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DrWorm,
If TLT breaks its 21-day SMA, I'd exit the long. The 21-day SMA has been doing a fairly good job of keeing one on the right side of a short/long on TLT.
Looks like CTGLF is rolling over. Think the 21-day SMA will act as support?
thanks Bullarkey
W@G2 QQQQ 05/04/05 for a 05/06/05 close
quiet 35.00
frenchee 34.75
financialadvisor 34.33
Rates usually trump earnings growth
http://www.marketwatch.com/news/story.asp?guid=%7B2A736569%2D1C64%2D461F%2D9B19%2DC6BCCD83746D%7D&am...
.20-.22 seems to be resistence. If I had this speculation, I'd be unloading it before it drops back to .13-.15.
Sell it!
Yes.
Both the short on QQQQ and long on TLT have been very good to me. At least for the short term, I think the long in TLT could be coming to an end. The train is still moving but it's showing signs of decreasing momentum. Here's why...
1) Note the volume since mid-April doesn't confirm the price run. It might be short sellers are covering positions, causing a rally, and money is leaving the marketplace.
2) The Chaikin Oscillator (ChiOsc) has a negative divergence with price. The ChiOsc has been flat with a downward bias and price is trending up. This is a sign of distribution.
3) The MACD line and its signal line are getting closer together. The MACD Histogram shows the difference between the MACD line and the signal line. This is a sign the rate of change is slowing down.
The weight of the evidence suggests moving my stop to the Parabolic SAR point currently at 91.39.
Bliss,
When you mention the "oils," are you talking about large and small oil producers and oil service companies or some subset thereof?
Good one Bob. Thanks
Good luck Gizmo!
Best keep a tight stop on the short. With the ADX so high and Parabolic SAR and MACD in buy modes, might get a sharp but short-lived upward retracement. Also, note volume and CMF confirming today's move.
I'm getting somewhat concerned with my QQQQ short. See my commentary at http://www.investorshub.com/boards/board.asp?board_id=3358
I'm seeing them too xe2dy. See my recent commentary at http://www.investorshub.com/boards/board.asp?board_id=3358
W@G 1 QQQQ 05/02/05 for a 05/04/05 close
35.70 frenchee
Let's look at the weekly QQQQ chart on 29 Apr and see what it's telling us.
1. The short, intermediate, and long-term trends are down. (neg) Next support around 32.
2. Price resistance between 36.00-36.55.
3. RSI and Fast Stochastics are in a presignal buy area. (pos)
5. MACD still plunging.(neg)
6. Chaikin Money Flow and Oscillator starting to turn.(pos)
7. QQQQ underperforming relative to the S&P 500. (neg)
8. Positive divergence between volume and price in that prices are down and volume are declining during the last three weeks. Perhaps long positions being forced to liquidate; downtrend will retrace as all sellers sell their positions. (pos)
What's all this mean? Probability of a corrective upward retracement next week is better than 50-50. We are oversold but the downward momentum seems to be getting weaker. I'm currently short but plan to move my stop to $35.59 for trading on 2 May 05. With resistance around 36--36.55, will start adding back to short position if these levels are reached. Otherwise, hanging on to the short.
What You Think You Know That Isn't So
In the late 1990s we wrote a lengthy report with the above title at a time when investment advisors, strategists and economists were exclaiming that all one had to do was ignore the stock market fluctuations, invest in stocks at any time, and watch your nest egg return an average of 10% per year. We pointed out that although there was a kernel of truth in the argument, investors were actually running great risks in buying stocks at excessive valuations near the end of secular bull markets. Although valuations are somewhat lower than the ridiculous heights reached in early 2000, the cyclical bull market since October 2002 has once again put the market in a position where the risks of losing money--or at least not making any—are once again very high.
The kernel of truth in the long-run thesis is that U.S. stocks really have returned about 10% a year on average over the very long term. There are two factors, however, that proponents often overlook when promoting this view. First, of the 10% overall return, about 4% has historically been accounted for by dividends, leaving about 6% attributable to the gain in the stock index alone. Since we know that the current dividend yield is only about 1.8%, the historic 10% return is not applicable to the current situation. Second, and more importantly, there have been many long periods where the market not only did not return 10%, but actually declined. Here are some examples covering different periods of time using the Dow Jones Industrials, which goes back the 1880s in real time. In each instance we show the starting date the ending date, the decline in the Dow, and the number of years.
August 1886 to November 1903—minus 16% (17 years)
September 1899 to July 1932—minus 27% (33 years)
January 1906 to August 1921—minus 15% (15 years)
November 1919 to April 1942—minus 22% (23 years)
September 1929 to January 1950—minus 50% (21 Years)
August 1959 to December 1974—minus 17% (15 years)
February 1966 to August 1982—minus 23% (16 years)
Furthermore, since 1903 there have been 26 different years where at some point that year the Dow was lower than at another point 15 or more years before. This comprises a full 25% of the total number of years within that span. It is therefore extremely misleading to conclude that investors can enter the market at any point in time and be reasonably assured of a 10% return.
Peaks of secular bull markets have generally been characterized by high valuations and an optimistic view of stocks, while bottoms have occurred at a time of low valuations and a view of stocks as being too risky for most investors. We believe that the long and powerful secular bull market of 1982 to 2000 has given way to a potentially lengthy secular bear market such as the periods outlined above. Given the current excessive valuations and the major economic and financial structural imbalances we have discussed repeatedly in prior comments, it is likely that positive returns from current levels will be exceedingly difficult to achieve for years to come.
Volume not confirming today's move. RSI(8-day) and CMF (7) not confirming move either.
A decisive close greater than .065 would turn this security bullish.
Sell it before you get burned on this thinly traded security. Note the MACD sell signal on the chart below. I wouldn't ignor it.
Add to short position if the QQQQ trades between 35.07--35.74. Set short stop at 35.75 for trading on 29 Apr 05.
Good read. Thanks
It has been working for me...
QQQQ's short-term trend is turning choppy which is normal and natural resting phase as the ETF digests info in the face of some strong earnings reports. Nevertheless, the benefit of the doubt goes to the bears as the down trend is still in force. As a result, should be able to add to short positions if the QQQQ trades between 35.25--35.84. Set short stop at 35.85 for trading on 28 Apr 05 if this analysis is wrong.
Thanks Gizmo!
Yes, if any of these conditions on a daily chart are satisfied:
1) Parabolic SAR is touched and reverses.
2) MACD line closes crosses its signal line from the top.
3) TLT closes below its 21-day SMA.
TLT is in a trending mode now and I don't trust what the momentum-based indicators are telling me.
Hi Gizmo,
What's your current technical analysis of SPY?
I'm thinking of moving out of TLT and into SPY.
Thanks in advance...
Thanks Chris. Please keep the updates coming...
Found a QQQQ board you are invited to review and participate in at http://www.investorshub.com/boards/read_msg.asp?message_id=6162031
Found a QQQQ board you are invited to review and participate in at http://www.investorshub.com/boards/read_msg.asp?message_id=6162031
Found a QQQQ board you are invited to review and participate in at http://www.investorshub.com/boards/read_msg.asp?message_id=6162031
Found a QQQQ board you are invited to review and participate in at http://www.investorshub.com/boards/read_msg.asp?message_id=6162031
Found a QQQQ board you are invited to review and participate in at http://www.investorshub.com/boards/read_msg.asp?message_id=6162031
QQQQ Technical Analysis for 26 Apr 05
1) ADX is over 20 and trending up. Suggests to me to follow trend-based indicators versus momentum-based indicators.
2) Heavy volume associated with the 36-36.40 area suggesting it could be a near-term resistance area.
3) Since the downside gap a little over a week ago, the short-term trend is sideways with an upward bias. However, volume on down days is stronger than volume on up days. Moreover, the trend in volume isn't confirming the upward bias in price either. Possibly short sellers are covering positions, causing a rally, and money is leaving the marketplace.
4) QQQQ is trading below its 21-day moving average which suggest its intermediate-term trend is down. I don't take positions against the intermediate-term trend as a general rule.
5) MACD and Parabolic SAR still in sell configurations.
6) Chaikin MF and Chaikin Oscillator still in sell configurations too.
The weight of the evidence suggests let the short ride. Even though a sharp rally is overdue, it's probably safe to add to short positions when QQQQ trades above its 5-day SMA but below its 21-day SMA. In the case now, that would be between 35.17--35.89.
Three conditions would cause me to cover the short:
1) Price touches the Parabolic SAR and it reverses;
2) MACD crosses the zero line;
3) 36 is taken out on heavy volume.
W@G 2 ~QQQQ 04/27/05 for a 04/29/05 close~
33.77 financialadvisor
34.40 frenchee
mr_cash4,
NEM is on my watch list. I'm going to get some when the daily close is greater than its 21-day SMA. After NEM closes higher than its 21-day SMA, plan to accumulate more on closes less than its 5-day SMA provided the close is still above the 21-day SMA.
Ditto Gizmo...
See this URL for interesting research about ETF investing with less risk, "Can You Make 100% Of The Market Gains Trading Only 6 Days A Month?"
http://www.investorshub.com/boards/read_msg.asp?message_id=6136819
Can You Make 100% Of The Market Gains Trading Only 6 Days A Month?
Can You Make 100% Of The Market Gains Trading Only 6 Days A Month? Read On...
Friday February 4, 9:13 am ET
By Larry Connors
One of the things we are constantly striving to do at TradingMarkets is publish original market research, especially research which has been quantified. This week I'm going to share some new research with you which will hopefully improve your trading even further.
The Pheonomenon
One of the things many of us have heard over the years is that the last few days of the month and the first few trading days of the new month tend to have bullish tendencies. I first heard of this when Kevin Haggerty wrote about it here on the TradingMarkets site about six years ago. Kevin, as you know, was the head of trading for Fidelity Capital Markets for a number of years, so he has had the chance to observe this market behavior better than most of us. Since Kevin first mentioned it, I've observed the behavior enough times over the years to prompt me to research it further and to quantify it. The results from our research are very interesting and may provide you with some edges you can take advantage of in the future.
The Question
We asked the following question in our tests: How has the S&P 500 (CBOE:^SPX - News), Nasdaq 100 and Semiconductor Index (Philadelphia:^SOXX - News) done if one had purchased these markets (on the opening) a few trading days before the month ended and exited a few days into the month? We looked at buying 1-5 trading days before month's end as the entry and exiting 1-5 trading days into the new month (slippage and commission are not included. Past results are not indicative of future returns. All results were created from simulated trading).
The Results
What we found was eye-opening. Most combinations did well. The sweet spot in the combinations was the one model which had you entering on the open the day before the last trading day of the month and exiting on the open on the fifth trading day of the month (you would be in the market a total of six trading days). How well did this do? Here are some results:
The SPX gained 753 points from January 1995 through the end of 2004 (10 years). But, had you purchased the SPX the day before the last trading day of the month, and exited on the opening of the fifth trading day of the month (and you stayed out of the market the rest of the month), the gains were 820 points. That's right. Those six trading days, on a net basis, led to all the market gains. The remaining 14-16 trading days of the month led nowhere. Sixty-four percent of the trades were successful.
Nasdaq 100
What about the Nasdaq? The gains hold here, too. The Nasdaq 100 has gained 1217 points over the past 10 years. But, buying and selling only over the six-day period showed gains of 1354 points.
Semiconductors
Now let's look at the SOX (Semiconductor Index). Are you ready to have your eyes opened? The SOX gained 293 points over the past 10 years. Yet, buying and exiting during the end of the month/beginning of the month period gained 1080 points. It outperformed the SOX by more than three times, while being in the market only 28% of the time!
200-Day Moving Average
Let's go further. You know from How Markets Really Work* that over the past 15 years markets have performed better on the long side above their 200 day moving average and worse below their 200 day MA. So let's add the 200-day moving average to this. Let's only buy on the opening the day before the last trading day of the month and exit on the open on the fifth trading day of the month. And we'll only take this trade if the index is above its 200-day simple moving average. When we do this, our market exposure is now lowered to only 19%. Yet, the gains in the SPX basically replicate the total points gained while being in the market 100% of the time (753 points vs. 743 points). For the Nasdaq, the gains jump up to 1768 points versus 1217 for buy and hold. And for the SOX, the gains are 952 points versus 293 for buy and hold. The SOX gains are even more impressive because you were only in the market 14% of the time.
SOX Equity Chart
Here is an equity chart of the SOX trading it only six days a month while it's above its 200-day moving average. As you can see, a hypothetical $100,000 account has grown to better than $550,000 with a compounded annual rate of return of nearly 20%. You were only in the market 14% of the time over the past decade.
TradingMarkets Swing Trading College
If you enjoy this type of research and are looking to trade systematically using methodologies which have been statistically quantified, please check out our new TradingMarkets Swing Trading College. Over a 14-week period of time, you will be trained to be a systematic swing trader using strategies, systems and methods that have never before been published. As strong as the above trading model is, the trading models in the College are as strong, and most are even stronger. And the Swing Trading College is being taught by Steve Primo. Steve was a 9-year Specialist for Donaldson, Lufkin and Jenrette (DLJ) and now runs a model-driven systematic private investment partnership.
If you would like information on the TradingMarkets Swing Trading College, you can find it at www.tradersgalleria.com.
Summary and Conclusion
Obviously, it appears the end of the month/early month trading bias is real. Why is this so? It's likely that money managers see the greatest inflows of cash during that period of time and they are aggressively putting this money to work.
There are many, many ways to take advantage of this information, and in later weeks I'll be spending some time sharing these ways with you..
Have a great week trading (and go Pats)!
Larry Connors
W@G1 QQQQ 04/25/05 for a 04/27/05 close
50.00 quiet
34.56 frenchee
33.77 financialadvisor
Bottom for both gold and bonds?
By Mark Hulbert, MarketWatch
Last Update: 12:21 AM ET April 22, 2005
E-mail it / Print / Discuss / Alert / Reprint /
ANNANDALE, Va. (MarketWatch) -- An extraordinary thing happened earlier this month among the gold and bond market timing newsletters monitored by the Hulbert Financial Digest.
The average adviser in both camps became extremely bearish.
On the contrarian grounds that the markets rarely accommodate the majority, this should be bullish for both gold and bonds.
But how could that be? Gold is an inflation hedge, after all, and it typically performs the best when inflation is accelerating. Such an environment would be deadly for bonds.
One response to this apparent paradox, of course, might be to remind us that contrarian analysis is neither perfect nor has pinpoint accuracy. And that is no doubt true.
You might be especially inclined to dismiss contrarian analysis right now, given Thursday's encouraging economic news and the ($INDU: news, chart, profile) Dow Industrials Average's remarkable rally.
But, for this column, I want to take the contrarian interpretation seriously. Does it really have to involve a contradiction? Are there realistic scenarios in which both gold and bonds will perform well together?
One reason I don't want to cavalierly dismiss the contrarian interpretation: The current sentiment situation is quite rare. Take a look at the accompanying chart, which plots bond and gold newsletter sentiment over the past few years. Notice that gold and bond sentiment typically move in opposite directions, with one hitting a high at a time when the other is hitting a low.
The chart is based on the Hulbert Gold Newsletter Sentiment Index (HGNSI) and Hulbert Bond Newsletter Sentiment Index (HBNSI), which measure the average exposure to the gold or bond markets among a subset of short-term market timing newsletters followed by the HFD. Negative values indicate that the average timer is advocating being short the market.
Prior to the last month, the lowest reading on the HBNSI over the past decade was negative 56.3 percent. That already represented extreme bearishness, of course, and often was registered at or close to bond market lows. But on April 5, the HBNSI broke to an even lower level: negative 67.4 percent.
A broadly similar story can be told about gold market sentiment, though gold sentiment hasn't actually broken down to new lows. It merely has come down to more or less match previous record lows. (The record low for the HGNSI is negative 31.3 percent; on April 14, this gold sentiment index dropped to negative 30.4 percent -- just 0.9 percentage points above the all-time low.)
If we take seriously the contrarian analysis of these two sentiment indexes, what might they be saying about the future? The most straightforward interpretation, it seems to me, is that a crisis is imminent in which the viability of the financial markets is called into question -- one in which there is a flight to quality (such as government bonds) as well to hard assets (such as gold).
This isn't as far-fetched as it may sound, scary as it otherwise is. It is a scenario to which Richard Russell, editor of the Dow Theory Letters, has been giving serious credence for a number of months. Needless to say, Russell is not part of the bearish consensus that currently prevails in either the gold or bond arenas.
As Russell sees it, the world financial system currently is so precarious that the monetary authorities must "inflate or die." And even if those authorities do inflate, as they show every sign of doing aggressively, Russell says it is not at all clear that they will succeed.
The "die" option in the "inflate or die" trade-off, of course, is a deflationary collapse. Bonds would do well if that were to happen, needless to say. But it is not out of the question that gold would too, if in that collapse investors lose enough confidence in the monetary system.
Unfortunately for those of you who would rather not contemplate such a scenario, Russell can't be dismissed as a Chicken Little-like adviser perennially saying that the sky is falling. His stock market timing performance over the past 25 years is one of the best of any of the newsletters monitored by the Hulbert Financial Digest.
Furthermore, Russell's warnings were echoed recently by what would otherwise appear to be an unlikely source: Former Federal Reserve chairman Paul Volcker. In an op-ed piece for the April 8 edition of the Washington Post, Volcker wrote that "under the placid surface, there are disturbing trends: huge imbalances, disequilibria, risks -- call them what you will. Altogether the circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot. What really concerns me is that there seems to be so little willingness or capacity to do much about it."
So those who dismiss the contrarian interpretation of the gold and bond sentiment data may be doing so at their peril.