Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
OT: Rebelman: Don't expect anything to change. (EOM)
Chuck, I'm waiting until it breaks one way or another--because it could. Or both for that matter. Nothing like a break up followed by a swift reversal to confound the majority. :)
BB
Bliss - After giving the market every chance to put in a more substantial 80-week low, I have to agree with Airedale's assessment.
I still think you may have a case concerning a substantial pullback, and the most likely and earliest scenario would be the next 10-week low anticipated in March.
The pullback into the 5-week low (end of this week) will be telling. If the market mood turns ugly after Tuesday, then the ugliness could lead to a completion of a market top and a pullback into the 10-week low.
If the pullback into the 5-week low is mild, then all bets are off, and this market is going higher.
Trying to call market tops without evidence is a fun game to play as long as we realize it is just a game. The only thing that matters is the market's actual performance. The gold index ($XAU) for example was looking toppy, and then this week broke to a new high. Oh, well. It keeps going up until it doesn't. When it doesn't, the whole world will know. Perhaps the gold train will reverse this week. We shall see.
I do see this market becoming more volatile, and that is one sign of a 4-year peak, but when the actual peak will be is still a matter of speculation. For a few examples of extreme volatility, see EXP, $DAX, $CAC, $COPPER and PD, $DJUSST and NUE.
BB
Thanks, Frank. (EOM)
OT: Golfin, you have been warned once. Knock it off. Why are you so entertained by my posts and feel such an obligation to critize, probe, inquire what I'm doing? I'm not critizing Bliss at all--just want to know what he's thinking because at least he is interesting. Quite often right too.
Overall, I'm bearish on this market. I changed my market calls ONCE in the last two days--not four times. Yesterday I changed concerning a meltdown on Thursday because I saw the real possibility of a bounce in the oil sector and that is exactly what happened. There is nothing wrong with changing an opinion in that instance, and I was proven correct. Still believe the odds are to the downside tomorrow--whether small or big move remains to be seen. If I'm wrong, no sweat because I'm in cash at the moment.
When the oil sector corrects, this market is going down in a big way. That's my opinion. I will watch that as my short signal. With politics in Middle East (Iran, Palastine, Israel) up in the air, it is difficult to say what happens next concerning oil. No one here seems to have any special insight into the subject except Bliss.
Clearly the price is way up in the sky, and the oil stocks are pulling back from pinnacles. It is just a matter of time now, and it could start tomorrow--or in February/March. If you have real information to offer, please do. Otherwise keep your thoughts to yourself.
I have backed off on questioning the 80-week low. My phasing also called for the 80-week low to ideally hit the first week of January but saw the possibility of a delay. I was really thrown off by market action--as were a lot of Hurst analysts. Still wonder about the lack of any correction in some sectors. Still wonder about major stocks that keep sinking such as IBM and GE. Not sure I would call the latest action in GE a pause zone--it seems to be sending a significant message (jmho). Can see the reasoning for a pause zone, but it *might* be more. Still expect to see the equivalent of an 80-week low in amplitude during the next several weeks. Whether we will call it the 80-week low or a 5- or 10-week low with increased amplitude remains to be seen.
BB
Bliss, do you have some basis for making these persistent crash calls week after week? The evidence you provide is less than convincing. No one anticipated the big move down on Friday, the 20th, except perhaps you in a general way.
Is the basis for your call intuitive? Or do you have some other compelling reason to be mega-bearish?
Call me curious.
BB
$CAC and $DAX exploding up. (EOM)
XLE and OIH have put in up-side-down H&S patterns on the 30-minute chart. Recent move a shakeout before rally as oil heads to the moon? Or will the H&S pattern break?
BB
Fry-Day for bulls.(EOM)
BlissB, translation please. :) (EOM)
The big drop on Friday 1/20 was earnings related and not oil-sector caused. The oil sector has been driving the major cycles for a while now including the drops in April and May 2005. See $BPENER on stockcharts for drops into January 2005, April, May, and October and the rise out of January 3, 2006.
BB
To put this another way, the oil sector gave us unusual amplitude down into October's 10-week low, minimized the decline into the 80-week low January 3, and drove the rally up in January. (Airedale, you appear correct in your analysis concerning the 80-week cycle, and I appreciate it as always).
Still think the next major energy pullback will deliver a surprisingly steep ride down (more like what we would expect with an 80-week move down). Think this market could put in some really erratic moves until the oil sector figures out its next trend.
BB
The key to this market is the price of oil. Yesterday, when I saw OIH and XLE getting out of town, I saw a situation similar to October developing where the market took an unusually deep plunge.
Then I saw the setup in the charts for a rally and the relatively mild pullback, and saw that the oil stocks could put in a bounce (OIH at 145). Today the market was stuck in gear until OIH did hit 145 and bounced hard, and the market rallied with it--confirming that oil stocks drive the cycles for now.
Tell me what the oil stocks are going to do, and I can tell you whether be long or short.
BB
The market's like that sometimes. At the moment, it really could go either way. Energy is the key to this market. At the moment, XLE is getting out of town. If it rallies back to the top, the market will hold. If XLE breaks lower, the market will crack.
BB
Resetting for rally--could be real. (EOM)
Reversal Thursday = Black Thursday. (EOM)
Multiple Dow stocks sit right above the 40-week FLD with the possibility of a cascade-style cross of the 80-week FLD. GE crossed the 80-week FLD today.
BB
80-week lows just now coming in on the following Dow stocks: C, DD, GE, HD, HON, IBM, INTC, JNJ, JPM, KO, MMM, MSFT, WMT.
Several others show signs of pulling back.
BB
Dow stats:
11 out of 30 hit lower lows today than last Friday including GE, IBM, and MMM.
21 out of 30 are below the 10-day M.A.
19 out of 30 are below the 20-day M.A.
16 out of 30 are below the 50-day M.A.
11 out of 30 are below the 200-day M.A., including MMM, WMT, VZ, and GE.
MMM broke below the 200-day M.A. today. C, DIS, HD, IBM, and MSFT are hanging just above it.
BB
The Major Market Index has created a fantastic head and shoulder pattern going back to 2003. 4.5 and 9-year FLDs shown.
http://charts.barchart.com/chart.asp?sym=$MMX&data=D&date=012406&den=MEDHI&divd=n&am...
BB
The high on the $rut will compare with the high it put in at the first part of August.
This market is as fragile as an easter egg. Easter is about the time the next rally will really get started.
It's melt-down time.
BB
Sectors with lows lower than last Friday: BBH, IJR, $DJUSHB, $HWI, RTH, $NWX, $RXH, $RXP, $TRANQ, $XCI, $XNG, SMH.
Sectors looking toppy: $BKX, $BTK, $DDX, $DJR, $DJUSCH, $DJUSHB, $DJUSPP, EEM, $GYX, $HWI, $INSR, $NWX, $RUT, $RXP, $TRAN, $XBD, $XCI, $XTC
The $NIKK, $FTSE, $DAX are just now putting in their 80-week lows.
It still may be melt-down time.
BB
17 out of 30 Dow stocks hit lower lows today than Friday. 17 out of 30 struggle below the 50-day moving average with more threatening to break it. 22 out of 30 Dow charts have 10-day MAs pointing down--with more on the verge of joining the crowd.
Just paying attention.
BB
Does anyone question the assessment that the FLDs are not aligned for a cascade down? If the market turned ugly, it seems we might get clean crosses of the 10-week, 20-week, and possibly 40-week FLDs. The $INDU has crossed the 10-week FLD heading down.
BB
Cash, I agree completely. Reserving judgement is essential here, imo. For whatever reason, I have been plugged into a live wire on this one, and I know it is partly intuitive and non-technical. My sense, however, from the beginning has been that the 4-year cycle will be putting increasing pressure on the markets and the "aberration" since November was excessive bullishness (speculation) associated with market tops.
I say "aberation" because the bullish move was difficult to understand if we were approaching an 80-week low with the 4-year cycle bearing down. I completely understand, grasp, comprehend Airedale's perspective, and I admire his ability to read the markets contrary to the opinion of virtually everyone else at times. I love it when he takes a position based on cycles and then goes fishing.
I'm not sure I'm right in this case, but so far the evidence is mounting. At this moment, the bulls are sucking wind, and any rally from here will be a backtest.
I also have to agree that the $NYA is still appearing strong. It has enjoyed a magnificent rally, and the supporting advance-decline line ($NYAD - cumulative) makes for a giant cruise ship that will take a major force to turn around. If it does start heading down, however, it will be equally hard to stop.
BB
There is a double pattern of 3 peaks and a domed house in the markets. The pattern is not distinct but it is there. It is most pronounced in the $INDU. On a weekly chart, you will see the first peak in the May - July period, the second in August, and the third in September. The domed house starts in November.
The second pattern appears on the daily chart with the first peak occurring in early December.
The pattern has a high reliability, and the last time it occurred, it preceded the 40-week low.
In my opinion, the market is beginning the march into the equivalent of an 80-week dip. In actual weeks, we are now 75 weeks out from the last 80-week low. With the smaller cycles coming in early throughout 2005, we would normally have expected the 80-week cycle to complete this week.
Once again, it appears that the market is delivering a delayed cycle low following the New Year. The market could still try to fight back to the top, but the recent market action is looking increasingly bearish, and world events are once again cooperating with a major cycle down.
All the evidence is not in yet, but the picture is starting to come into focus.
BB
Bliss, excellent point concerning the $TSE. Now how about the $DAX? The same analysis stands. Now in mid-January, we are seeing a big dump. Same with the $CAC and the $FTSE. There is real evidence there that a larger move down is just beginning--and that was my point when I started writing 10 days ago.
My "guess" then was that the amplitude normally associated with an 80-week low had been delayed, and now, *maybe* we are seeing evidence.
Not wanting to argue but to observe, understand, learn, and anticipate the market's next moves.
BB
I too have enjoyed our exchanges, Airedale, and appreciate Hurst, your work, and this board immensely. Written communication is difficult and easily misinterpreted. If we met face to face, I'm sure we would enjoy a good chat. Not looking for trouble, but definitely want room here to ask probing questions and express varying points of view. This can only help all of us.
Through open communication, the truth emerges, and the ultimate judge is the market.
Good luck and good trading to all!
BB
Bliss, no problem understanding your analogy. As someone interested in Hurst analysis, I am curious about the absence of any low at the time an 80-week low would have been expected in the $TSE. It raises many interesting questions.
I am wondering, for example, whether we can compare this year to last year when a significant low occurred in January 2005 and not at the anticipated time of the 20-week low in December 2004.
I at least think these are meaningful questions, and I can only wonder about the motive of someone shooting me down for asking them.
BB
Then why
have you avoided my questions concerning the $TSE which I've been asking for 10 days?
What I've noticed is static and answers designed to obfuscate in response to reasonable differences of opinion. It got so bad that I took my opinions offline--which is why I went to email. I'm not the only one to notice. More than one person commented on it privately in email.
Then when I ask reasonable questions, they are ignored or answered by questions.
I think there's a reason for it, and if there isn't, then let's keep the communication clean and straightforward.
If I notice logic gaps or other inconsistencies of reason I will point them out, and I will ask you to do the same for me.
BB
"what "evidence" do you use to identify a cycle?"
Why do I feel like this is a trick question? If you have evidence of an 80-week cycle coming in with normal amplitude in the $TSE, what is it? And why--when this exchange has delivered all Hurst cycles with nearly ideal regularity--would this exchange suddenly "skip" an 80-week low?
BB
If you examine the $DAX, $FTSE, and $TSE, you will see virtually no evidence of a 40-week or 80-week low--until now. Now they are all tipping over in a way more typical of a larger cycle blowing through the markets.
The same is true of the U.S. markets. We getting a more substantial dip for the nominal 2.5-week low than we did for the nominal 80-week low.
Of course, if a larger wave down is in the works, the evidence will build and there will be plenty of time to catch the sweet spot.
BB
Putting the pieces of the puzzle together:
* The FLDs are not lined up for a cascade down. Xlnt observation, Airedale.
* The bullish mood will be subdued from here on out if not broken.
* The 2.5-week low (now) will likely produce an observable rally even if only for a day or two.
* The January highs will not likely be broken before the next 5-week low (high-probability speculation).
* The market is now 2.5 weeks away from the next 5-week low (not likely to be major).
* The money that poured into the market in November will be ready to pull back out at the 10-week low. A frustrating sideways market will contribute to the pullback into that low.
* There's a possibility the market will trend lower into the 5-week low.
BB
Bliss, Thursday a reversal UP? (EOM)
Cash: re: $NAAD and $NAUD, the same thing happened on the way to the market peak in 2000. The $NYAD (cumulative) declined but the volume ($NYUD) stayed high. It suggests a more speculative market with more money chasing the big winners such as GOOG.
BB
The NASDAQ Advance-Decline ($NAAD - cumulative setting) on stockcharts.com shows a serious negative divergence with a rising index. Especially see a chart going back to 2003. It essentially indicates that the index has been rising on the backs of fewer and fewer stocks. AAPL, GOOG are typical suspects. A similar phenomenon occurred leading up to the market top in 2000.
The NYSE advance-decline ($NYAD) shows just the opposite for the $NYA--at least for now.
I'm unable to post chart, and you will need to be a member of stockcharts.com to use the cumulative setting. Maybe someone can post the chart. It is worthy of review and discussion.
BB
BlissMelt, congrats. ;) (EOM)
DowDeva:
Pull up the yield curve chart on stockcharts.com, and look at the chart of the S&P. You will see a thin red line you can move around. You will see that in the last couple weeks, the tail of the yield curve is pulling up and flattening. This is bearish for the economy and stocks.
In 2004, you will see a bullish pattern. At the market top in 2000, you will see a pattern similar to the one developing now. If the interest rate is boosted again on January 31, the curve will likely invert completely. The British yield curve has already inverted strongly according to one source (unverified).
Regarding the indicators I used at the beginning of October, just one thing I looked at was the bearish pattern in the $BKX chart. On a long-term weekly chart, it looked ugly in late September.
$NYMO (cumulative) was another indicator.
BB
Yield curve inverting as of 1/13 according to stockcharts.com:
http://stockcharts.com/charts/YieldCurve.html
Inversions often precede market corrections and economic slowdowns.
BB
$NYY on stockcharts.com. (EOM)