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that ndx chart shows a classic retest of the inverted H&S neckline on tuesday on lower volume, after the high volume breakout last week, that's indeed looks like a happy thanksgiving for bulls -g-
since this threads topic lately has talked about triangles, i thought i'd post this one, that i've been following for a couple of weeks, and have trade good and bad.
i bought the low near eod, the lower tine of the triangle, given the bullish bent of the market, hopefully this laggard will breakout and get overbought like everything else before a top,
stop at todays low.
NOTE TO DEUCE: SORRY ABOUT THE BIG CHARTS. I'VE I KNEW YOU WERE COMING I'D A' BAKED THEM SMALLER. {G}<<<
actually, augie those charts look quite minimalist compared with some a few months ago -g-
now, i didn't mean to offend you a while back, i said i like your charts, but i have an opportunity to give some feedback here.
i read some of the public charts on stockcharts, and it just blows my mind that some of these people link 30 indicators on 10 charts and they are superwide charts,
it just information overload, some of them have some good ideas but it just get lost in the information shuffle.
i still believe that charts only need 1 or 2 indicators, ones that you are comfortable with, everthing else just brings in too much noise.
jmho
stop talking about me -lol-
and if i told you in 87 at dow 1600 after the crash that the dow wud be up over 5 fold and prudential would do that you wud have sed i wuz nutz..lmao...<<<<
in 1987 the public was not largely involved in the market, in 1999 the public was ga ga on the market, there are more mutual funds than stock issues -lol-
you've got to throw in the towel on that dow 16,000 stuff and stop looking like a fewl, we have just come off a new era top, like 1929 or 1966, it's going to take a long time to put a flag on this 18 year pole.
the question is how will it resolve, will it be the mother of all bear channels or something kinder and gentler, the nikkei bubble was stopped out in 1992 and was held in check by the bouyant US market, and traded sideways.
We are the economy of last resort, and the lenders of last resort are giving no money down, 0% loans to buy stuff,
maybe China will become an economic powerhouse and bail out the world economy -g-
i've been pretty bullish for the last month & a half, but now pigs are flying, clowns are recommending calls, bears have been taken out and shot.
there are some sentiment indicators that look like they have room, particularly your market vane and the rydex ursa/nova ratio, but sentiment has made lower highs and lower lows along with the bear,
there are no absolutes (per LG -g-)
but bull markets don't start with 25% bears -g-, they start with 60-70% bears and they give up grudingly, like the bull gave up grudingly off the bubble top.
actually my WAG is that we have one more drive up to a new high (which would be the third drive off the mid nov trough) and that will set up a nice tradeable top, in early december.
I went long at the close, if we go in the bag tomorrow i'll get stopped out.
a cyber friend sent me this blurb about a front page newspaper above the fold headline that came out last week at the top of the surge.
Cover of the San Jose Mercury News had a large article saying TECH STOCKS REBOUND! Cisco Dell ect. Up 40% some stocks move %100 THE MARKET MAYBE BE TURNING THE CORNER!! <<<
that is some pretty bullish sentiment to appear on a front page, i do realize that San Jose has a lot riding on the tech industry, but still it's goes into the sentiment play book.
market vanes bullish consensus for tue 36 down 3....amazing in the face of 7 up weeks in a row<<<<
4 of the last 5 weeks were up only marginally on the dow.
sentiment is mixed bag, there are already only 25% bears on II, i'm sure you've heard Jim Schmidt say that bull markets average 45% bulls 35% bears, and you can see that action on this long term chart from larry katz, that there was a wall of worry out of the 94 low, which started getting killed on the rally into the 98 top.
Triple M gapping down out of a rising wedgie top into resistance
>
there seems to be no interest in why triangle chart patterns signal directional breaks and why they form<<<<
i would say they form because price has reached a point of equilibrium, a narrowing range forms as neither bullish traders-nor bearish traders have enough fire power to move price in their direction, the range narrows and volume shrinks, as traders get frustrated that price isn't moving in their direction, then either some news happens, that creates a direction move or for some other reason (full moon, 600 year old italian turning point, etc. -g-), one team jumps sides and moves to the other side, causing a directional move
i don't know if you asking about the ability to catch the direction of the break while it's still in the range or why they break directionally.
and while were at it, i think i've got the longest narrowest triangle on a market index in recent memory, i did post this back in april and may and noted that some rock n roll was dead ahead.
http://www.investorshub.com/boards/read_msg.asp?message_id=596410
the ftse from late october 01 thru may
OK, LG now give us your take =g=
db
{for some reason the embedded link will not work on this post, but i't will somewhere else (full moon? -g-)}
That was my prediction back in xmas 1998/99 when His Grace graced the cover of Time Magazine. >>>
weren't you the guy that said magazine cover indicators were useless, or were they useless just in a secular bear market?
well here we are in november, and despite a few minor thrusts below levels where the bear appeared on biz week on 7/22, 4 months later we are higher.
now i'm not saying, nor was i ever saying that the bear appearing on the cover ended the bear market, but it put in a bear killing level at least for a significant period of time.
peaks in pessimism and peaks of optimism, as published in the major media, should not go unnoticed by the trader-dood =g=
there is an old traders saw:
sellers dry up buyers appear at a rising 200 dma,
and buyers dry up and sellers appear at a falling 200 dma,
if you look back at things for a long long time, it's not just an old wives (or ole traders) tale -g-
imo you can throw out all that 20% gains stuff or 20% decline stuff as demarcations of bull or bear markets,
if the 200 dma is headed up your in a bull market, headed down your in a bear market.
you mean its childish to think the dow is goin to 36000??? <<<
it's quite immature at least, if your a market historian, the last couple of times the major press was talking about a new era or a new economy (1929 and 1973) the markets took a 1 decade hit.
that post makes me want to call your 900 # and get your wrong market call -lol-
you shoulda stuck with your day job, sellin shoes.
your the al bundy of market timin -lol-
.".......sez u....lol<<<<
after the bubble has burst, nobody believes wannabee quants like you or abby joe cohen, who believe you have some harry potter hogwarts magic on the markets - they did in the last half of the 90's, but you guys are like david blane who never got out of the giant ice cube, you froze in there like bull market dinosaurs.
come on get friggin screamin bearish, start buddying up to luc, put and end to this misery -lol-
200 dma
i would worry more about missin the upside <<<
ya you've been worried about missing the upside for two years.
>>being long from the oct 10th low and staying that way will allow you to catch the whole move to that trendline <<<
ya but you've been long from the october 2000 low, actually you were calling for a cycle low every week off the sept 00 top.
ARE YOU EVER GOING TO POST SOMETHING BEARISH TO KILL THE BEAR MARKET -G-
You will eventually be right, but right now we are consolidating the move up off the october lows, this is either an accumulation pattern or a distribution pattern and a close above or below the november extremes in the spx should be taken as bullish or bearish.
the monthly trends are bearish, until the monthly trends turn bullish, bullish traders should worry about preserving profits, not worrying about missing out on upside.
that's some good stuff augie, the bear market rallies off the april and sept 01 lows had larger distribution patterns before rolling over, the move down from the jan/march top this year has been as directional as the move off the october 99 lows in reverse and has cemented a lot of bearish sentiment. At the lows in october we saw equity p/c ratio last seen at the 90 bear market lows, we have about 4 months of mutual fund outflows (the public hates the market - they hate it at the bottom), we had a huge blow-out in rydex bear fund participation, and 94% bulls by market vane on bonds.
while valuations are no where near benchmark bear market bottoms, they weren't after the first drive down off the 1966 top, it took a disco and bell bottoms to take us single digit p/e ratios -gg-
Now the real gruesome bears believe we are just going to have 20-25% bear market rallies then rollover and go straight down like the 30's.
There is no evidence right now that we are anywhere near a 30's scenario, with 6% unemployment.
there are some other interesting cycles that come into play, the traditional 4 year cycle, many cycle bottoms end in the 2nd year of a decade, 1932, 1942 (actually 1941 off by a year), 1952 wasn't a market cycle year, but i started the womb to tomb journey that year, it was my cycle -g-, 1982 was the gold market/commodity market top, stock market bottom inflation adjusted, and bond market bottom, 1992 was the real estate bottom after the mania top in 1989, it was also a significant bottom for the nikkei.
Nobody has a crystal ball, but there is the possibility that the market has made a significant cycle low here, similar to the gold market low in 1982, the nikkei low in 1992, and we have at least 5 months, like we had of the 9/01 lows, and maybe more.
bearishness has become quiet fashionable, you know how things go in and out of fashion -g-
After the bubble burst on the nikkei and the huge bear market into the 1992 bottom, i'm sure most traders had conditioned themselves to trade the trend,
but they got farked for the next decade if they only sung the same tune.
Sideways? Oh no! I'm just starting to get the hang of trading strong trends. ):
your not the only one - that's when the game can change,
we have had some extreme moves up and down during the last six months, some wide swings in sentiment..
i believe that we saw a reasonable amount of capitulation at the july and october lows, the market got really oversold at those levels and the shorts had to capitulate, the market has come back to equilibrium, there is no consensus to fade.
the market may be in a period of stasis between 870 and 930 for a while here, as it has been since mid/late october.
and is waiting for the news to break the market up or down.
a break below 870 spx on a closing basis would be bearish in my book.
looking at your nya charts, since we have had directional markets over the last 6 months, it's quite possible that we will enter a quiet period of narrow sideways ranging between pinching bands.
What I am trying to say is, your call is too modest in light of the momentum-induced irrationality <<<
thats not what it's about at all, what this huge move up is the HUGE complacency of shorts and put buyers that thought they owned the market over the last several months.
by irrationality, you may mean the irrationality of the scared bears trying to cover before they go upside down, or get upside down more.
the market will oscillate around a trend, the oscillation of the trend got too extreme in july and then again in october, now it's correcting back to the median.
it's too early to say there's a trend change, it's the minority view, it's got possiblity =g=
EK, MMM, PG, and even JNJ should have gone through, and at least made new recovery highs or yearly highs. <<<
Zeev, i think we are still in a sector rotation market, they bid up sectors to overvalued and sell-off other sectors,
I think those stocks you posted there may be somewhat done, but some of the beet up (a beet is related to a turnip in the vegetable kingdom, and some stock traders become vegetables =g=) stocks are ready for a rally.
mcd, dis, ge, msft, intc, are a few of the dow beet stocks that look like they could rally, while some of the others that have been doing the heavy lifting take a rest.
The paucity of new 52 highs on the nyse is because there was a plethora of new 52 week new highs in march, those small caps and other contra-trenders that fought the big caps bear market of the last two years have given up the ghost.
everything that is moving hard now, is a former beet (remember this is a turnip relative =g=)
will the beets beat the turnips and seize the day, it could be a short story, some hope for a best selling cabbage patch novella -g-
". Is it not strange that not a single Dow component made a new yearly high so far? Where is the leadership?<<<
did any dow stock make new 52 weeks high within 4 weeks of the october 98 bottom, the 87 crash bottom, the 82 bottom, the 1974 bottom,
i'm not saying that we just had a similar bottom to any of those,
but you can also look at the dwindled list of new highs as a sign that everything that was quality or strong was killed.
but isn't it a bit overdue for a pull-back?<<<<
augie, it
has been for over two weeks, but instead of pulling back we have this sideways consolidation, looks like a bull flag, you can see that little bear flag on the put/call ratios that we broke down out of friday, this kind of tight formation should produce a directional move, if nothing spoils the msft news on monday, msft will have a gap open above significant resistance, ge looks like a downsloping bull flag
we have had several indecision days lately, on thursday ge had a doji, friday had a bullish engulfing of the last two trading sessions.
These two stocks have enough meat to move the markets, the volume was low on friday, but that doesn't matter, what will matter is the volume on monday and how the market acts, a breakout and close on the high monday with strong volume would indicate that we are starting another leg up off the october lows, thats my thinking right now.
SPX is working on a near-hanging man<<<<
while that very well could be a reversal signal.
candlestick reversal patterns risk reward ratios increase when you can sync in a few other indicators to confirm the market is overbought or oversold and the candlestick pattern is ripe for a reversal
put/call ratios are still turning down from extreme levels and have not reached levels they have reached during past bear market rally tops.
the weekly rsi, can move back to the 50-60 range during bear market rallies, returning the averages back to confirm the downtrend (200 dma), that would take another 10%.
last but not least it looks like the october low was five waves down from the january top, which mean this rally should be more lasting than the august rally.
This rally boosted many, but like BRCD many are starting to fizzle again<<<
i believe the odds are that we have seen some distribution, the only thing that bothers me is that we have not seen a real capitulation by option buyers, which would probably happen if we rally into 1400 compx, the rising wedge on the compx was touched or slightly creased today, if we break tomorrow hard, i will have missed an opportunity to short, but if we rally into new highs above today, combined with some p/c ratios in .6 area, that would be a good st top, imo
. So, not only the current rally lacks volume, not only it lacks broad participation by the overall market<<<<
market internals have little to do with the market since the 1998 top, except at extremes, the small caps were rallying during the big cap bear market from the 00 top and skewing the market internals bullish,
and skewing the market bearish from the early 99 top in the a/d line, while the averages took off, there were so many failed hindenberg sell signal during jan-october 99, they decided to make the market a blow-up doll -g-
a/d line, new highs new lows, mcclellan oscilators, participation index means nothing - except at extremes,
all that matters is price.
since the october bottom the big caps have lead the rally, while the small caps have lagged.
those charts displayed show a sideways choppy trading range for 5, maybe 10 trading days, it's either working off overbought, or distribution,
no merlin prognosticator can tell you for sure, which way it will break.
: I am aware you believe a bell curve started in 1995 for the NAZ Comp.>>>>
Lg, i think it's impossible to put a point of reference on a bell curve off the 1974 lows, you have T going back to lows in the late 70's, most of the major airlines are trading back at that area now, this bear market is much worse than is publicised in the media, which is very worrisome, there should be bears aplenty on the cover of magazines and front page dailies, the only time we get this is during parabolic down moves and washouts, like into late july.
We are on the verge of making a new high in 52 week lows on the nyse, after we touched the h&S top at 950 in august there has been nothing other than short choppy countertrend rallies and one day wonders
http://stockcharts.com/def/servlet/SC.web?c=%24nylow
this chart from cross current puts an exclamation point here, if you believe the pattern from the 97-98 lows is a bubble H&S top, and that the 98 lows were broken on huge volume and we retested the neckline on weak volume.
I think we need a selling climax here to bottom this thing out, similar to the selling climax in late july.
Unfortunately i called back in most of my shorts on 9/23 and reshorted and held only for a day recently, i expected more sideways off that low before another leg down.
Remember during the bubble in 99 - 00 stocks could double in a matter of days or weeks, now we are seeing stocks lose 50% of their value in the same time frame.
Any guess on the likelihood of continuing up from here?<<<
we'll that was plan b and it turned out to belong in the b category, and plan a has turned out,
the elliotwave count on the indexes is not as clear as on the mcllelan oscillator, one could make the case that we are in the fifth wave of three from the 9/11 top, and the bear flag off the bottom today will lead into the fifth of five into a bottom tomorrow morning,
which will yield a 4th wave triangle or rising wedge rally out of tomorrows bottom,
this is my plan A.
elliotwaves are not always accurate and have to be confirmed by real indicators.
one always have to have plan b, in case plan A doesn't work out
here is a good fractal of plan B, which would be an ABC into the lows a couple of days ago, in a continuing triangle.
this is a chart from whichwaygo on traders talk.com
http://www.traders-talk.com/site/mb/show_topic.asp?id=17134&folderid=9
How about saying 'calculated risk'?
Just sounds so much better.. >>>>
yes it does, but how many people take the time to calculate the risk and the probabilities.
there are ways to do this, but it takes sophisticated models, time and effort, a full time job for a staff of people.
and that may not be good enough
1. NAMO is currently at or near the end of a little five wave down thingie.
2. This five wave down thingie is itself the third wave of a larger five wave down thingie.
3. Thus, as soon as this little five wave down thingie ends, we should see a little three wave up thingie, followed by another little five wave down thingie, thus completing the larger five wave down thingie.
Does this make sense at all? <<<
yes it does - i've been watching that and the index counts, one would think there would be a 4th wave rally maybe even back to the zero line on the oscillator, but the market has been gapping down since the top in late august and sellers are in control, there is also the potential that the 4th wave will just be a tiny blip countertrend rally that will last only one day or 3 days.
if that wave count plays out the five wave count into the next bottom should provide a huge buying opportunity.
the oscillator count follows the put/call count, maybe todays call buying binge (-lol-) .84 was the end of wave 4, we'll see -lol-
found this on SI, it's a hoot
EBIT: earnings before irregularities and tampering.
CEO: chief embezzlement officer.
CFO: corporate fraud officer.
NAV: normal Anderson valuation.
P/E: parole entitlement.
EPS: eventual prison sentence.
BULL MARKET-A random market movement causing an investor to mistake himself
for a financial genius.
BEAR MARKET-A 6 to 18-month period when the kids get no allowance, the wife
gets no jewelry, and the husband gets no sex.
MOMENTUM INVESTING-The fine art of buying high and selling low.
VALUE INVESTING-The art of buying low and selling lower.
P/E RATIO-The percentage of investors wetting their pants as the market
keeps crashing.
BROKER-What my broker has made me.
"BUY, BUY"-A flight attendant making market recommendations as you step off
the plane.
STANDARD & POOR-Your life in a nutshell.
STOCK ANALYST-Idiot who just downgraded your stock.
STOCK SPLIT-When your ex-wife and her lawyer split your assets equally
between themselves.
FINANCIAL PLANNER-A guy who actually remembers his wallet when he runs to
the 7-11 for toilet paper
and cigarettes.
MARKET CORRECTION-The day after you buy stocks.
CASH FLOW-The movement your money makes as it disappears down the toilet.
YAHOO-What you yell after selling it to some poor sucker for $240 per share.
WINDOWS 2000 -- What you jump out of when you're the sucker that bought
Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR-Past year investor who's now locked up in a nuthouse.>>
So it seems that in fact the mutual fund holders must control a smaller share of the market, since inflows did not equate with market action<<<<
yes they do control a smaller market share than most believe imo, and they may be right during the bull trends, but very wrong at the turning points, they were piling money into agressive funds and tech funds in the first q 2000.
there is no guarantee however that this recent exodus is an equal and opposite reaction to the 1q 2000.
from the guys I speak to at the trading desks, it is redemptions causing selling which sets prices. a few years ago it was like that at the bond desks. sell sell sell whack whack whack. Problem is I do not know what percent of market holdings are mutual funds or other.
are we talking about the chicken and the egg???>>>>>
there is no doubt that the public will be buying at the top and selling at the bottom, the level of the bar of any turn is the question.
mutual fund holders other than a week here or a week there have been net buyers during the whole bear market until the last couple of months.
is that a change in trend or a sign of capitulation.