
Kind Regards
...writing in between jobs, today's update seems to be an easy one as the SPX 500, as mentioned stuck to *1041 support area and surged higher; have not checked market internals but looks like today's trading is the overture to another test of *1080/*1092/*1119 range;
...failure > double top established > 20% (+) correction
...break-out > more in the next update, but currently not my favorite option
Kind Regards
delinky, even I was showing signs of withdrawal yesterday, ??
US Calendar:
U.S. ISM slipped to 52.6 in Sep, below median 53.3 vs 52.9 in Aug
U.S. construction spending rose 0.8% in Aug, above med -0.3% vs -1.1% Jul
U.S. NAR pending home sales surge 6.4% to 103.8 in Aug vs 97.6 in Jul
U.S. personal income +0.2% in Aug, in line
U. S. Personal Spending Aug 1.3% consensus 1.1% prior 0.3%
U.S. initial jobless claims rose 17k to 551k, above median 535k for Sep-26 week
Stock Market:
...SPX 500 under pressure following the release of a mixed data stream and as a result, a thorough test of key support range Sept 14 Low *1035/Sept 9 congestion *1027 is now underway
...at present, the index rebounded from intraday Low *1034 and holding above so far
... a sucessful defense of key support range would form the basis to fire the index up for the initial Sept 16 High *1069 on its way to a second test of the *1080/*1092/ *1119 target range
...failure in the key support range on a Close basis would substantially increase risk for a downside break-out to the September Low *992 initially
...looking ahead, still very much in favor of the double top scenario between *1080/*1092/*1119 that should trigger a sharp 20% (+) sell-off during most of Q4 that should affirm its July low at 869 before stabilizing
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
...fundamentally, could not agree more
...two things stand out about this rally:
-Wall Street 'Pros' pushing it based on the theory of pricing the market on 'mid-cycle earnings'
-happy, no clue economists et. al pushing it on 'less negative data' as actually 'bullish'
...technically, the index is at key support and some sort of short term bounce is most likely including a second test of before mentioned target range before a larger sell-off
Kind Regards
US Calendar:
U.S. nonfarm payrolls sank 263k in Sep, below median; jobless rate up to 9.8%
U.S. factory orders dove 0.8% in Aug, well below median 1.1% vs 1.4% in Jul
US Hourly Earnings Sep actual 0.1% prior 0.4%
US Average Workweek Sep actual 33.0 prior 33.1
Stock Market:
...SPX 500 under renewed pressure following the release of employment data and as a result traded down to 31 August Close *1020 intraday holding just above the 50 MA *1016
...traders/investors bought the index at this level keeping market direction in the neutral to bullish zone; the intraday rapid recovery bodes well for today's *1016 to be a bottom (Dow Close above Sep 9 Congestion *9497) that completes the first half of the expected major double top pattern in the *1080/*1092/*1119 target range followed by a sharp 20% (+) sell-off during most of Q4 that should affirm its July Low *869 before stabilizing
...the other side of the bargain features a Close below todays' intraday Low *1016 which would negate the double top pattern scenario and would strongly indicate, the Q4 20% (+) sell-off is already well on its way
Market Finish: market direction turned bearish towards the Close with increased selling becoming apparent; Dow missed key support Close by 9; Nasdaq by 1; SPX 500 Close above intraday Low *1016; upside momentum rolled over;
Current Elliot Wave commentary:
In summary: all the major stock indexes are in synch lower, with prices in the process of tracing out “five down” from the September peaks. There may be a little upward bounce early next week, but we are not certain of this potential. Regardless, we would view such a move as an opportunity for the bears because once the bounce exhausts, prices should decline again and make new lows. The initial downside support surrounds the September lows—9252± in the DJIA, 992± in the S&P—but much lower potential exists
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
Have you guys had a look at the China market graph. Looks like a top and moving down. This does concern me abit, cos China have been where the action is this entire year. I keep a close eye on China these days for directions.
Key Technical SP 500 Levels:
*1020 > 50-day MA and below >
*1008 > uptrend line March Low and below >
*992 > 02 Sept Low > and below
*869 Ultimate Support and below > (do not think it) (see attachment_1 = Free Data Chart)
SP 500 Major Pivot Point: (see attachment_2 = S&P 500)
SP 500 Fundamentals:
...The average U.S. institutional fund manager is up 22% for the year, outperforming the S&P 500 by some 400 basis points. This in turn suggests that there will be incentives to “hug the index” and try to hang on to that outperformance through year end. This in turn suggests that the stock market may end up losing a prime source of buying power — otherwise known as the panicky PM who has been desperately trying to make up for last year’s horrendous performance.
...And whether you look at operating or reported earnings, trailing or forward, the S&P 500 today is trading at multiples that are higher than they were at the market peak in October 2007. So we’re not talking about pricing the market with ‘mid-cycle’ multiples – it is trading at ‘late-cycle’ multiples.
...WHO HAS BEEN DOING THE BUYING?
We already ascertained earlier in the week that is hasn’t been Ma and Pa Kettle – in fact, the FT quotes data from TrimTabs showing that only $2.5 billion in net inflows has gone into U.S. equity funds and ETF’s since the March lows. Inflows into bond funds have been ten times as strong. We know that corporate insiders have been net sellers of size. And the buying power from short-covering subsided months ago.
The answer, and this validated by the FT on page 16 of yesterday’s edition, are the hedge funds. And once they begin to see signs that a V-shaped recovery is about as real as Santa or the tooth fairy, watch out. Because there aren’t any other buyers out there that can be identified. (see attachment_3/_3a = Core Holdings/Institutional Buy-Sell Spread)
US Long Bond Market:
...the Treasury market is signalling that deflation is the more profound risk. The yield curve is flattening big time and since mid-September the long bond has rallied more than 30 basis points. That is amazing and it means that the bond market crowd smells a rat somewhere – as it did when it rallied like this as the stock market was making new highs in the summer of 2007. As an aside, the last time the long bond yield was at 3.95% was in late April … when the S&P 500 was sitting at 855. We should add that real interest rates – the bond market’s proxy for real growth -- as measured by the yield on 10-year TIPS is all the way back to 1.5% after hitting a peak of just over 2% in early July and again, the last time it was where it is today, the S&P 500 was 20% lower than it is today.
...The real question is, if we in fact do have this sustained reflation trade going on, which is actually necessary to justify the earnings expectations embedded in equity valuation, why it is that the yield on the 10-year Treasury note isn't north of 5.0% already? Instead, it is 3.3%. And history shows that when bonds and stocks do diverge, as was the case in the summer of 1987, the fall of 1994, the summer of 1998, the winter of 2000 and the summer of 2007, it is the former that proved to be prescient.
Kind Regards
Thanks V much your work is invaluable
US Calendar:
U.S. ISM services index rose to 50.9 in Sep, above median 50 vs 48.4 Aug
Bond Market:
U.S. 10-year TIPS sale awarded at 1.51%, firm cover 3.12, indirect bid 44%
Treasury yields rebounded after firm TIPS, options trade faded Friday rally
The 10 year TIPS reopening auction was solid and bidding was aggressive. The yield was about 5 bps below expectations and the bid to cover of 3.12 was the highest since Jan 1999 and well above the average over the past two years of 2.17. Indirect bidders totaled 44%, slightly below the July auction of 49.7%. Bottom line, combining this with another breakout attempt in the price of gold and the US$ trading near recent lows and its clear that investors want inflation protection and are less sanguine with the inflation picture than the Fed is. The conventional 10 year note did trade lower in response as a yield of 3.20% doesn’t reflect much fear of inflation.
Stock Market:
...SPX 500 is extending its rebound today after a successful defense of the 31 August Close *1020 and the 50 MA *1016 last Friday; the index penetrated the initial up target *1041 intraday, but finished on the weak side *1040
...its successful defense indicates that *1016 remains a short term floor, but the continuous weak finish in the major US indexes also indicates and strenghtens the double top view in the *1080/*1092/*1119 target range; only an unexpected Close below SPX 500 *1016 would negate this scenario and would confirm, that the expected 20% (+) sell-off during Q4 is already well on its way
Trading Strategy: sideline (safest);
-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: short 10% equity covered; short bias (+); with equity exposure;
Long Term: THE BEAR
_no guarantees and trading strategies are just ideas_
Kind Regards
SPX 500 Monthly update:
...according to September month end data, the index is now in a bull market and current market weakness should not indicate a slide back into bear territory (see attachment > SPX 500 Monthly Index)
...current favorite quote for the short- to medium horizon:
-stash cash for minimum *869-
Kind Regards
Ananda, I was looking back over this thread and couldn't help but notice that you were quite Bullish while the market was crashing (you sold nothing!) yet, just as soon as the market turned, you became overtly Bearish, with most every post concluding "Market Strategy: Sidelines (safest). Longterm THE BEAR". It appears that you rode the slump fully invested all the way down and that you have been fully cashed up for most all of the very strong rally that has ensued. From where I sit this looks awfully like a lose-lose strategy! You maximised your losses on the way down and have minimised any gains on the way up. As Sarah Palin said - "say it aint so". Please!
While you have been advocating sitting on the sidelines, the market has soared roughly 50%. It seems to me that you have painted yourself into a corner here. Having advised avoiding any market involvement during the biggest rally in decades, you really would be going out on a limb to advise buying now - the longer this exceptional rally continues, the higher the likelihood of a correction. I think you will be stuck with your unfortunate "sidelines" recommendation for quite some time yet!
You should have been Bearish when you were Bullish and Bullish when you were Bearish. Imagine if you had sold everything when you said "sell nothing" and bought back in when you said "This Bear has just started"!
The bluntest, crudest instrument in the TA toolbox is the 200 day Moving Average. Van Tharp said "My advice, get in the market when prices are above the 200-day moving average and get out when they are below. That would have kept you out of this market throughout 2008". Indeed. It is of course fairly easy to improve on such a simple, basic system.
http://h1.ripway.com/78963/DOWa77.gif
Ananda, I feel a bit mean featuring your posts like this, but maybe there is something we can all learn from it.
Regards,
Phaedrus.
Hi Phaedrus,
...I know that you do that and I think its funny...
Kind Regards
TA's life is like a slow moving soap opera...everyday a little more of the plot is revealed :):cool:
Ahh Hah.... a zig zag upturn on the 2 November. Hmmmm
Everyone has been beating the market correction drum.
Hmmm..could it be that this latest weakness is just another leg in this zigzag formation?
coming up....
will we end the year in a EW Prechter c wave crash :confused:
will we end the year on a Jim Cramer high dressed in a bathrobe (again) :confused:
will we see Nouriel Roubini exit the market & add another room to his loft ;)
Stay tuned for the next exciting:rolleyes::p episode of...THE DOW
http://i458.photobucket.com/albums/q...OW03112009.png
Back over the psychological 10000 ...
Belg...that "yes" looks a good bet now..eh :)
http://i458.photobucket.com/albums/q...OW05112009.png
Nice graph Hoop. :)
Keep us up to date on the TA side. I am more of a FA man and have no clue when it comes to TA.
I ve always said the market will go higher (read other posts) and bought more stock during the last week of weakness. As long as those rates are low, the market will hold.
Good jumps in the Dow but the Aussie seems to be lagging despite the fundamentals. Am picking up Aussie and hoping it plays catch up. Will have my stops in this evening when the US labour figures are announced. But yeah lots of good news out lately.
May head towards 10200 by Xmas
As I write the DOW closed at 10407 (+136).
The 50% Fibonacci has been breached. the primary downtrendline is under threat and the Market correction due point has been exceeded.
What is so important is that all these points are happening at this period of time and creates a large resistance for the DOW to leap over. it seems today the DOW's rise today is remarkable as it is against the chartists odds. The chartists last week were expecting a fall of the DOW index this week as they were assuming a respect of these lines and points. Even though today's rise is big and enthusiasm is abound with sideline money starting to enter the Equity market..there are still the same warning bells going off for a bull market correction to happen.
If the DOW keeps rising there is another big hurdle looming, the strong resistance line (orange 10650) created back in the previous bottoming out in 2002/2003 That resistance line is the Feb 2002 Feb 2004 necklines of that inverse H&S formation.
http://i458.photobucket.com/albums/q...OW16112009.png
The DOW is respecting the triple wammy..the Primary downtrend line, a resistance level and the FIB 50% extension point, all together at this point of time (see the above chart in the last post) This was always going to be a big hurdle to mount, it will be easier to break upwards later when these points shift and don't coincide together...at this moment all together they are acting as a big heavy lid which would take more than normal buying pressure to move above it.
Meanwhile.. with this big lid in place, a TA bull correction due point of 10360 market, and the ending of a double zigzag wave pattern...its time to be careful again.
PS Edit....Notice the short/medium term down trend in Volume
.
http://i458.photobucket.com/albums/q...OW20112009.png
Hi Hoop
as always a very informed post.
I'm starting to feel a little nervous. The market has just stretched itself too far without a good 3 month pull back/ consolidation.
i'm increasing my cash position. frist time i;ve done that since March 09
PS NZ and Aussie markets.. which is what most of us all trade HAVE NOT MADE NEW HIGHS
Hi Footsie
yeah corrections do make us feel insecure and can make us do emotional actions rather than the discipline/calculated actions.
Your PS quote says it all..PS NZ and Aussie markets.. which is what most of us all trade HAVE NOT MADE NEW HIGHS...
The NZX50 and All Ords seem to be already halfway through a correction which started about a month ago. Ideally... (and you had a crystal ball that works) if you had an indexed portfolio and were expecting a correction it was a month ago you should've sold. However, for most of us why sell? as Bull corrections are mild and often end without triggering medium/long term sell signals with the net result further down the track a higher market..
At present the NZX50 correction is waveless and has consistently downtrended about 4% already.. so I guess we are half way.
The All Ords had a sharper correction of 8% and has bounced to recover 6% of that..whether it is a B wave and a bigger drop (c wave) is coming is not clear...some charting indicators (Ichimoku) suggest it could be forming a triangle/pennant (higher low lower high) we have to wait and see.
Disc:- 90% equities 10% cash.
Even with today's new high (10451) nothing much has changed chartwise since the last charts.
Still green on P's Charts:)
The DOW still banging away at this heavy lid on my charts and doesn't seem to want to go down.:)
So...are the investors fearful with all this correction talk.......The VIX (fear index) says ... Nah..bring it on:D.
http://i458.photobucket.com/albums/q...IX23112009.png
that graph is still around the 10500 mark tho, so isnt it missing a couple of days data?
Whoops! All fixed now. Thanks Peat.
Thanks for that post Phaedrus, but it was a bit crass. The truth hurts, but why rub it in?
I wonder if anyone's been posting on here that might get Phaedrus's stamp of approval?
Be a bit more positive than drawing attention to the losers ad nauseum?
Ground Hog Day
Got the feeling nothing has changed much this last month. You wake up and swear that you have seen the closing day of the DOW at this level before.
To save writing and it is a Ground Hog Day scenario, it is fitting that I repeat my post (in green) :)
Repeated Post #678....Hoop Quote 24 Nov 2009
Even with today's new high (10451) nothing much has changed chartwise since the last charts.
Still green on P's Charts:)
The DOW still banging away at this heavy lid on my charts and doesn't seem to want to go down.:)
So...are the investors fearful with all this correction talk.......The VIX (fear index) says ... Nah..bring it on:D.
http://wallstreetbear.com/board/view...89&post=216981
This chart unless a giant headfake suggests we go a lot higher
inverse head and shoulders is circa 1220 on the s&p
Belg..a Merry Xmas 2 u 2 :cool:
Yeah..statistics!!!......The secular bear cycle starting exactly at the start of a decade really has made the 2000-2009 decade figures look real bad...eh.
However down under I'm personally going to miss 2009...my best year ever. Unfortunately there will be a downside.. the tax bill :(
Speaking about tax...a interesting snippet on CNBC this morning..they were speaking about the American investors who recently expected a correction or worse (EW supporters?) and shorted. Now that the Equity market has not down-trended as expected, if they want to claim a this year tax loss they have to cover by 31 December, and apparently there is quite a number of these investors around.
Would this covering add enough momentum to crack that resistance zone and see another upward wave?
Edit PS....another example of how one can lose their money ...shorting in a cyclic bull market
I don't think so, Belg. True contrarians look at what the herd is doing - and do the opposite. When the herd began bailing out of the market (at the big red arrow) contrarians were buying. What mugs! (There are documented examples of this right here on ST)
When the herd began re-entering the market in strength (at the big green arrow) true contrarians were selling. What mugs! (Again, there are examples of this behaviour right here on ST)
It is the market followers that have had a great year, Belg. A great 2 years, come to that.
http://i602.photobucket.com/albums/t...usPB/Dow14.gif
Belg, a contrarian seeks opportunities to buy or sell specific investments when the majority of investors appear to be doing the opposite..... ie they buy in downtrends and sell in uptrends. You can't advocate "loading up and going long" when the herd is thundering North and claim to be a contrarian!
Market Strength Indicator chart update :-
http://i602.photobucket.com/albums/t...sPB/DOW111.gif
P's chart will still be green
Heres something from Chart of the Day .... this rally is by historicall terms almost a non event ..... a long way to go yet
Quote ..... all major market rallies of the last 110 years are plotted on today's chart. Each dot represents a major stock market rally as measured by the Dow. As today's chart illustrates, the Dow has begun a major rally 27 times over the past 110 years which equates to an average of one rally every four years. Also, most major rallies (73%) resulted in a gain of between 30% and 150% and lasted between 200 and 800 trading days -- highlighted in today's chart with a light blue shaded box. As it stands right now, the current Dow rally (hollow blue dot labeled you are here) has entered the low range of a "typical" rally and would currently be classified as both short in duration and below average in magnitude.
Bad times on the DOW tonight. Down 220 (2%) points at the moment.
P, has this changed your chart from "Stay in" to "Caution"...it must be close.
No point in a new chart..this 2 months old one I posted way back tells the story
Note:...its the distance that counts not time..... BM Correction warning point of 10350 (green dotted line) about 4% error ...not a bad error rate:).
Note:- Typical BM Correction "rule of thumb" sign...by the time you realise it is a BM correction half of the correction has already happened
Watch Monday (Wall St time) for a kicker....may or may not happen.
pardon moi, senor hoopster, what is a kicker?
touche meester pudding!
ive been planning all day today to sell my shares on monday. and then i strted reading all the old posts, charts on the size and length of this rally, looked at big phaddys charts etc. and im actually going to stay all in. im not a day trader, nor am i by any means any expert, but to me this looks like any normal healthy retracement. we go up up up down down and then up again. after all this is what happened in nov just last year.
cool heads is what is called for. cld be famous last words, but imo this is just how the staircase traces. while will be good pickings next week i cant be bothered with short selling, and will simply wait for herd to trek north again.
good luck everyone. interesting times.
Bonjour evilroyrule...
Je suis ne peut pas écrire le français donc j'ai trompé l'utilisation d'un traducteur de texte en ligne... niffy hein! essayez-le ici
A kicker is a very powerful two candlestick formation. Investors are known to make a lot of money from doing nothing else in investing except hunting down kickers and acting upon them.
see here (click "skip the ad" if it pops ups)
Google... candlestick kicker for more info
I mentioned to watch for a kicker (which may or may not happen) next week as the market drop is very severe on news which isn't particularly bad when you sit down and calmly think about it. The markets being closed for the next two days investors have time to "group think" and may decide on Monday to proact rather than react.
thanks hoopy,
sadly i quit 5th form french before i flunked.
i dod my homework. so we are looking for a bullish kicker? god knows how you can recognise that candle forming until the event is upon us? it cld go either way, but i agree, the news out hasnt been bad at all.
so someone looking to trade off these bull kicker (good name for next racehorse or a derivitive of at least) signals wld take a punt on monday? surely if they waited till after the day, the candle wld have been formed and opportunity lost? appeciate your reply, this is really interesting. thanks
ok so this is what we are looking for:
Recognizing the formation of a potential Kicker Signal requires observing the previous day's candle formation, with the open price, then the closing price continuing in the direction of the existing trend. A bullish kicker is formed after an announcement or some event, a down-trending price alters its direction, opening at the same level or higher than the previous day, a gap open, and proceeding to close in the complete opposite direction of the previous day.
in practical terms how does that work? if on open monday, any one stock opens highr than its friday close, is that it?? or is it formed at days end after reversing previous trend? if so, ho much higher wld it have to close??? is the bull kick est on open or at end of days trade?
ps good use of the on line translator!!
Thinking a bit more about it ...Realistically Monday would not be the day for a bullish kicker..The Dow would have to open above 10400 and rise higher and close higher (gap), a bit too much to ask for methinks.
Maybe Tuesday if Monday suffers a much smaller fall....hmmm.. an assumption
Hmmm... need the right variables...maybe at this moment this is not the right scenario (chartwise) to expect a bull kicker formation...
Oh well.... I'll stop assuming and continue analysing the real stuff.
We needed an up day to offset the bearish effects of the 3 identical black crows. We got that.
The DOW closed up at 10197 (+24) a positive but wary start to the week the Media say.
But did the returning bulls do a good job today?....Personally...Nah
Their first bullish attempt to regain their lost territory failed. (retest of new resistance 10250 respected). Maybe tomorrow?
A bull market correction in progress scenario is the odds on chance at the moment..
http://i458.photobucket.com/albums/q...ow25012010.png
Hoop
Where would a bull market correction take the DOW 9500?
what affect will that have on the asx i wonder.
markets are starting to diverge vs the 2008-09 correlation.
Phaedrus is calling aussie to bounce and he might be right with a solid reporitn season abotu to start...but it will be had for aussie if the SP and DOW are correcting
btw, what % are you invested at the mo hoop?
No he's not. He simply drew attention to Mondays candlestick. This chart shows some previous examples :-
http://i602.photobucket.com/albums/t...llOrdsDoji.gif
nikkei down .11% anything to make of that?
and hang seng .38%
Just how rooted the US is relative to the rest of the world can be seen in this chart from chartoftheday.com
Yanks need heaps more gold to buy the DOW now than they did a few years ago .... and note the log scale as well
hang seng on fire tonight, nikkei less so. cld it be 3 green for the DOW?
China IS BOOMING! Up 2.4%
Final confirmation that the Bull market correction is over.
DOW had a good day and closed at 10889 (up 103 +0.95%)
OK... what happens now..?
If I knew I would be richer than Buffet.:cool:
Well being a TA bent investor I would first have a look at the charts ...I would take history and project it forward look forward and use TA Targeting to find the next bull market correction due point.
Using TA targeting method and simply averaging the 2 previous corrections uptrend distance at 2500 points the next correction due point should be in the vicinity of the 12300 area (2500 + 9835).
Looking at the charts below from history there is confidence that a correction will start near or at a major resistance level. At the 12300 area unfortunately a major resistance point is absent...so one has to look at resistance points nearby. There are some around the 11760 area and more towards the 13000 area. Looking at the second chart I have marked this 11750-13000 zone in yellow. A wide area but the correction due point of 12300 happens to be nearly in the middle of this zone.
http://i458.photobucket.com/albums/q...OW23032010.png
The chart below points to some possible pessimistic news if one believes in charts.
This next correction has to be taken seriously as it may or may be not a cyclic turning point. The 11760 level happens to be the peak back in February 2000 that saw the commencement of a cyclic bear market as well as a change of secular cycle from bull to bear. Investors will be reminded that in secular bear cycles (on average, give or take) cyclic peaks tend to be no higher than the last. However a long strong cyclic bull market during 2003-2007 did push a new high peak to over 14000...so hopefully this time around with this present day cyclic bull market we are in, we may see that 14000 area again.. but any level above 13000 if we get that far, would become a constant worry for the chartist investor.
Now seeing that yellow zone within striking distance (10-20%) now, it may look as if the bear is ready to attack this year and the cyclic bull dies ...however correction due points are based on distance not time.
I have illustrated this example, (see the red elliptical) February 1994 to February 1996.
By Feb 1994 it seemed the cyclical Bull market had nearly run its course but as it happened it was still another 2 years before that due point was finally reached...this gave the market time to create a strong floor (support level) to spring up from and the life of the cyclic bull market was extended. EDIT: Its this same strong then Support / now(was) Resistance level (10700) that was broken up through last week...a very bullish sign.
http://i458.photobucket.com/albums/q..._1/DOW17yr.png
Hoop
You might be interested in this view of the US markets .... even uses your Shiller figure
http://hussmanfunds.com/rsi/valuatio...rdearnings.htm
Interesting piece
http://www.investorsinsight.com/blog...-in-store.aspx
The current - "buy-and-hold" investors in the S&P 500 Index are still 25.5% down from the levels of 10 years ago, the Dow Jones Industrial Index a similar 23.5% lower and the Nasdaq Composite Index a massive 52.5% under water.
The future - Based on the above research findings, with the S&P 500 Index's current ten-year normalized PE of 20.3 and ten-year normalized dividend yield of 2.1%, investors should be aware of the fact that the market is by historical standards expensive. As far as the market in general is concerned, this argues for unexciting long-term returns, possibly a "muddle-through" trading range for quite a number of years to come.
So buy and hold strategy appears next to useless .... need to be invested on the uptrends and out of the market on the downtrends ........ hey isn't that Phaedrus is trying to tell us
asia pumping up the jam tonight. nikkei 12 month high.
Yipee ...... DOW back to 11000
On and upwards from here to 12,000 and maybe 13,000
But gee the DOW was 11000 in 1999
Todays 11,000 just what you expect in a secular bear market .... and we'll probably celebrate again in 2014 and 2015 when the DOW reaches 11,000
It seems that more people on ST are now applying Fibonacci levels to indices and stocks in an attempt to identify future turning points. In view of this, I thought it might be interesting to "backtest" Fibonacci levels over 20 years of Dow history and see how well they identified the significant turning points of this period.
Trends are followed by countertrends. Fibonacci theorists claim that the extent of these retracements is often a Fibonacci ratio of the extent of the previous move. The countertrend "ought" to retrace 23.6% or 38.2% or 50% or 61.8% or 100% or 123.6% or 150% or 161.8% (etc!) of the previous major trend. You can see from the charts below that after each and every major trend, Fibonacci levels failed to identify (let alone predict) the extent of the following retracement, even approximately.
Troubled by too many significant highs and lows failing to occur at conventional Fibonacci levels? No problem! As illustrated in the latest chart (bottom right) all you need do is simply apply another set of Fibonacci levels within each of the original ones. Such a subdivision gives the current uptrend 26 putative reversal levels - so far. This technique (as posted right here on ST) gives such a multiplicity of possible reversal levels that it virtually ensures any event deemed to be of significance will be "at or near" a Fibonacci level.
http://i602.photobucket.com/albums/t...sPB/DOWfib.gif
A recent study by Professor Roy Batchelor and Richard Ramyar found no evidence that Fibonacci numbers work in American stockmarkets. They tested nearly 90 years of history of the Dow Jones Industrial Average (1914-2002) and found no indication that trends tend to reverse at the 61.8% level - or at any other Fibonacci level.
http://www.cass.city.ac.uk/media/sto...004_65846.html
maybe you should have started a new thread.
I think perhaps you're taking the fib claims a little too literally in that no one claims its perfect but that there are a lot of instances where they act as support resistance levels which may or may not hold.
There are so many examples of them being useful that your 1 post denigration using one index isnt really a satisfactory refutation in my opinion
Also you didnt mention the fib that I prefer most of all in conjunction with the .618 fib, and thats .786 (the square root of .618)
There - I did bite! (I was very tempted not to)
What? only one nibble.
Come on you Fib fans. Get stuck in and defend the cause.:p
Peat reckons they may or may not work which is a bit like it may rain tomorrow or it may not. Not exactly a strong defence :D
well it seems to me when I draw the Dow Fibs that is there IS some magical attraction to fib levels during the correction - the price corrects to the 23 the 50 and 61.82 levels.
and on the way down the 2.61 extension is just a little uncanny dont you think?
Peat, our plots differ because we are basing our respective Fibonacci retracements on different starting points. The attached chart shows just a few of many possible start date options. All are equally valid, and of course even more become available as you extend the timespan covered by the chart. The low that you elected to use is marked by a red arrow, mine light green. Fibonacci levels are colour coded to match their respective start point arrows.
This chart gives some idea of the very large number of Fibonacci retracement levels that can be generated. They are so closely packed that one can be found for nearly every peak and trough. I have included Peat's favourite 78.6% fib. You can see that it is no more effective or accurate than any of the other retracement levels. All these lines - and not one got it right! I certainly see no "magical attraction to fib levels" and the only thing I find "uncanny" is that the reversal, when it came, was between Fib lines - and in an area where they were unusually sparse!
http://i602.photobucket.com/albums/t.../DOWfib413.gif