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S&P 9-Day MA Overlay How To
Snap, it's easy. Use SharpCharts 2 (Beta 6) on StockCharts.com and make the S&P line invisible. You'd be left with just the MA line.
Isn't that cool?! I like this David's Entry Timer... :) I came up with this myself. I don't think I've seen anyone used this indicator.
TRIN-McClellan Chart Update: The Real Conundrum
Fluor Corp (FLR) Trade Confession
Since I started documenting this trade journal here on this board, this is what I should've and could've done better.
Just a quick note to share with the board here. I gotta get going. For more detailed confession, you can check out my humble journal. :)
Have a wonderful day, everyone!
Forest Laboratories, Inc. (FRX) Trade Journal
The chart says it all… Bought at $34.08.
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Fluor Corp (FLR) Trade Journal
On 3/21/2005, I noticed this technical formation, and I documented that I bought FLR shares at $57.04 here http://tinyurl.com/6dcez.
At the time, the divergence between the Bollinger Band Width and the ADX (thick black line) seemed to be market's way of saying to me that while my volatility (BB) started to increase, the momentum (ADX) of the recent declining trend had started to slow down; meanwhile, I’m (1st person for FLR) hanging in there along the 50-day MA trendline.
While that trend recognition was still technically correct, I failed to seek entry point confirmation. I could come up with excuses such as being busy working on other projects, but the main reason was that I got too confident (cocky?). Since feeling confident is a subjective state of mind, I let my emotion take control of my action.
Of course, the market made me humble very quickly. Few trading days later, FLR price dropped to $53.63, or about 6% decline from my entry price.
Had I only bothered to use my head instead and just spent a few minutes to put on my own “Entry Timer” for confirmation, I would’ve waited till my Timer confirmed the entry price at about $55-$56, which is an additional 1.8% - 3.5% of savings or profits when it’s realized.
Market is indeed the greatest teacher.
JP – I’m impressed with your observation. You are a true student, and I don’t mean just attending schools. :)
Since you brought it up, one of the reasons I use the 20-day MA is that it happens to be the center line of the Bollinger Band as well. Everyone has to find his comfort zone that suits his/her trading styles. I happen to find the centerline of the Bollinger Band to be a very useful trendline. One can use it for various game plans.
How did we get to be so lucky to have you here? I’m serious.
Good night for now. We should have a mini rally sometime next week, but it may turn out to be selling opportunity for many. I just can’t see the market being oversold yet. I don’t feel totally comfortable going either way, long or short. Holding cash makes me feel good right now.
I’ll see if I could find some free moments to write up something about the bottom fishing on my Trade Journal board.
PieSky, you've put in so much work and effort in your Aroon study. I can read your thought process and I can see the endeavor. Please do not stop your work. Keep sharing your work with us (me at least) here. It is greatly appreciated.
No one is perfect, and I mean no one. There are holes in everyone's analysis, even the Gurus who charge big money for their subscriptions. As Ken always says, we can always do better. It takes courage and wisdom to share your work with other people.
Thanks
Oversold and Entry Point Reference
sunrise, allow me to use CMCO as an example to see if we can identify the oversold condition together.
(1) If we'd start from top left corner, we'd see the 9-day RSI was in the oversold territory below 30 but started to move accross 30 on 11/8/2004. This was where I would've started seeking my entry point.
(2) And then the signs started to show up on 11/17. It took a while for the formation to develope, but that's fine. Sometimes it takes patience to reap great rewards. Depending on your trading style, you may feel comfortable enough to establish your long position here on 11/17, or you may want to wait till MACD crossed above the trigger line a couple trading days later just to have that final confirmation. In this type of market, that's probably what I would've done.
The rest should be pretty self-explanatory. I used the red letters and yellow highlights to show Friday's condition. One other bottoming indicator to look for is for Aroon DOWN to move up and cross 50 or higher. And, while there's a large black candlestick below 20-Day MA, it did not break below the 50-Day MA yet.
Technically speaking, it didn't seem oversold yet on Friday simply due to the lack of confirmation from some of the indicators.
Ken, got your email. Congratulations on your VIP invitation. I share your feeling of accomplishment. You’ve worked hard on your belief, and it’s Trump and Lou Dobb’s honor to have you as their guest. I always believe in hard work, and I respect people who work hard.
One favor from me here… When you meet him, can you ask Donald Trump how he did that comb over? I might need that technique someday.
flota, I wonder if you’d be generous enough with your time to write simple report back to us on your first hand experience of the local economy there. Among other things, I think the Purchasing Power Parity would be interesting considering Dollar has depreciated against Euro.
Thanks for your consideration.
Juststocks, The leadership Ken & flota have provided for this board is of nurturing and learning. This creates a wonderful board culture of sharing instead of competing. All ideas and questions are encouraged not disputed. In addition, Ken is such a student of the market. He works hard in his search for the truth, and he never hesitates to lend a helping hand to the other students.
And, that’s what makes Seasonality Stock Report board special.
Have a great weekend, everyone. Gotta get that tax thing done...
MARKET FORECAST for NEXT WEEK
Looking at how much crude oil price and the S&P were inversely correlated on this chart reminded me of yesterday’s article by Vadim Pokhlebkin for Robert Folsom’s Market Watch column. In his article Pokhlebkin literally attacked the media for connecting oil to the recent stock market’s performance. He then questioned why the stock market didn’t rally when the crude price declined on Friday. Of course, you can also pay for his subscription so that he’ll tell you what other investment opportunities are out there.
Unless I’m reading someone’s personal and dramatic account of an event or experience, this type of subjective and emotional argument about the financial market by a professional writer bears little credence. Here’s the link to that article, but you probably didn’t have to bother. http://tinyurl.com/kahk
One simple fundamental about the market is that it does NOT look at only one day’s action. The market’s price action is a reflection of its long term concern about the crude oil price, which, if sustained, could lead to higher inflation. Higher inflation leads to higher interest rates, which is the equity market’s major concern. Financial market is always forward looking, the daily fluctuation does not change the fundamentals of the market. I hope Mr. Phkhlebkin understands that.
So saying, let's take a look at the crude price. It doesn’t take a professional chartist to see how exhausted the crude oil look in this chart below.
And, the crude oil top was confirmed by the action of the 10-year Treasury Yield, which had dropped below 20-day MA and looking tired trying to climb back up – for the short term anyway. For the time being, it doesn't appear to be as concerned about the inflation.
In addition to oil and bond, this chart that I created shows a possible mini market rally in the making. It’s the relationship between the Money Supply and the S&P. I took out M2 from the M3 so that we’re left with just the large time deposits, the balances in institutional money funds and repurchase liabilities, etc. The chart indicates the correlation between this M3-M2 and the market with time lag of about 1 – 4 weeks. Hopefully, the lag is only 1 week this time.
From the point of view that oil’s impact on our economy and the financial market is of utmost significant, it would appear that a rally seems due next week. I could bring out more indicators, but why bother when oil holds the key.
MARKET FORECAST for NEXT WEEK
Looking at how much crude oil price and the S&P were inversely correlated on this chart reminded me of yesterday’s article by Vadim Pokhlebkin for Robert Folsom’s Market Watch column. In his article Pokhlebkin literally attacked the media for connecting oil to the recent stock market’s performance. He then questioned why the stock market didn’t rally when the crude price declined on Friday. Of course, you can also pay for his subscription so that he’ll tell you what other investment opportunities are out there.
Unless I’m reading someone’s personal and dramatic account of an event or experience, this type of subjective and emotional argument about the financial market by a professional writer bears little credence. Here’s the link to that article, but you probably didn’t have to bother. http://tinyurl.com/kahk
One simple fundamental about the market is that it does NOT look at only one day’s action. The market’s price action is a reflection of its long term concern about the crude oil price, which, if sustained, could lead to higher inflation. Higher inflation leads to higher interest rates, which is the equity market’s major concern. Financial market is always forward looking, the daily fluctuation does not change the fundamentals of the market. I hope Mr. Phkhlebkin understands that.
So saying, let's take a look at the crude price. It doesn’t take a professional chartist to see how exhausted the crude oil look in this chart below.
And, the crude oil top was confirmed by the action of the 10-year Treasury Yield, which had dropped below 20-day MA and looking tired trying to climb back up – for the short term anyway. For the time being, it doesn't appear to be as concerned about the inflation.
In addition to oil and bond, this chart that I created shows a possible mini market rally in the making. It’s the relationship between the Money Supply and the S&P. I took out M2 from the M3 so that we’re left with just the large time deposits, the balances in institutional money funds and repurchase liabilities, etc. The chart indicates the correlation between this M3-M2 and the market with time lag of about 1 – 4 weeks. Hopefully, the lag is only 1 week this time.
From the point of view that oil’s impact on our economy and the financial market is of utmost significant, it would appear that a rally seems due next week. I could bring out more indicators, but why bother when oil holds the key.
Nice work, Ken. You've worked too hard. Time to take a breather. Nice table too... you gotta show me how to do that whenever you have the time.
Thanks
MARKET MONITOR: S&P and VIX
A Picture is Worth a Thousand Words
This was from my Monday's Market Monitor
Cellphone Numbers Release To Telemarketers & Trading
I was informed that in about 30 days, our cell phone numbers will be released to telemarketers. Unless we register with the National Do Not Call Registry, we’ll start getting telemarketing calls. Here’s the link to the registry. https://www.donotcall.gov/default.aspx
But that wasn’t the first thing that I thought of. My first response was what would the market has to say about this. For an interesting exercise of my “little gray cells, here’s a couple of telemarketing companies to keep an eye on.
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STRATEGY: New Bankruptcy Law & Trading Part III
Does the flap of a butterfly’s wings in Brazil set off a Tornado in Texas? – Sensitive Dependence on Initial Conditions or better known as The Butterfly Effect.
We’re all affected financially, socially, and politically by someone living in poverty or filing for bankruptcy. I also doubt that our habit of consumption would change much before we hit the bottom. Our need to consume is nothing new. Our original need to consume is to survive. “It was the ability to do so, which was new”, according to historians McKendrick, Brewer, and Plumb’s book, The Birth of A Consumer Society.
This ability is now given to us by the Fed’s easy monetary policy and the credit card companies alike. Before we hit the bottom, what do we do to get the credit to continue our consumption? If we can no longer get it from the lenders, we can always turn to the sub-lenders, the check cashing companies or the pawn shops where no credit reports or tax returns will ever be required.
Among other businesses that may thrive under the new law, the check cashing companies and the pawn shops should be the sector to keep an eye on. Again, I don’t condemn or condone; I’m only a trader in this instance. According to the findings from yesterday’s release of infoUSA’s Sales Genie Business Survey Report, check cashing business is the 2nd highest growth sector in the last 5 years. It’s growth rate of 62.78% is only next to Locksmiths’ 66.79%, but check cashing companies’ growth had been more consistent.
I found Locksmith business intriguing. It should be another interesting research. For now, here’s a group of check cashing and pawn shop companies. I ran the group together first just to see if there’s any correlation. And here’s what the first chart looked like.
It looked sort of noisy, so I filtered out 3 that didn’t seem to correlate well with the others. This next chart gave me a clearer view of the group. They appeared to be moving together quite well, and they all seem to drop all of a sudden in the beginning of March.
According to Associated Press, http://tinyurl.com/3topu, on March 3, FDIC issued new restrictive guidelines limiting how these check cashing and pawn shops’ lending services are provided. The sell-off was due to the new guideline that discouraged issuing loans to customers who have had outstanding debt for a total of 3 months within the past year. And, it’s still uncertain how the new guidelines may affect the check cashing business’ long term financial status.
While the sell-off may provide good buying opportunities, I wouldn’t touch them under such uncertain circumstance. Market dislikes uncertainty. Nonetheless, it should be an interesting study for any student of the market.
Speaking if infoUSA, few would think of investing in the telemarketing companies. For many, the telemarketers are probably on the same public enemy list as the pawn shops.
STRATEGY: New Bankruptcy Law & Trading Part II
The 4 stories in Part I demonstrated how anyone can make a case for or against this new sweeping bankruptcy legislation. For this Trade Journal purpose, I’m not here to condemn or to condone because it involves subjective thinking. Instead, as a trader with warrior mentality, my job is to study the environment, to adapt to the environment, and to utilize this environment to my advantage. So, let’s first study the environment.
The reason I use the word environment is because I believe this new bankruptcy legislation is going to have a lasting impact on our socioeconomic infrastructure. But let’s take a look at some facts and we’ll hear what the experts have to say.
These are some of the current bankruptcy facts.
(1) Americans currently owe $2.12 trillion, excluding mortgages. That’s 110% more than a decade ago.
(2) As lenders and credit card companies have given credit to many who wouldn’t have qualified a generation or two ago, more families sought to unload debts in bankruptcy court.
(3) 1.59 million people filed for personal bankruptcy in 2004, up from 780,000 a decade earlier.
(4) At least $40 billion debt is wiped out annually through personal bankruptcy.
(5) More than 70% of filing fall under Chapter 7.
(6) A typical credit card holder had 5 cards, and about 83% of college undergraduates had credit cards in 2001, up from 67% in 1998.
These are the highlights of the new law.
(1) The new law would require debtors to receive credit counseling at their own expense 6 months before filing.
(2) Debtors would have to repay full amount of car loans purchased within 30 months of filing.
(3) Filers would have to document income with paystubs and tax returns.
(4) Democrats tried unsuccessfully to put limits on marketing to students under 18 and cap on credit card interest rates.
(5) Repeat filers would not be allowed to file more than once every 2 years.
(6) Filing would be more costly with higher legal fees.
(7) Legislation wouldn’t go into effect until 6 months after the President signs it.
These are some of the questions that no one has the answer for.
(1) Will thousands of debt laden families pay back more of the money they owe or will they be pushed into poverty? I guess my tax dollar will pay for that instead of financial institutions.
(2) Will credit card companies and lenders lend more easily?
(3) Will people spend less and depress the economy?
And here’s the heated debate from the experts.
(1) Economist Lawrence Ausubel of the University of Maryland says more people would be pushed into "informal bankruptcy": "You hang up and move, you leave no forwarding address, you pay with cash and have no assets, and end up operating on the fringe in an informal economy.
(2) Todd Zywicki, a George Mason University law professor, responds: "This is a matter of morality and personal responsibility." Reneging on debts has lost much of its stigma, he says, and the change in the law will help restore it.
(3) "Consumers will become a little more prudent about taking on credit," says Nariman Behravesh, of Global Insight, which studied the bill on behalf of a consumer-finance company. The firm predicts a 0.2% reduction in consumer spending -- $15 billion a year – which he terms a “very small” impact on the US economy.
(4) Others speculate that creditors may be more willing to lend if the bill becomes law because the odds of getting paid back will rise. "To the extent people are a little less likely to file for bankruptcy and therefore bankruptcy rates fall a little, we probably will see an increase in credit availability," says Michelle White, an economist at the University of California who has studied bankruptcy trends extensively.
So, what do I have to say? What does anyone have to say?
To be continued...
STRATEGY: New Bankruptcy Law & Trading Part I
The new sweeping bankruptcy law was on Wall Street Journal’s front page yesterday. Whether you’re for or against it, the bill had already passed the Senate in March and is expected to clear the House next week. Despite how we personally feel about this new law, there may be great trading or investing opportunities ahead.
In this Part I of the analysis let’s outline the bankruptcy stories of these different characters mentioned in the WSJ. We’ll then ponder the implications and explore the trading opportunities with technical analysis. Their full names are not used in our analysis for legal considerations.
STORY 1
In mid-March, Mr. H, 62, of Baltimore, filed for Chapter 7 protection, seeking to wipe out $242,921 in debt on 11 credit cards. Mr. H, who works Saturdays in the electronics department at a store in Baltimore, listed as assets his $180,000 house, $1,350 in furnishings, $450 in clothing and $528 in cash.
His attorney said that Mr. H lost all the money day trading securities online. “There’s no profit buried in the backyard,” his attorney said.
STORY 2
The law would make things tougher for consumers like Ms. H, a single mom, who makes $15 an hour. When she got sick with pneumonia in late 2003, she missed six weeks of work and ran up more than $5,000 in medical bills. Soon, she was falling behind on her car payments and owed various creditors about $15,808. "I was head over heels in bills. I wanted to pay them off, but I knew I couldn't," she says.
In February 2004, Ms. Herndon filed for bankruptcy protection, winning a court-approved plan to wipe out some debts and pay back others. The court knocked several thousand dollars off her car loan and slashed the interest rate to 10% from 18.6%. Her monthly payment dropped by nearly $100 to $275.
Under the new law, a bankruptcy judge wouldn't be allowed to lower her car payments.
STORY 3
The new law would affect people like Mr. & Mrs. L, who have filed for Chapter 13 in each of the past three years. The last filing, in February, showed debt of about $85,000, including the outstanding balance on an $11,000 loan to buy furniture. The furniture firm, which has 350 outlets in the South, says about 1,000 of its customers file for bankruptcy each month. Mr. L says he and his wife haven't stuck to their Chapter 13 repayment plans because they have been periodically unemployed.
"We filed under [Chapter] 13 so we could keep our stuff," including a four-bedroom mobile home and a 1999 Buick, Mr. L says.
STORY 4
Entrepreneurs like Mr. & Mrs. C, who filed for bankruptcy in January, would face a tougher time under the new law. After more than 13 years working at corporate level, Mrs. C decided to retire and open a beer and wine bar. Despite her good credit, Mrs. C found banks unwilling to lend her enough money to open. She took thousands of dollars of cash advances from her personal credit cards.
But business suddenly slowed, and the couple fell behind in their credit-card payments, causing the interest on one of them to rocket to 28.74%. Then later on, Ms. C suffered a serious bout of diverticulitis. After three days in the hospital, the couple owed $12,000. "With both things hitting at one time there was nothing else we could do," says Mrs. C, 43. "I cried a lot."
Under the current laws, the couple was able to file a Chapter 7 bankruptcy, which cost them $1,909 in legal fees. But, under the new legislation the couple's attorney would have to argue that the Mr. & Mrs. C should be allowed to file Chapter 7 because of "special circumstances." If the court ruled against them, they would have to decide whether to try to create a payment plan under Chapter 13, even though their profits after business expenses are barely enough to keep them alive. As a result, the best-case scenario for them is a higher legal bill.
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To be continued…
WATER PROBLEM IN THE U.S.
Sorry couldn’t get back with you guys sooner as it has been a very busy day for me.
I think the very essence about water is as simple as the fact that we can live without oil, we can live without gold, and we can live without cattle or vegetables. We can live without almost anything except WATER.
I do believe that water is going to be another scarce commodity, but it should be part of the long term diversification strategy. Investment, not trading, to me is about the future. In addition to my aforementioned water problems in Asia and Africa, here are some of the items that I’ve been collecting from various reports and sources about the problem in the U.S.
- According to the U.S. Geological Survey, “The drought in the Western U.S. could be the region’s worst in 500 years, and the arid conditions there may persist for several decades, From 1995 through 2004, the average annual flow of water in the Colorado River was 9.9 million acre-feet, the study says. The period from 1584 to 1593 had the lowest average annual flow at 9.7 million acre-feet. The river, which runs through Colorado, Utah, Arizona and Nevada, is one of the main water sources for the western
- According to Greg McCabe, a Denver-based scientist for the U.S. Geological Survey, “warm water temperatures in the Atlantic Ocean tend to correspond with droughts in the U.S; the Atlantic is warm now, similar to how it was during the Dust Bowl drought of the early 1930s. David’s Note: Combing that with a stock market crash would create a Greater Depression. Don’t blame me. Blame Dktway for soliciting my opinion. :)
- Aside from the natural events, there’s problem with the U.S. water supply infrastructure. The infrastructure is becoming dilapidated and is an increasing cost of municipal governments. EPA estimates up to $1 Trillion for upgrading the infrastructure in the coming years.
- The pollutants in our water. National Water Quality Assessment Program (NAWQA) found that “Major challenges that continue to affect streams and ground water, point and nonpoint sources of pesticides, nutrients, metals, gasoline-related compounds, and other contaminants.”
And so on and so forth...
Ken, you can probably try the S&P Water Utility Index Components. I'm not sure about the scanning for this type of "future thinking" stocks. These may not be ideal trading stocks although one can always strategize various game plans to trade anything.
Dktway, this is one of the other water desalination companies that I also have.
Aqua Dyne is an Australian Thermal Desalination company. Aqua Dyne’s JetWater system can be used in a wide range of desalination process, from seawater, groundwater, to remediation of industrial waste water. It's not much right now, but I thought it’s a good long term holding in a diversified portfolio.
Anyways, it’s getting busy here.... I’ll try to add a few water related things in our backyard that should be causes for concern later. Meanwhile, I think flota can add to this discussion from his wealth of information on this subject as well.
Have a wonderful day, everyone.
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Matt, Thanks so much. I guess the system automatically reverted back to 1 single ' whenever you enter the updating profile area.
I think it's working now. We'll see if it shows up below.
Hi Matt, thanks. I did that per your instruction, and this was what's shown on the next screen after I tried to input the Message Signature again.
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Microsoft OLE DB Provider for SQL Server error '80040e10'
No value given for one or more required parameters.
/boards/update_profile.asp, line 120
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Dktway, please, no offense taken whatsoever. My emphasis was for clarification because the Desalination process is, to me, a very important part of the future. In my previous post I mentioned the plight in Asia and Africa, but the problem in our backyard is just as serious. I didn’t want to get into it too much because I didn’t know of the interest level. I hate to sound like a doom and gloomer.
Thanks for bringing up the Desalination subject.
David
#board-3693
OBSERVATORY 008: Statistical Arbitrage MECA, UBET
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Hi Matt, all the other fields have been there since I signed up with iHub. I didn't update anything. And, I did use " instead of ' when I did the update before.
The only field that I'm trying to update is this Message Signature field. I disable my Popupcop as well as Spyware guard programs, but the result's the same.
Baffled...
Dktway, My Water Stock Example is Desalination water company stock. Most people took one look at CWCO and immediately thought that’s just another water utility company. That’s not true.
The reason I have CWCO in my portfolio is because of its DWEER (Dual Work Exchange Recovery) system, which is used in reverse osmosis seawater desalination plants.
So, no. I didn’t think of CWCO is just a water utility company. I wouldn’t have bought it if it were just a water utility company. I didn’t add any additional comment last night because I thought it’s a well known facts about CWCO.
David
#board-3693
QUESTION ON MESSAGE SIGNATURE
I've just signed up for the premium service. Please advise why is it that I kept trying to input my message signature, and I kept getting he “page can not be displayed” blank browser page?
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WATER STOCK Example
Just as an example, this is one of the most consistent water stocks held in my portfolio for quite a while. And, it pays some dividends.
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David
#board-3693
flota, got your PM on water, and I noticed you’ve put out some pretty good information here. Instead of emailing back, I thought I'd post the reply here to share with others who may be interested.
BTW, GE bought Ionics (ION). It was part of my water stock portfolio, but now it’s part of GE. The price shot up 150% on the news and stayed there in the $40’s till the completion of the acquisition. It worked out well.
You're way ahead of the trend. I couldn’t agree with you more. Water stocks are a great addition to a diversified portfolio. Allow me to add a few more reasons here.
- In Africa, over 40 billion work hours are lost to the need of fetching drinking water.
- In Asia, global warming is melting glaciers that are crucial to their water supplies. Himalaya glaciers that feed into 7 Asia’s greatest rivers are melting more rapidly every year. This highest glaciers in the world are receding at the rate of 33-49 feel each year.
- Global water consumption rose six-fold between 1900 and 1995 - more than double the rate of population growth.
- Global food production must increase to fee the growing population. Agriculture uses up about 70% of all water. However, Farmers in parts of southern India have begun to abandon farming so that they can sell their groundwater at a premium to water-hungry industries and urban users.
- Water pollution that removes large amount of water from the supplies.
- International Center for Peace Initiatives reported that Pakistan’s true reason for fighting over Kashmir is water. Pakistan’s obsession with Kashmir is not driven by territorial ambitions or love for the Kashmiris but rather to control the rivers in Jammu and Kashmir.
And so on and so forth…
David
#board-3693
Revlon (REV) End of Day Review
Tech Note: Using Ratio for Timing
MARKET MONITOR: S&P and VIX
OBSERVATORY 007: RYURX, GVPIX, CNPIX, REV
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waterwisp, your timely comment is taken to heart. I can see you’re an independent thinker with poignant observation and unconventional wisdom. I hope you’d stop by more frequently and share your thoughts with us here.
I thank you dearly for your advice.
David
Revlon (REV) Trade Journal Part II
Next thing I found intriguing about Revlon was that both the 1-year chart as well as the 4-year chart indicated that REV had spent 1/3 of the time in the upper 38% of the Fibonacci Retracement area followed by 2/3 of the time in the lower 62% of the Fibonacci Retracement.
The short term 1-year cycle seemed to indicate that it’s about ready to resurface to the upper 38% retracement area. These charts were prepared on 3/19/2005, and here’s the link to that record. http://tinyurl.com/5vsb4
For the record, I added REV to my portfolio on 3/16/2005. My entry price was $2.75, and here’s the link to that record. http://tinyurl.com/54m97
Based on today’s closing price of $3.02, it had gained about 9.81% thus far. However, this is a long position, and there’s no hurry to sell it anytime soon.
1-Year Cycle
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4-Year Cycle
David
Revlon (REV) Trade Journal Part I
As a defensive measure against the possible market downturn, I started taking notice of Revlon in early March in search of some type of cheap Consumer Staples that counters market trends. Most consumer staples had already gone up to the $40-$60 price range at the time.
Notwithstanding the details I put forth in my search, the first thing I noticed about REV was that, in addition to its mass market cosmetics, it also sells Consumer Products to United States military exchanges and commissaries. This indicated to me that Revlon is not just a cosmetics supplier. And, in good time or bad, our female counter parts need to use the make-ups. Revlon might just be the mass market cosmetics company that could do well in down market.
The next thing then is to determine whether it would counter S&P 500 moves.
I must say that I wasn’t particularly impressed with the perfidious correlation with S&P that most major consumer non-cyclicals had demonstrated. Much to my surprise, Revlon’s inverse correlation with S&P was more clearly defined than I expected. I then documented my observation on 3/12/2005, and here’s the link to that record. http://tinyurl.com/5jajq
Here’s the chart that shows REV’s clear inverse correlation with S&P. There were some periods such as late 2002 thru early 2003 REV and S&P did move together. But then that was the trough of the market when majority of the stocks went to the bottom. And then in peaked market of 1999 when majority of the stocks rose to the top. Other than that, REV and S&P pretty much had gone the opposite ways for as long as the chart could show – almost 8 years.
I also noticed the sudden appearance of REV quite intriguing. From this chart I posted on 3/13/2005, it would seem like REV had simply disappeared from the market and from everyone’s radar for the past 5 years.
To be continued...
MARKET WRAP 4/4/2005 Part II
MARKET WRAP 4/4/2005
CBOE Total Put/Call Ratio: 0.88
20-Day Moving Average: 0.92
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VIX: 14.11
20-Day Moving Average: 13.38
TRIN: 1.05
10-Day Moving Average: 1.08
“Now, like you said to LjK, I think we've probably talked about this enough. The two methods obviously depend on your outlook.” --- blasher
That’s exactly my point from the very beginning when I proposed the game plan. For whatever the reason I was asked to defend myself although I’ve nothing to do with the actual trade. And then you came along to also try to put me on the defensive.
I’ve no idea why. If it’s for the learning, no one should learn from me. The market is the greatest teacher, not to mention the large amount of resources out there for free. And besides, if I’m such a master why would I be put on the defensive to defend the strategy that I started out as a benign gesture of good will to the other students of the market here?
Is it personal? Perhaps, but that’s not my concern. In any regard, my exchange with you was just trying to prove this point. Thanks for being my role play partner.
Have a good one, everyone.
David
blasher, Will I lose a lot the other way?
Let’s see...
ELN goes to $6.25, blasher loses $720 vs. David loses $0
ELN goes to $17.50 blaser loese $10,845 vs. David loses $9,630