The support is clearly in the 852-856 range, though while yesterday fell into support, today has had to rally back above it. The daily modified DMX reminds us this market has no trend, so we shouldn’t pretent to see something that’s not there. I still think the next trend is down, but it isn’t here yet.
click chart to enlarge
click chart to enlarge
34 responses so far ↓
1 Berkeley Square // Apr 28, 2009 at 11:54 am
Chris,
Last Thurs 23rd, you wrote “The question was asked when the solutide model flips to long. As written, the model flips on Thursday, May 7. However, the next tidal buy date is Monday, April 27. ”
What negates “the next tidal buy date” ?
Thanks
2 rich // Apr 28, 2009 at 1:18 pm
@Berkeley Square, The rest of the sentence was ‘This date just misses being the flip date as it’s less than one point higher than the subsequent tidal sell of May 1. FWIW’.
3 Berkeley Square // Apr 28, 2009 at 1:26 pm
@ rich,
What effect does that have on a “tidal buy date” ?
4 Berkeley Square // Apr 28, 2009 at 1:27 pm
I just got it “Pigs Fly”=”swine flu”. I’m sloe like gin.
My family use to have a farm on which we raised hogs. On a Friday, my mother wanted my father to take the pigs to market. He said that they could wait til Monday. Over the weekend they were struck by cholera. The following week the county oversaw the destruction of 500 hogs so the cholera would not spread to other farms.
Farming & ranching has its risks.
5 rich // Apr 28, 2009 at 2:05 pm
@Berkeley Square, I always loved sloe gin. My father used to make it every few years when there was a good crop of sloes.
Good story. Timing really is everything.
6 rich // Apr 28, 2009 at 2:25 pm
@Berkeley Square. The rules on the buy and sell signals are designed to choose correctly between signals that are too close to each other I think, or that’s my reading at least.
7 Berkeley Square // Apr 28, 2009 at 2:37 pm
@rich,
Sounds to me like when i was a broker & told my clients that they should only buy stks that go up; and if they didn’t go up they shouldn’t pay for them.
IF we broke above QQQQ’s 200E @ 33.91 & Nov 4, 08 high @ 34.01, THEN cite the “tidal buy date”. If not, ignore it.
Signed,
Cynic
8 rich // Apr 28, 2009 at 3:02 pm
@Berkely Square. I think everyone’s losing interest at the moment as nothing is happening for all of these dip and climbs.
The othet way to look at this though is that the market may be working off a very overbought condition by going sideways for a while. A lot of selling pressure has been absorbed to little effect so far.
Maybe this means that the rally will resume climbing soon.
Or maybe this means that having shaken most of the bears out, the market may now decline meaningfully!
9 LovesBeta // Apr 28, 2009 at 3:48 pm
@Berkeley Square, that over the weekend hog story is very interesting. The events in life and how they unfold are sometimes amazing. @Rich, the low volume is worrying for bears. But it’s really on both sides; Buys have also been slowed. I am not sure that the first meaningful volume and action would come for the right intermediate direction. The BB’s are coming up from the bottoms for the indexes on this consolidation, and if they hit the price, may ignite the rallies. But I am still holding my bear financial ETFs even with an upward bias in the markets now, at least until next week for treasury bond auctions.
10 rich // Apr 28, 2009 at 4:21 pm
@LovesBeta, there is also a background problem here though, which is that much of the news is better than expected. Earnings, confidence etc. I’m not thinking of large bank earnings as they seem to be a mix of subsidy and fantasy.
Positive sentiment is strong and getting stronger at the moment.
All rubbish of course & I agree with the article in the FT arguing that stocks are in a bubble relative to earnings, but I think that we might have a two or three good months left in this rally.
On the other hand if we see a dramatic worsening in the swine flu news, sentiment will worsen dramatically.
Cash is looking pretty good right now.
11 LovesBeta // Apr 28, 2009 at 5:53 pm
@Rich, Although, I am not sure if all the printing that all the central banks around the world are pumping would be enough to offset the large derivative bets in multi-T’s that have gone sour, I am always open to both sides of the trade. Actually, I am not that bearish at this moment, and I agree we likely have more run in this rally, maybe much more than everyone expects. However, If we correct here and then make some firm second leg on this bounce, it would be healthier.
12 rich // Apr 29, 2009 at 9:03 am
@LovesBeta, I think that the banking system is insolvent on any reasonable measure. ignoring that and hoping for the best rather than facing up to it hasn’t been working out too well for the Japanese.
I agree that a second leg would be firmer after a correction, I’m just increasingly doubtful that we are going to see that correction. The moment of truth may be today, do we bounce off 775/881 or power through it? If we power through it then the correction will be off the table for the moment I think.
13 Berkeley Square // Apr 29, 2009 at 9:04 am
The ascending triangle on hourly RUT/IWM that i mentioned on the 27th is matched by a descending triangle on the Daily VIX.
14 rich // Apr 29, 2009 at 10:24 am
Not great news for the bears that.
We are at overhead resistance now. I’m taking a small position for a bounce off again, but I wonder.
15 LovesBeta // Apr 29, 2009 at 11:46 am
@Rich, The Dollar and inverse to that (for recent actions) market is acting like the FED is going to do more QE action today. I would not be surprised if the market to punch through using the news, but we’ll see. Though, I take the action of the market more serious from tomorrow. But you may want to keep a tight stop or close before tomorrows actions. BTW, bank test results comes out next week on May 4th before they are doing the auction sells on 5th 6th and 7th; Great timing
16 Berkeley Square // Apr 29, 2009 at 12:13 pm
Ken Lewis, BAC CEO, is buying some time. Hope that someone is keeping an eye on him to make sure that he doesn’t take any swag like pens, stationary & coin wrappers.
Maybe he’ll get a job writing Red Herrings at Merrill.
17 wwshep // Apr 29, 2009 at 12:39 pm
for a TA based blog the comments here sure seems to be focused primarily on bearish “funnymentals”… just an observation.
Other observation is how even for a very good trader / technical analyst a bearish bias can skew the analysis. Case in point is how the bias on this blog has been toward picking a top for the last month in spite of the fact that the weekly, and daily net lines have been on buy signals the whole time. The market action has proven the old adage that they trend is your friend, and a purely mechanical approach of following the net line signals on various timeframes with the weekly being the most important, followed by the daily, and then on down with the hourly being the least important would have been much more successful than attempting to use hourly charts to pick tops the whole time, going against the weekly trend. But even though less profitable, the top picking approach has been so successful for the prior 1 year that it has even the seasoned pros “trained” like Pavlov’s dog to do the wrong thing. That is my 2 cents FWIW…
18 rich // Apr 29, 2009 at 12:53 pm
@LovesBeta, stopped out at at 876. Cheap play in any case. Baby steps in this market.
@wwshep, you’re right that there is a bearish bias here, but there were a lot of signals indicating a pullback. Many of us thought that the rally was unfinished regardless. The bulls win this one though. I bailed out of most of my shorts yesterday at 850 & I’m very happy about that at least.
Nonetheless I still think that the big opportunity this year will be shorting the end of this rally to a lower low than 666. Equities are in a bubble relative to earnings and economic prospects, so the bears aren’t finished yet.
I plan to make some money on the way up before then though.
19 Berkeley Square // Apr 29, 2009 at 12:55 pm
@wwshep
“The ascending triangle on hourly RUT/IWM that i mentioned on the 27th is matched by a descending triangle on the Daily VIX.”
“picking a top ” ??
20 LovesBeta // Apr 29, 2009 at 11:25 pm
@wwshep, Even though I look at some fundamental data at times, as a relative measure; I usually ignore them. Since as far as I can see, most econ numbers have been massaged so much, that I am not sure people who wrote the programs to do the analysis know what the code does any more
As for weekly charts, here is the S&P and VIX in weekly, and I added a daily VIX too. S&P could likely go to it’s upper BB or test it’s 50WMA around 1000. But there is that blue resistance in the S&P weekly chart that it needs to break through. Also, weekly RSI is reaching overbought for a bear market, if this is one, and it is only a bear rally. VIX has a chance of breaking down through previous supports though, that would match with S&P rallying to 1000.
S&P Weekly
http://i713.photobucket.com/albums/ww139/LovesBeta/SnP-Weekly.jpg
VIX Weekly
http://i713.photobucket.com/albums/ww139/LovesBeta/VIX-Weekly.jpg
VIX Daily
http://i713.photobucket.com/albums/ww139/LovesBeta/VIX.jpg
@Rich, I am glad you are ok from this run. My loss so far is not too bad, as I was not playing with options on this play. I added a bid more when we hit 880 (not a good idea usually). And the drop after helped a bit. Tomorrow is another day
21 wwshep // Apr 30, 2009 at 10:24 am
@beta
I always cringe when I see statements of certainty in regard to the market such as “it is only a bear market rally”… How is it that you “know” this for sure? I am guessing you are relatively new to trading and thus have not learned the hard way that the market is always right and one must always be flexible and keep an open mind. When I first started trading 20 years ago I was like you and though I “knew” for sure what the market was going to do. As a result I blew up an account. Then I learned to spend my time “listening” to the market rather than telling it what to do.
So, sure this could very well be a bear market rally, but why should that matter to a trader who is trading off the weekly, daily, or even hourly chart. I would think that sort of distinction should only matter to a long-term investor or someone trading off the monthly chart. In which case why even spend time at this blog. Just plot up a monthly MACD and take the buy and sell signals the one or two times a decade that they occur?…
The reality I find as I read the blog and message board is that there a very few true traders out there and the vast majority are either perma-bulls or perma-bears who will resist changing their stripes tooth and nail regardless of the damage that stubborn bias does to their P&L.
22 rich // Apr 30, 2009 at 2:40 pm
@
23 rich // Apr 30, 2009 at 2:50 pm
@LovesBeta. Well I’m completely with you there. This can only really be a bear market rally, though technically it might be considered a short interim bull market sandwiched between the falls behind us and the falls ahead. No real bull market could start from here.
That’s not a perma-bear talking. That’s just the big picture from an economist’s perspective.
Having said that, I think that this bear market rally has further to go and I’m switching to long. next stops 940 & 1000.
@wwshep. Point taken mate. You’re clearly the only pro here. We are not worthy.
24 wwshep // Apr 30, 2009 at 4:28 pm
@rich,
I think you missed my point. The point is the market is going to humble everyone eventually no matter how smart you think you are and how much you are “certain” of. That is unless you can be flexible and trade against your biases. Obviously you can as you demonstrate with your statement that you are long for rally to 940 or 1000. Anyway, I was not trying to brag about being a better trader than anyone else here. I was trying to relay my experience learned in school of hard knocks to hopefully save some less experienced traders from engaging in the “know it all” or “perma-bear” pitfall. I hate to see people losing money fighting the tape. Been there done that, not ever going to do it again.
25 rich // Apr 30, 2009 at 5:30 pm
@wwshep,
Humility as a trader is essential. I absolutely agree. Anyone who trades on faith will probably end up as roadkill in this market. You were right about this bear wedge being a bear trap too & I completely respect that.
Like you I have been surprised by the number of diehard bears in the blogosphere though. Too many. When this bear market ends, I will cheerfully become a bull. Much easier to make money in a bull market.
There’s nothing wrong with looking at the big picture though. I was short last September because the economy was clearly heading into the crapper and the market had to be following it down. Notwithstanding a lot of insane government spending, the economy is clearly very far from recovery, and the market cannot prosper for long until the economy improves sustainably.
In the short term though, subject to swine flu, the bulls look solid, and unless the lower line on that channel is penetrated, I will respect that & trade accordingly.
Good quote from Zero Hedge tonight – No less an authority than FDR’s Treasury secretary and close friend, Henry Morganthau, said in 1939: “We have tried spending money. We are spending more than we have ever spent before and it does not work…..I say after eight years of this Administration we have just as much unemployment as when we started, and an enormous debt to boot!” Similarly policy makers’ current aggressive actions remind me of the quote “Never in the history of the world has there been a situation so bad that the government can’t make it worse”.
26 wwshep // Apr 30, 2009 at 8:08 pm
@rich,
On the subject of whether or not the government can spend it’s way out of the problem the long-run answer is no, but as Keynes said “in the long-run we’re all dead”… so what we need to be concerned with as traders is what all this massive unprecedented funny money pumping is going to do to stock in the “short-run”… and in that regard the way I think about it is not withstanding IPO’s and secondaries there is a finite amount of stock shares and those shares are priced in dollars. So what happens to stock prices (and other asset prices) in the short run when the Fed can and does print an infinite amount of dollars out of thin air in the click of a keystroke???…
27 LovesBeta // Apr 30, 2009 at 9:56 pm
@wwshep, Thanks, I am constantly looking to learn from others, and that’s why I am here! And, I did put the subject of this current rally in conditional (question) form! And for adding to my short positions, I just based that on looking at indicators, and “for me” at this point the likelihood of correction “before the continuance of advance” is higher than the continue of advance without any correction. I am trading short term! And yes, I have been paying dues for a while, and I am sure I will be paying more.
28 rich // May 1, 2009 at 4:58 am
@wwshep,
In the long term, we are all definitely dead. lol.
One other thing to remember is at the time that Henry Morganthau spoke in 1939, there had just been a bull market 1933-7 & then another bear market 1937 to date.
Roosevelt came to power later in that cycle though, and by his inauguration the market had already fallen 89% to the bottom. Massive spending can only create the illusion of prosperity, not the actuality, and for only as long as people are fooled. That won’t be more than a few months here.
29 BearOfNH // May 1, 2009 at 6:29 am
@wwshep “So what happens to stock prices (and other asset prices) in the short run when the Fed can and does print an infinite amount of dollars out of thin air in the click of a keystroke???…”
This is an example why Chris really needs to have a forum on the pay site. I’m not at all sure what happens, and don’t even know if the Fed can actually “print” an infinite amount of dollars. “The fastest way to run out of money is to print more of it”.
On the other hand I recall Frank Capiello on WSW back in 1981 or so mentioning that in the 1923 German inflation stocks held value because they represented tangible assets in the form of factories etc. I’m not so sure how well that analogy applies to American corporations nowadays, but is worth a thought.
Lastly I don’t mean to be so USA-centric in my posts but at the moment the first world is still looking to the U.S. for leadership. Maybe not for much longer but today I trade U.S. markets.
30 rich // May 1, 2009 at 6:56 am
@BearOfNH,
Gideon Gono knows what happens when you print dollars as fast as you can over a long period. definitely one of my fav commentators on the financial cris this year.
Of course they’ve stopped using zimbabwean dollars now. I think the presses broke or something.
31 wwshep // May 1, 2009 at 10:13 am
@rich,
There is a big difference between Zimbabwe and the United States. The Zimbabwe Dollar is not the world’s reserve currency. That is a very important distinction…
32 rich // May 1, 2009 at 11:01 am
@wwshep,
Yes, and it will remain the world’s reserve currency as long as people have confidence that it will retain value better than alternatives. The dollar is not history’s first reserve currency, and it is unlikely to be the last.
33 wwshep // May 1, 2009 at 12:06 pm
@rich,
There are no good currency alternatives because the rest of the world are worse basket cases than the U.S… only real sound alternative is Gold… that is until the Central Planners decide to make it illegal to own it like they did during the Depression. Majority of world goverments and central banks have a vested interest in keeping the U.S. Dollar as reserve currency, so as long as they all “conspire” to keep the game going then we should just accept it the funny money binge and “party like it’s 1999″
… gotta make hay while the sun shines, and we or our children/grandchildren will have to deal with the mess we’ve made later on down the road. I certainly don’t condone this insane goverment policy, but I have to trade what “is” and not what I wish and hope for…
34 rich // May 1, 2009 at 12:07 pm
@wwshep,
True story. Everyone’s racing to the bottom in this fiat money debasement contest.
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