Replies to post #104008 on Zeev's Turnips Patch-No Politics (ZEEV)

[Kirk]

Right now, I doubt that the Naz retrenchment will be to much worse than 1425 or so in the near future, if it gets under 1414, that might be reevaluated. The May/June major decline I had postulated earlier in the year got annulled by the December highs being taken out, by new highs finally following the indices and the mild volume expansion. Few other parameters, though are still indicating major dangers, but on balance the score got actually to neutral from very negative just a few weeks ago. I don't have a bull sign on yet.

I admire your honesty and how it seems you have no ego involved at all which allows you to look at the data and react to what it says, not what you said in the past.

Just want to say BRAVO! and I'm adding that one to my "Zeev Hall of Fame"

... whenever my damned site comes back online!

[Tenchu]

Zeev, as someone currently short this market, I suppose you'd suggest covering on any retrenchment?

Tenchu

[Babylon]

Does that essentially imply that GN-03 isn't in play right now (delayed perhaps)? If it's off the table (for now), could you possibly draw up a new map over the weekend, even if its very brief compared to the original? If you could mention some new stocks we could be eying with SL's (besides the core and orphans) such as BSTE, FSTW, CAKE (how about some chip stocks with our cake for our h/wealth?), COCO (are there any others? How about some lagging QCOM here?) that'd be nice too. Along with some fries.... <gg> TIA

[leon]

Exactly what "dec. highs being taken out" are you referring to?

[Rick Storm]

Zeev, in December the naz high was 1521 and Dow 9043; these have not yet ben hit. Do you mean the January highs? If this the cyclic bull then can it last to the election and if it is what is your Naz target? The dow seems to be lagging the naz. Do you think the dow will play catch up?

[gtober]

Zeev, I think the Dec. highs are still valid, even though the COMPX breached the closing high of the December rally.

Here is a question. Of the 187 stocks that hit new 52 weeks highs on the Nasdaq today, only 7 had volume in excess of 5 million shares. And 3 were the same company. (UASI, EXPE, ROOM) Is the $NAHL indicator any less valid if there is no leadership in the new highs list? No big dogs. By my count, less than 10% of the stocks that trade in big volume are making new 52 weeks highs.

For myself, while I feel like I am denying the obvious in the price action, this still looks like a bear rally to me. Rising wedges on contracting volume. (the DOW printed a breakout, but volume certainly did not confirm) Money flow bearish divergences. Bear market patterns of friday ramps and the running of the crap near the top - etc.

And heck, even if it is a bull market rally, it's about spent anyway. I do look forward to the trend reversal when it comes.

GT

[orkrious]

before you get too comfortable, take a look at this chart

http://www.dailyduediligence.com/Midday/nylow.html

[mjk]

1425? How do you define near future? You don't think with some of the extremes here, BPCOMP, NASI, VIX, etc, we'll see a deeper retrenchment?

[Train Guy]

Here's an interesting excerpt from 21st Century's morning breifing.



You'll notice how the markets have gone through the same phase sequence twice in a row. It starts with a quick down/up move -- the ones that lasted 32 and 30 days on the chart. Then the SPX went into mid-term downtrends, which lasted 33 and 39 days. The uptrend off the October low went 36 days.

And now the uptrend off the March low has also lasted 36 trading days. We're now clearly in the zone for a mid-term trend change.

Yesterday's action was highly consistent with a change of mid-term trend as well. This action is what I call "fibrillation", which is a typical output pattern seen at phase changes in non-linear dynamic systems, such as a human heart, or the stock markets. The market has been subjected to sudden, arrhythmic shocks up and down. Yesterday's violent move down -- and equally sharp move back up -- is entirely consistent with an uncertain market on the brink of a chaotic move.



The implied volatility in the markets is also on the rise. Yesterday the VIX gapped up and started running up on the morning sell-off, but backed off considerably during the afternoon rally, leaving a "doji" candle.



The momentum of the VIX is now on the rise, showing it is now the bulls turn to get squeezed. This also looks to be one of those times when the implied volatility is early in calling the trend change. Remember, the VIX is a measurement of pricing in the options market, and the collective wisdom of traders will often anticipate the rise in volatility associated with a change into a downtrend in the markets. This is exactly what happened back at the top on December 2nd -- the VIX started rising ahead of that top.



But it's also interesting to see that the market made one last big push higher after the VIX started rising back then, which quickly failed. I remember it well. The SPX went from 913 to 940 in one day, and that marked the end of the road for the uptrend. But the fibrillation at the end of that mid-term uptrend cleared the decks of both longs and shorts, and set the stage for the bigger decline.

I think the market is doing this again right now. Its current business is cleaning out as many short-term positions as possible before embarking on a new trend.

The market is getting ready to go into a mid-term downtrend, no doubt. But we may see more of this violent back and forth fibrillation first, and we may even see another breakout attempt. The nastiest thing the market can do right now is suck in breakout players on the long side, ahead of a larger collapse. So we'll continue to wait for this mid-term uptrend to fully exhaust itself before entering short positions.