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Bruce and oeo2oo: It stretches credulity to think 120,000 call options priced at $5,300 to $8,800 each (rough numbers) has anything to do with the ordinary course of business. I have no idea what it signifies. My suspicions lean toward oeo200's article and an anticipated shake of the markets. Since there is no way to know for sure, I'm dropping this, making a mental note to see whether something big comes down over the next 20 trading days. That's when the options expire.
MrT
Brainless, by 3 I mean simply very few. Perhaps there is something I don't understand. Perhaps there was a clerical error. Or someone is raising a lot of money in a mysterious way. Buying calls for that much money makes no sense unless you owned a printing press. Unless you knew exactly what was happening, what was going to happen. If the Fed were involved, it might make sense because they own the only legal printing press. One strategy is to sell calls short and you might do it if you had the backing of the right powers.
I have no idea. It's mysterious for sure, and only a few powers in the world would move that much money through this particular channel.
MrT
Brainless, the calls are deep *in* the money, that's why they are so expensive. Check the bid/ask. There are only a few sources in the world with this kind of money, and the motives for moving it through this channel have to be less than 3. Either that or a clerical error (extremely unlikely) was made. Do the math. My calculator sent up a wisp of smoke.
MrT
Best answer I've seen anywhere here:
About half-way down page. Thorough discussion.
market-ticker.denninger.net/2007/08/whitewater-wednesday.html
Options Question: Yesterday, Thurs., Aug. 23, the records show 10,000 call options traded at nearly every strike from 60 through 95 with the bid/ask prices ranging from $50 to $90 each.
How is this possible?
Is it significant? Or was it just some accounting transaction? These were deep in the money calls that just appeared on the books yesterday.
If sold short, it would be significant. But who would have bought them at these prices.
OK, I admit I'm out of my realm. Will someone solve the mystery please.
finance.yahoo.com/q/op?s=SPY
MrT
RUT and Financials looking good. Nice bases on 60-min. charts. Pushed higher on volume at the close.
MrT
Yen carry trade unraveling? Yen has been bounding up against most currencies. Read: how fundamentals can sideswipe technicals.
Intro article: http://www.moneyweek.com/file/20635/why-is-the-carry-trade-so-dangerous.html
“It's only when the tide goes out that you learn who's been swimming naked.” --Warren Buffett
The tide is going out now. The local board prophet may be more correct than even he knows. See yesterday's posts.
Fed Injections: Any simplistic answer will almost certainly be a distortion. It isn't simple.
Here's one reasonably good intro:
http://blogs.wsj.com/economics/2007/08/12/how-does-the-fed-inject-money-into-the-economy-a-primer/?m....
My simplistic understanding is the Fed does create money out of thin air and then uses the mechanisms in the above article to put the money in circulation. Through an accounting transaction the Fed turns absolutely nothing into something (money) and calls it an asset. It then injects this money into circulation by buying Treasurys, bonds, and securities.
Once upon a time, paper money had to be backed by something of real value (gold). Now money is backed by nothing but faith in the Government. Some say the day is soon coming when the Government will be forced into default. The last time I checked, half the Federal deficit is funded by foreign infusions of cash. Without this foreign money, the Government as we know it would be unable to function. The more foreigners pour in, the more the Government pays out in interest. The higher the bill, the more must be borrowed from foreigners. U.S. citizens simply cannot pay the amount required to run their own Government as currently structured. This is astounding if true! As far as I know it's absolute fact and have seen senators saying so and asking Greenspan about the risks. He always shrugged and said, it is what it is and global capital flows will work it out--and hopefully without any catastrophic events.
If all this is true, a day of reconciliation approaches within our lifetime, and may begin with the next 9-year cycle down (cycle topping now, market maybe topping in 2008/2009). The reconciliation may complete with the 18-year cycle down (last bottomed in 2003). All this is extremely speculative but makes sense for a wide variety of reasons. The unraveling of the sub-prime lenders and the housing industry is something I foresaw in 2001 through 2004 when lenders were having a hayday. Now it's beginning, and the shadow easily extends all the way into 2020 (the next 18-year low +/- a year).
I believe at some point fundamentals and TA become one and the same. But don't let the fundamental negativity fog your intelligence. If TA says we are going higher, buy it. But if the TA suggests the market is rolling over and we start seeing left-translated cycles, well believe it, and you will see headlines to confirm what the charts are telling you.
TA trumps fundamentals.
Fundamentals can affect cycles and TA, but the TA will always tell us how the fundamentals are ACTUALLY affecting the market.
MrT
Slinky, thanks for this. Perfect. EOM
SPECIAL REQUEST OF THE BOARD:
I'm not happy about what happened to DoubleTalk. The guy writes funny but asks good questions. Some around here trashed him.
Heartbreak is now asking questions. At least he's willing to be specific.
My request is that NO MATTER WHAT you say only what YOU KNOW TO BE TRUE--without telling the other guy how he's full of crap. Heartbreak says, "There is no principle of harmonicity." If you think there is, don't tell Heartbreak he's a fool. Just say, I know there is a principle of harmonicity because Hurst says "Waah, waah, waah, waah, waah." This way all of us learn something. OK?
No p*ssing contests, please.
"i also think you have a very flawed perception of what T/A (of any type) provides the trader/investor."
Suggestion: Stop attacking. Just explain how you see it. I for one want to know what DT thinks and how Airedale sees TA. But I darn well don't want to know what Airedale thinks of DT or what DT thinks of Airedale. Irrelevant BS on both side.
Yes and still learning. Jose Stevens: "Correctly bidding for power when you are ready is an act of supreme power. Like a lion stalking its prey, you wait and watch, maintaining your reserves until the exact moment when, with the least effort and the greatest speed, you bring your quarry down successfully."
The book is loaded with many more gems that apply directly to trading--although the market is never mentioned.
It's one of those books that whenever I pick it up offers a paragraph that relates directly to a current challenge in any area of life.
T.
PMiles - There's an interesting book I think you may enjoy called "The Power Path: The Shaman's Way to Success in Business and Life" by Jose Stevens. It's everything you already know written into one, clear, inspiring volume.
Slinky, All: I can see I've opened a can of worms. There is no way we will be able to debate it out here. I apologize for opening it. I intend to stick to board rules, and ask everyone to do the same.
Cash, re-read your analyses from 5/31 through 6/1--less than accurate. It's OK--really. You are often extremely accurate. It's just that there are weaknesses in the Hurst method.
You and Airedale were also disagreeing concerning the cycles during late May, and I consider the two of you to be the best. If the best can't agree, then what do we have? The value and objectivity of a system is that two independent observers will arrive at the same conclusion.
Sometimes the two of you agree completely. I have no doubt Hurst has a lot to offer. I just see there is a lot of room for open discussion concerning the real value of the system. I have concerns about rationalizations. About memories that forget about the failures and remember the times it was accurate.
I have real concerns when we are so lacking in clarity concerning major cycles at the time we are trading them. Airedale thinks he is now sure about the cycles since January, and he may be right. I'm reserving judgement. I don't think we know for sure where the next 10-week cycle will land or where the 40-week will land. This is a problem. It was also a problem that we didn't really know where the 80-week low had come in last January.
I have real concerns when analysts are ignoring the elephant in the living room (e.g., $TRAN falling through the floor). Then when someone meekly asks about it, the analyst says, "Meaningless." Why would anyone say this? Simply because it doesn't fit their current theory of the cycles? (The $TRAN is definitely not fitting a bullish picture.) Whether you realize it or not, this suppresses open communication. There are many people who are afraid to offer their observations because of this kind of dominant response. Just pointing it out, and you may or may not get it.
To answer your questions: I have studied all Hurst methods and have concluded from actual practice that they are interesting but fallible. More accurate than most projection systems but fallible. I have found a completely different method of looking at the market, and it is a virtually perfect system given the market's random movements. As part of that system, I rely on cycles 20 weeks and greater, but only as possible scenarios.
My definition of perfection: 70+ percent winning trades with an average loss of less than 2 percent on false starts. Have reason to believe I could push the winning trades number to 85 or 90 percent, but choose to play the market in less-than-ideal situations lowering the winning trade number.
DowDeva, Cash, All:
I have read every post on this board, have for years.
I ask that anyone and everyone who writes on this board to stay to the subject at hand, to treat every person with respect, to encourage the full and open discussion of all ideas, to avoid sarcasm, to criticize an idea by offering evidence not sarcasm and derision, to emphasize the positive wherever possible, to challenge ideas but never attack the man.
Anyone who has ever directly questioned Airedale or Hurst knows the reason for my posts. Airedale can and will do anything in his power to snuff out any discussion contrary to his opinion. This happened last January concerning the 80-week low, and now it turns out there was real reason to question Airedale's opinion. That Airedale *may have been* wrong is completely understandable and acceptable. The way he tries to dominate, ridicule, and attack any discussion contrary to his opinion is not. If you don't know what I'm talking about, you haven't been paying attention.
[I emphasize "Airdale *may have been* wrong" because I don't think the issue is clear yet--and may not be until the 40-week low, and may never be.]
Dowdeva: I stated in several different ways, Airedale has my highest respect most of the time. I do not like the way he trounces on any idea or opinion that directly challenges his own.
You wrote that I was sneaky and underhanded when writing: "Rationalizing discrepancies away by blaming fundamentals doesn't add to credibility of the system." There is nothing sneaky about it. Rationalizing to make the data fit the system is simply not a way to win credibility. This is one of my biggest complaints about the E-Wavers, and occasionally, I see Hurst cyclists practicing the same technique.
Cash, I honestly don't remember your making market calls or projections based on half-span ma's. Did you? I do remember your calling certain cycle lows at certain points, and it seems there is still uncertainty concerning which is which right now--and I'm talking about exactly where the last 20-week, 10-week, 5-week, and 2.5-week cycle lows came in. I'm not challenging you whatsoever here.
Cash, I don't have any problem with your communication style and never have. Your communication with everyone for years has been a great example, and I for one appreciate it. I have seen Airedale trounce on you, and I don't like it. Maybe you don't mind. Maybe you don't want me speaking for you. Maybe you don't like my communication style right now, taking on Airedale this way. I could certainly understand that, and I plan to crawl back into my hole right now.
MESSAGE TO ALL: I don't want a firefight. I do want Airedale to give a fair hearing to all ideas presented. Let's do whatever we can to put this whole subject to bed by staying focused on the topic of this board. I'm crawling back in my hole.
================================
There is one simple way to resolve this whole thing. Follow the board rules, and don't make exceptions for Airedale just because he is really good at what he does.
================================
Anyone who takes the time to read the entire public record beginning last January when Aire rejected all other interpretations of when the 80-week low came in--and reads his comments concerning FLDs prior to May 10--will know exactly what I mean.
Airedale has my highest respect as an analyst most of the time. There are times however when he treats people on this board with offensive arrogance. There are times when he rejects all other interpretations harshly without considering that someone else might have something meaningful to contribute to the process.
His one word dismissal of the falling $TRAN was not so much arrogant as it was simply an error in judgement.
That he made a mistake in phasing the cycles is completely forgiveable and understandable.
To the many Airedale supporters out there: Look, I admire his work too. But notice what happens if someone challenges his perspective. He completely overrode a few different writers last January, and only now is changing his tune. All of us would have benefitted from a free and open discussion back then.
Airdale, you have made it clear you are a natural warrior who will take on anyone who dares challenge. For the benefit of you and all of us, lighten up. Allow some open discussion. Let the weaknesses of the Hurst system to be brought out into the open. All of us will benefit.
Aire:
I didn't presume to know. I wrote, "I suspect..." It was in fact just a passing comment.
I find it sad that someone as talented as you feels so consistently compelled to antagonize and put down anyone who challenges Hurst or you--or points outs out the weaknesses of the Hurst system. The system has real and substantial weaknesses. And so does any analyst who claims that the $TRAN falling to new closing lows is meaningless.
There is simply no place for your kind of communication on this board. None. You and your skills are invaluable to this community. Your persistent antagonism toward any challenger only lowers your worth and credibility.
And my point is that the FLDs and 1/2 span moving averages have been ineffective since May 10 in predicting market moves--although I have seen them be extremely effective at times, even a high percentage of the time.
As far as Hurst being intrigued with VectorVest-like systems, I have to wonder about your response. Have you tried it and compared the returns to your own? If not, you have no basis for your comment. It sounds like you are making the basic assumption that no such system could possibly exist, therefore VectorVest is not worth investigating.
The problem with projections is that you can't count on them. Anything can come along and skew the result. I have read Hurst's discussions, and he is no doubt one of the greats. I suspect he would be fascinated with systems like VectorVest which shift the trading mentality considerably away from projections. The thinking now is more ON/OFF--while looking for the best setups out of the major cycle lows.
Disclosure: I am in no way associated with VectorVest.
I see 2 good plays: 1) Riding from the market peak into the 40-week low. 2) Riding up and out of the 40-week low.
I'm a little slower to judge the meaning of the falling transportation sector. You can't call it bullish.
I too see the possibility the 40-week low will simply be one more backtest of the June lows.
I have seen the FLDs and other Hurst methods prove shaky at best a few times too many since May 10. Still think they are useful but they have their limits like most indicators. Rationalizing discrepancies away by blaming fundamentals doesn't add to credibility of the system. Don't take this personally. Just stating fact. If fundamentals can distort my system at any given time, then what do I have?
I have been told VectorVest gives excellent on/off signals. I'm gearing up to test it, and would like to have a thorough discussion of their methodology compared to others.
$TRAN fell to a lower low today.
Question re: VectorVest. Recently met someone who claims VectorVest is the perfect system--at incredibly low prices. I really should go find out for myself, but I'm going to ask anyway.
Does anyone here have experience with the system? What are the system's weaknesses? This person claims there are virtually none.
Question re: VectorVest. Recently met someone who claims VectorVest is the perfect system--at incredibly low prices. I really should go find out for myself, but I'm going to ask anyway.
Does anyone here have experience with the system? What are the system's weaknesses? This person claims there are virtually none.
"Roughly 40 percent of all non-NASDAQ stocks put in lower lows in July, according to a random survey of 200 stocks that included the Dow Jones Industrial Average. Several key sectors--often acting as canaries in a coalmine concerning economic health--also fell to significant new lows in July. These sectors include several technology sectors, biotech, retail, home-builders, consumer discretionary sector, and transportation.
"Worrying about 5 and 10-week cycles at this point is to split crumbs off the table. What lies directly ahead is the 40-week low, and any short position taken after August 28 above 1280 on the S&P is likely to pay gold."
$TRAN: Curious about lack of discussion. Is the recent collapse significant? What about commonality phasing?
$TRAN new low again. Interesting divergence among sectors concerning cycles. $TRAN bearishness cannot be ignored. First the $NDX turned bearish and now confirmation by $TRAN. The economy and the market will follow. Still could squeeze a summer rally into August.
New low on $TRAN (EOM)
Not that I recommend being short! (EOM)
ProShares.com - Short market in IRA acct using ETFs.
ULTRA LONG:
Ultra QQQ Double the NASDAQ-100 Index: QLD
Ultra S&P500 Double the S&P 500 Index: SSO
Ultra Dow30 Double the Dow Jones Industrial Average: DDM
Ultra MidCap400 Double the S&P MidCap 400: MVV
SHORT:
Short QQQ Inverse of the NASDAQ-100 Index: PSQ
Short S&P500 Inverse of the S&P 500: SH
Short Dow30 PInverse of the DJIA: DOG
Short MidCap400 Inverse of the S&P MidCap 400: MYY
ULTRA SHORT:
UltraShort Double the inverse of the NASDAQ-100: QID
UltraShort Double the inverse of the S&P: SDS
UltraShort Double the inverse of the DJIA: DXD
UltraShort Double the inverse of the S&P MidCap 400: MZZ
Hurst cycles: Back in April I was looking for a 20-week low May 19 to May 22. After examining various scenarios, I'm satisfied the 20-week low arrived in that vicinity. I then match subsequent cycles to the following dates:
2.5 week low - June 13/14
5-week low - June 28
2.5 week low - July 18
Next 10-week low - August 2 (+/- 4 trading days)
With the shorter cycles being left translated, I will look for a lower low at the next 10-week cycle low.
Jury will remain out on all Hurst cycle scenarios until August. Still find it helpful to consider all possibilities. Airedale's reconsideration of the 80-week low and subsequent cycles was creative and possibly valuable. The placement of the next 40-week low may help settle the question.
For the time being, I choose to favor the original interpretation (80-week low, January 3) and will look for the 40-week low to complete 10 weeks from the next 10-week low (August 2 +/- a few days). That would put the 40-week low somewhere in early October (October 11 +/- a week). The tilt into the 40-week low could begin as early as just after Labor Day. That puts the best odds for a summer rally in August--just after the 10-week low.
Thanks Airedale/Cash for cycle scenarios. IMHO, they remain possibilities until Aug. By then, the market will give us a clear fix.
A case could be made for this being either the 2.5-week ahead of the 10 or the 10-week low. Somebody said this is too big a dip to be the 2.5-week low but not sure that has any bearing. If it's the 2.5, it's part of the larger 10.
For this reason, I will play this low as if it were the 10-week low and then be on guard.
Looking for a rally attempt (minimum) starting between now and Thurs. Will play it full on unless I see good reasons not to. Market is set to climb wall of worry--a good thing for a sustainable summer rally. Be fearless and keep tight stops.
Hurst guys: Anyone think this is the 10-week low coming in? I would say we won't know for sure until it's all over. I see 2 scenarios. One is the 10-week is coming in now, and another that this is the 2.5-week ahead of the 10. Any thoughts?
MrCash, what date marks the last nominal 5-week low? (EOM)
Hurst guys: 5-week low yesterday? (EOM)
5-week low Weds. or Thurs. next week. (EOM)
MrUSA, what's your take on the RUT? (EOM)
Once again, my hat is off to Bliss who is the only one on this board (that I know of) who saw it coming. You can put him down for timing, but the underlying conditions that led to this market breakdown were building consistently since January. Anyone looking back now can see it--look at the commodities charts, metals, oil. Copper was going absolutely vertical. Breakdown straight ahead--duh!
There was a lot of arrogance on this board in early May--and some harsh putdowns of Bliss. Yes, his message was tiresome, and I wish he had offered more analysis and timing triggers to go with his message. Still, he is an old market lion with his own way of discerning the market tides.
Bliss, a tip of my hat to you.
T.
Can anyone here compare/contrast Tradestation with Think or Swim? Met a guy who absolutely loves Think or Swim and said it was the best for less.
T.