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$NYMO down -0.01 to 0.94. Market @ tipping point. I find evidence to suggest it could tip either way, but my bet is that it tips up. If it does, I tip my hat to Airedale who said it would all along. :)
Airedale, I've been reading some past posts on this and other boards, and I just want to say thank you for the consistent way you have been putting out the same message for a long time. Your patience with the dimmer-witted like me has been amazing. Your experience shines through your words and insights time and again. Cash, you too. Thanks.
Black
PMiles - Cycles, Planets, Astrology
I was casting a wide net when I suggested planetary movements, and am willing to consider a variety of possible causes of the cycles including chance. Still, I think this subject is worthy of a closer look. At one time, ocean tides must have seemed mysterious, and no doubt many a person thought it couldn't be explained. And then some brilliant person realized that they are caused by the gravitational forces of the moon.
Something is causing those 80-week and 4.5-year cycles, and perhaps we can find no external cause right now. But if we did, it could prove interesting and even useful.
I briefly examined the planetary orbits and found nothing corresponding to these cycles. I did, however, find one asteroid with a 1.5 year cycle, and several significant asteroids with cycles roughly 4.5 years in duration. A few of the asteroids with a 4.5-year cycle play a significant role in astrology. Ceres, Pallas, and Juno are just 3 examples of asteroids with +/-4.5 year cycles, and they represent feminine aspects in astrology.
Chiron has a 50.7-year orbit and plays a special role in astrology as the wounded healer. For anyone approaching their 50th birthday, Chiron is worth reading up on whether you believe in astrology or not. The Chiron return is a time of reconciling imbalances and old wounds or chronic patterns. In this sense, it would correspond in an uncanny way with the Kondratieff cycle.
So am I a believer in astrology? I was a sceptic actually until someone observing my life said, "You must be going through your Chiron return." She looked up the dates, and they matched my recent significant life shocks exactly. The more I read about the Chiron return, the more I understood my current life experiences and the prevailing theme of my life. Oh, but I confess too much.
I write all this to inspire the astrologically minded to delve further and to motivate the non-astrologers to consider the true causes of the market waves we all appreciate.
You gotta love that 80-week and 4.5-year.
Black
Has any study been made of the 80-week and 4.5-year cycles to find a correlation to some other force--whether plantary or economic? The dominance, reliability, and persistence of these two cycles in particular seems too interesting.
Just curious,
B.
80 week and 4.5 year cycles
Why does Hurst find a 2x multiple of most cycles but a 3x multiple of the 80 week cycle to arrive at the 4.5 year?
Black
Neither a Bear nor a Bull be.
Only one thing matters--the line
the market crosses now.
Minimize loss,
maximize long-term gain.
No desire, no fear.
No speculation, no doubt.
No bias,
Black
Pt. 2 - Technical Formations and Cycles
MORE NOTES TO MYSELF
People love to ask, "Are you a bull or a bear?" I'm neither. Here is the only question worth asking: "What line is the market or stock crossing now?" A second question might be, "What is my best hypothesis concerning what the market might do next, and what would be the best possible verification--giving me an objective, ideal moment of entry?"
If the market is crossing no lines (pause zone), why be a bear or a bull?
If I adopt bullish or bearish glasses, I see evidence of my point of view everywhere. This will cause me to stop looking for the opposite possibility--to not see when the market does cross an objective line--demonstrating a clear trend or direction.
Trading strategy: Hypothesis, Verification, Action (enter or exit trade). No impatience. No forced trades. No bias.
Black
Technical Formations and Cycles
MORE NOTES TO MYSELF
I'm convinced the market is capable of turning *any* formation and any cycle in any direction it chooses. Head and shoulder formations can twist and break upward. Cycles can left and right translate or cut deeper or higher at any point in time.
The benefit of any formation or cycle projection is to provide a hypothesis concerning what may happen. Some formations offer higher probabilities than others. For example, I find bearish and bullish wedges highly reliable. And Hurst cycle analysis offers some of the best predictors of market performance.
Still, at this moment, anything can happen at anytime. Any cycle can run dead on into an unanticipated force--for example, a terrorist attack or a left-translated 8-9/4-4.5-year cycle.
It is a mistake for me to become ego-invested in any particular analysis or recognition of a formation. It's a perfect setup for poor trading. Instead, use the formation to develop a hypothesis of what might happen, and then trade only on the step-by-step verification or rejection of the hypothesis based on the crossing of trendlines.
Recognition of a high-probability pattern/cycle verified by a crossed trendline raises the probabilities near 100 percent. Crossed trendlines can be headfakes too of course, but combined with sound technical analysis, headfakes can be screened to a rare occurrence.
The problem with ego-investing in any particular analysis is that I enter trades too soon and hang on too long waiting for proof that I'm right. And then if the market twists and converts my high-probability pattern into a nasty surprise, I take it personally, thinking I'm lacking intelligence or skill. The mistake may simply be thinking that the identified pattern *must* unfold in a particular way. It may or may not.
The bait that leads to premature trades is that by getting in early I get the best possible price--before the market gaps in the desired direction. Waiting for the market to verify my hypothesis by crossing a trendline is the most profitable in the long run. I might lose a little profit at the beginning of the trade, but I hit the sweet spot over and over again.
Black
??? "NYSE closed at a new ALL time high friday"
Airdale, sometimes I feel your bias showing. I want to learn to see the market just as it is without my feeling the need to push it one way or the other.
I'm looking at the $NYA, and I see that it closed a few points higher than it did on December 30, 2004. The $INDU did not. The $SPX did not. The $NDX did not. The $VLE did not. The $XVG did not. The $WLSH did not. The $RUT did not.
Also, the $NYA delivered a near-perfect double-top on the all-time intraday high, and I think that in this case, that is the significant fact until the market proves otherwise--especially because no other index confirmed the half-dozen point blip on the $NYA. That blip could be advertising a breakout or a bull trap--and at this moment we simply do not know.
Did you mention this? Or did you advertise the ALL time high on an index that few are watching? I know why you watch $NYA, and I do too for the same reason.
But I have to wonder why you feel the need to push a certain point of view rather than just letting the market be what it is. Objectively, I have to admit there is a possibility that the 4.5 year cycle is putting in a left-translated top. It can't be excluded until the market breaks above current resistance.
You can search for all kinds of evidence that supports the hypothesis we go higher from here, but until certain lines are crossed, we simply do not know whether this market has the fuel to do it.
I see the evidence you see, and I have to say that so far, I see a perfect setup for a bull trap. I also see the possibility you are dead-on right--again.
If you prove correct again, I will tip my hat. I do love how you dig deeper and look beneath the surface performance of an index like the $NDX or the $COMPQ. I learn from your style of analysis over and over again, and I appreciate it.
That you are showing a little human bias is understandable. You may or may not see my point.
I'm neutral until I see this market break out of this double top.
No bias,
Black
I've been hinting about 1998.
Then there's this:
http://i.b5z.net/i/u/1631368/i/superbowl0205.gif
Just another hypothesis until the market turns in results.
Black
WLP - Watch for major short.
See long-term chart for 3 peaks and domed house.
Black
The $OEX reveals a mountain of resistance overhead. See weekly or monthly chart going back to 1998. If we break higher from here, the market is bullish.
I'm neutral until I see next week's action. Potentially, we face a replay of 1998. Deja vu. Just a hypothesis until market turns in results. Any weakness from here = major blood-letting.
Black
FA, Don't let LD get to you.
You're doing good work. Now he's baiting you, which lowers him in my estimation.
Black
FA
If you read the purpose of Cash's board, you will see that most of your posts did not fit. The emphasis there is on SHORT TERM trading using TECHNICAL ANALYSIS.
It was clear to me as an objective reader that you were running headlong into trouble with both the focus of your thoughts and your antagonistic style of writing--not on your board but on theirs.
You criticized their analysis without fully comprehending their perspective. Again, keep reading their board, and you will learn to appreciate what they do--if you have a shred of interest in objective technical analysis. There are several good writers there, but Cash and Airdale are the best all around. They offer an analysis and back it up with specific facts. They will openly admit what they know and don't know.
I follow your board, FA, for a reason. I do see you have a natural instinct for this business. I appreciate your efforts.
I offer my comments as part of our learning process.
Keep up the good work.
Black
FA - I'm wondering whether you're willing to listen.
You know I've been fair in talking to both sides, and I have no axe to grind.
You came on the Short-Term board obviously baiting and antagonizing. On that board, you are talking to some of the best traders and market analysts you're likely to meet. They are fair, tolerant and objective.
We are going through a tough market cycle bottom with many cross-currents. They openly admit the difficulty of analyzing the current situation. You cannot judge their method or their abilities based on the current situation--even if they turn out to be wrong this time. Mr. Cash has openly conceded that we might be turning bearish here even while he is giving the bull every chance to prove it is still alive. The moment the market decisively breaks out or breaks down, both guys will be on it.
I will tell you again. Their method deserves close study. It will serve you well. Get the Hurst course--it's worth every penny invested. I have watched these guys make incredible calls over and over again for the last few years.
They are the best. Don't take my word for it. Sit back and watch over the long haul. Objectively, Airedale has so far won the analysis--calling the bottom at January 24--and the charts show it. He is now continuing to stick to his guns, saying we head higher from here. If he turns out to be right, you will have to hand it to him because there have been plenty of curve balls in the current situation, and he hasn't waivered yet. If he turns out to be wrong, he will gracefully and objectively reevaluate because that's the way he is.
There is a chance that the 4.5 year cycle has topped, and that may explain the market action we have seen recently. It's a huge maybe at this point because the charts still point UP. The setup is still UP.
We shall soon see who is right.
Black
Airedale re: the $VIX
To say there is no correlation is a bit extreme. Few indicators demonstrate 100 percent correlations, and even with the Hurst cycles, we have to bend a bit here and there to make it fit.
In fact, there is a mountain of evidence showing there is at least some correlation between the VIX and broader market performance. Is it difficult to make specific trades based on the VIX? Yes. Do we know the exact meaning of the low VIX now? No, probably not.
Do I think that it should be one factor in the overall interpretation of the market as it is now? Yes. Does it suggest the market is more precarious now? I think so. Does it imply we may not see a vigorous, propelled move up from these levels? There's a reasonable chance.
All market systems--any system of analysis including Hurst cycle analysis--can only suggest *possible* market moves. Any hypothesis--any projected possibility--remains just a possibility until lines are crossed, resistance is overcome, or trendlines are broken. As such, the VIX is as valid an indicator as any other. It suggests a possibility. It provides evidence of a possible outcome. It hints at a hypothesis. Now as a wise trader, I want evidence that supports or rejects or modifies the hypothesis.
The VIX hints of market weakness, and that's what we have been witnessing. Hypothesis supported. If tomorrow we rally hard, hypothesis rejected.
You may say that the VIX is then worthless. Well, the same proof is required of any Hurst analysis as well. You can project we rally from now into March, but until the SPX surpasses the December 31 high, it remains a mere possibility. Perhaps a likely possibility, but any number of causes could prevent it actually occurring. So we wait for evidence to support our hypothesis.
Regarding the VIX, it is just one piece of evidence to consider in conjunction with many others. The last time we discussed this issue, you said that the VIX means nothing. But it meant something to me, and privately I predicted a prolonged downturn during January. It turns out the evidence supported my hypothesis. Did the VIX predict this market event? Maybe, maybe not. I will continue to evaluate the VIX as one piece of evidence in my trading because I find it informative. Informative just as a single piece of evidence in a world of information which includes the Hurst cycle analysis.
Just my take for what it's worth.
Black
FA, do you reach any conclusions from this? (EOM)
Frank -
You are a great chartist. I have been reading your charts for a long time, and have always appreciated your work. Thanks for all you share. I write the following only as notes to myself, and I share them with you because I admire your work and your persistence.
I don't share technical observations on this board because so many cover that ground well.
=====================================
Notes to Myself:
Stick to lines in the sand, and let the market reveal its identity one cross of the line at a time.
Occasionally the market crosses lines and then headfakes. It's just part of doing business. These headfakes happen far less often than my imagination delivers unrealistic dreams of profit or nightmares of loss.
Any system of market analysis is only as good as the support or resistance line broken. In other words, every system gives mere possibilities until the market verifies its direction by crossing lines.
Use your charts, and be specific. Want nothing, fear nothing. Let the market be exactly what it is. Draw your lines, and then invite the market to cross one or the other. Once a trend is established, specify an objective measure to determine the failure or end of the trend.
Neither a bull nor a bear be. Want no more than the market delivers in this moment. It is exactly what it is and always will be. Desiring to squeeze something more from it leads directly to unrealistic projections and unnecessary fears.
Just keep seeing
what is now.
No bias.
Black
Seeing the market as it is now,
this is the trader's highest priority.
At this moment, the market's stance is bullish.
At the same time, no one knows what happens next.
I am present-moment neutral and
will remain so until I see the SPX attack
1210 to 1217 like a pitbull with volume.
If I see a nice setup for a run at the top,
this too will be a high-probability trade.
I anticipate the setup taking a few days,
but that is simply projecting a possibility.
Since January 1, the market's performance
has been limp, and this keeps me neutral
even though the chart setup is bullish.
The Hurst cycle analysis is interesting,
but the market needs to verify it by
breaking the overhead resistance.
Until this market breaks one way or the other,
no one knows what happens next.
Speculation is futile.
No desire, no fear.
Black
Speculation is futile.
Since January 24,
the market has been leaning bullish.
So assume the market is bullish
until it proves otherwise.
We know the look of a bear.
Draw lines, and if it bares its teeth,
run with the trend.
Until then, waste no time
imagining what is not there.
Projecting possibilities is fine,
but speculation is futile.
No bias, no fear.
Black
PMiles--
Referring to the falling dollar, you wrote:
"I guess this bodes well for the stock market in dollar terms since stocks are liekly to rise in $'s just in oreder to maintain their 'absolute value'."
We're getting into funny-mentals here, but a comment is warranted. The market has an interesting way of turning negatives into positives, and then flipping a positive to a negative unexpectedly.
So initially the falling dollar boosts the market, but at some point, the shadow side emerges. When inflation and especially rising interest rates really start to cook, the stock market will smell the rat.
Sticking with cycles is the only way to go. It is too difficult to tell how and when the market will foresee and interpret the consequences of the falling dollar. At some point it becomes a negative--but when?
Just my take.
Black
FA, the indications are bullish, and
it appears Airedale (that genius) *may* be right again. I write this in spite of my warning--which could be correct yet. But we can't trade on the negative possibility if the market demonstrates its ability to pull back gently here without violating any supports. In other words, a gentle pullback now indicates to me a high likelihood we break out to new highs going into spring.
If the pullback is strong or prolonged, then the bearish scenario becomes dominant once again. In this case, Airedale will be eating humble pie for once.
I will say it again. His method is the finest, and his objectivity is something to emulate.
No bias,
Black
Clue:
Study all the indicators, market conditions, and currency issues surrounding the 1998 market decline. Everything you can think of potentially relates to the current situation--especially the July 1998 high that precedes the decline.
Notice the S&P market level. Also the 3 peaks and a domed house formation.
No guarantees history will repeat.
No bias.
Black
FA, Keep your eyes peeled.
Crash alert conditions now exist.
If just one thing goes wrong next week, this thing will topple.
I'm not giving my reasons, but want to go on the record.
I'm not calling for a dump--just aware that it could happen.
No bias,
Black
Hurst link
http://www.tradersworld.com/Merchant2/merchant.mvc?Screen=PROD&Store_Code=TW&Product_Code=0-...
The course is recommended and the following book:
http://www.tradersworld.com/Merchant2/merchant.mvc?Screen=PROD&Store_Code=TW&Product_Code=0-...
Be prepared for a lengthy apprenticeship.
You can also learn a great deal from Cash and Airedale at the following site:
http://www.investorshub.com/boards/board.asp?board_id=2593
FA, re: advance-decline, what did you want us to see?
Thanks!
Black
FA, I do see the possibility that the rug could get pulled out from underneath this market. All I'm saying is that at this moment, the setup is for a rally and downtrend lines are starting to break. Therefore, the bias should be bullish until proven otherwise. If the rally fizzles or even shows signs of fizzling Thursday, Friday, or early next week, then the bias will switch to heavy bear.
I'll say it again. Hurst analysis is worthy your earnest study, and Airdale's and Cash's opinions are ones to be reckoned with. They are occasionally wrong, sometimes confounded by market action, but in the long run, you will do well not to bet against them. I do not make these comments idly.
I see that you, FA, have natural talent and are likely to stick with this business long enough to verify whether what I'm saying is true or false. As the market action affirms Cash and Airedale over and over again as the years go by, I can assure you your respect for Hurst cycle analysis will grow. If Cash and Airedale happen to be wrong this time by being a bit too bullish, do not use this result to dismiss their opinions or especially not their method. They can and will be wrong on occasion. When they are, they will adjust immediately with an objectivity that demands respect. Then if you will stick with them over the months and years, you will see they are right more often than they are wrong, and they are often right in the face of all obvious fundamental data.
I hope you will weigh these words carefully and choose to measure them against experience as the months pass.
No bias,
Black
FA, prepare to go long. All signals are in place if you look. Then if the rally fizzles, go short, but the bias should be to the long side at this moment. No need to speculate or guess.
No bias,
Black
To state the obvious:
This kind of market behavior following the bullish mood of December; and
a steady decline throughout January; and
the market's inability to rally on MSFT's report; and
breaking lower on the second to the last day of the month when bulls would most want to save the market
causes me to shift to a bearish sentiment until proven otherwise.
Black Bear
I will say this, FA. This market has spent the first month of 2005 searching for a bottom, and it hasn't found one yet. That's bearish, and I would be a fool to ignore that.
Still, we could rally here. So we have no choice but to wait for solid evidence.
Black
Market could still break either way. It's searching for a bottom--and either it finds one or it doesn't. There is no evidence yet to support which way she breaks.
No bias.
Black
I have to say that the current market behavior is consistent with the building of a base that will take us higher into April.
If this base breaks down, if for example the $NDX breaks below 1495, then I will hand it to you, FA. I will go short.
So long as the base continues to build, expect a rally to begin no later than next Tuesday. It could be a powerful one.
Black
Possible bearish wedge on 60-minute $COMPQ. Wait to see which way it breaks.
No bias.
Black
FA--Question. Are you saying the NASDAQ is going to shed about 600 points sometime around April? Or are you talking about the NASDAQ 100 ($NDX)?
Why are you looking at the 1400s and why by April?
I'm just wondering what your basis is?
Thanks in advance.
Black
LD, just so we're clear,
I'm not bearish. No bias here. Nice base is building, but so far no follow through. Give me follow through, and I'm bullish big time.
Black
The ascending triangle is breaking out now, but it's acting like a headfake. Caution. I'm expecting a pullback soon--one that will reveal this market's cards.
Black
Headfake? Caution. (EOM)
It broke upward as I was writing! (EOM)
I agree! And my comment about having no bias was not a reference to you but a note to myself. :) I will have no bias as I watch how this formation breaks, and it could break to the downside before the hour is over. For the reasons you have mentioned, it will probably break to the downside before the end of tomorrow--and probably sooner rather than later. But if it breaks upward, I will pay attention. :)
Thanks for the intelligent dialogue.
Black
The next pullback will tell the story. If the pullback is a calm consolidation, we rally. If we sell off hard, trust no rally until the end of February.
Black
Rising Wedge or Ascending Triangle?
As so often happens, these patterns can be viewed two ways--and could break either up or down. The key is to watch for the break--and then to beware of headfakes!
Having no bias is the key to good trading.
Black
PS
I'm referring to the ascending triangle on the 5-minute chart of the $NDX.