Replies to post #253597 on Zeev's Turnips Patch-No Politics (ZEEV)

[Burk]

Thanks for your response, Zeev, and I hope you are having a fantastic weekend!

[Bullwinkle]

It is quite possible that the trend reversal that is due will be a reversal of the overall trend since topping in January and not just of the most recent uptrend off of the 1865 low, but as of this moment I am in the camp that it will be a reversal of the current smaller uptrend that we are in (as I am sure you are aware had you read my cycle posting I sent). There are many forces at work and this market is gonna have to show me something to get me to change my current view, but if we do get that rally you are looking for I will gladly take it.

With that said, I have been watching for that handle on the COMPQ cup & handle I pointed out a while back to finish forming. Maybe the handle is fully formed or will be fully formed if we do get the down I think we are setting up for... As a side note, the top of 2150 to the bottom of the cup (say 1150) is 1000 points. If we revisit 1800-1840 that would be approximately 1/3 of the total move since March'03 and within the requirements for the handle formation. I am just not sure if the gaps in the 1840 area have been satisfactorily filled and could be ripe for a revisit.

Chart from May 14th


Current Chart

[dabonenose]

Zeev, I agree with your mkt direction.

My favorite indicator is the Summation. I've gone long when it curved up and either shorted or went to cash when it curves down and finally I'm starting to keep my profits.

I use it with the 10 day simple mvg avg, and rsi(14).

When the RSI 14 starts to paint the bottom, I start looking for longs, etc.

My question is this,,,do you know where I could get info of what stocks, CE Funds, etc. track the summation index?

tkx,

Dab

[was Steve]

<Most likely, within the next two weeks I will raise my top target for the year to around 2500 from the extreme I had before at 2390 (that was until now not "very likely" and just a possible excursion, now that number is "in" and the above 2500 takes the "excursion spot).


getting past the years early highs will be a big achievement for the nas imo. it pretty much needs to make a move up next week or it is heading down. initially this year i had multi year highs in july/august and higher than the january highs, but have taken it off the table unless 1500 ndx is hit next week plus a day or two.

even if the 1500 level is taken, it is still about impossible for me to imagine a rally to the 2390-2500 nas levels you are looking for (sorry for speaking in nas and ndx, but ndx is my world while the nas is yours). the turnips have done quite well for some time, but i think their time has come for a bad stretch later this year if they keep looking up.

[Alexander]

Zeev

I share your bullishness.

I think in the upcoming rally, new leadership within technology will emerge, in other words I don't think the same tech subgroups that led in the last rally will lead in this rally.

Alexander

[extelecom]

Zeev, Will the time frame for your revision remain the same?

[stiv]

Zeev et al,

There is another view of sentiment on the equity option front that might be worth keeping an eye on and that is the International Securities Exchange (ISE) Sentiment Index (ISEE).

http://www.iseoptions.com/marketplace/statistics/sentiment_index.asp

The ISE, as it states, is the largest equity options exchange in the world. Their sentiment index, the ISEE, is based on the following:

1) An equity option based index
2) It is a call/put ratio (c/p * 100)
• < 100 = higher puts
• 100 equilibrium
• > 100 = higher calls
3) It is based on calls and puts purchased opening long positions (no position closing transactions)
4) It claims to use only option investor purchases with NO market marker, broker or other specialist transactions

I don’t know if this will make it a cleaner number, but if as advertised it filters out the funny stuff it may be worth following.

In comparison to the traditional p/c number, the ISEE did not hit any earth shattering extremes this week. It actually hit a noticeable local low on 5/11 (82), which was the lowest reading since the March low last year (76). So far, both those index lows look like darn good market turning points. It also called the Jan 04 top as well, 304 on 1/20 (3 times as many calls).

Unfortunately, it has a very short history to work with (only goes back to August 02), so it’s hard to start shaking in your boots when it nears some historical low. Its lowest reading ever was 60 back in Oct 02. Yes, according to the ISEE, put buying really can exceed call buying (ISEE<100) on a basis that does not suggest the end is nigh.

Also, for comparison’s sake, the traditional p/c number showed increasing put buying throughout the day on Fri whereas the ISEE showed marginally higher call buying.

I follow it in Excel and keep a few ma’s along with one derivative, the ISEE divided by the NAS. This number actually was an all-time low on the 11th. In other words, the ISEE reading relative to the NAS reading on the 11th was as low as that ratio has ever been in its brief history. That was interesting. See the third chart below.



All the best,

Stiv