Some Junctions More Crucial than Others!
I want to start by offering the stock market bulls an insight into their future once this tug-of-war finally ends.
A lot of people have been asking about sentiment, since apparently there's a lot of bearishness out there, and it's widely considered a contrary indicator. I was intrigued by this, but after examining the graph below, I've concluded that it's a fairly meaningless exercise. Sentiment rockets up and down to the point that it's just noise. The creator of this graph pointed out a few times that bearish sentiment correlated with a market bottom. Well, yeah, but I can just as easily point out three times that bearish sentiment correlated with a top. Because it's meaningless! I've circled (in green) one such example.
Dow 11,257 is what we want to not cross, people. I was nervously watching the Dow today as it ratcheted up another 50 points. But it couldn't keep it up, and it closed down by a point. What's remarkable to me is the doji pattern that formed. How's this for a tug-of-war, folks? I can't remember the last time I saw such an incredible doji. It has indecision written all over it. No one has control of this market! And it's getting tiresome.
Since last Tuesday, the S&P has been pushing ahead with a series of higher highs and higher lows. Not good for us bears. But it has stayed beneath its trendline, and I see strength starting to flag. Make no mistake, though. We have got to close out this week with some meaningful weakness! Recent market activity is far too heartening to our bull friends!
On a daily basis, you can see the S&P is also in a doji pattern (although not to the freakish degree that the Dow was) and we are still safely below the trendline. But we are very close to the danger zone, folks. One more good, strong day, and things are going to suck.
27 comments:
love the humor! It's been interesting over the past while to read the posts and see an ultra bear sweat a little. i'm a young trader and this is just a very crazy market. Let the good times roll!
A tighter doji formed on June 16th on the DJ. Also, note the double bottom "W" formation on the dow - or is it the beginning of a double top??? Who the heck knows.... just stay tuned.
It's always darkest before the dawn... Looks to me like the bulls are showing weakness by not being able to follow through on their intra day rallies.
It's almost like, "Let's keep it up until the end of the month, and then everyone will see we have a bull market!" Gonna need a serious dose of Viagra to keep it up.
Lets face reality, This is a sideways market, we are in step five of the five step process. We might have to wait awile before we can take this thing down to where it belongs.
GDP is going to move the market this friday, if gdp is weak expect a rally due, many will think a weak GDP number will keep the fed from raising rates after august 8th and most likely pause. A strong GDP and were headed back down.
still like this chart
CHART
If anyone has time, daytrading isn't too bad in this kind of market, buy and hold then wishing it goes in your direction is just tough. Look for Industry leader intraday. Scoup up MYL and NUE today.
Intraday Leader
So Tim, I am a little of the chicken of the group. I like the downside opportunity, but unlike the posts not in on the "put" side yet.
My buddy got in on the BBH Aug 180 call yesterday for less than $.2 than I had my order in (scalp play - Short term damn it!). I think this is one sector that is showing bullish action. Today, the gain would have been over 120% on my option (he is a wuss and took off at 80% - just kiddin, he is making money). Still looks like financials (dllr as an example, not my fav, but still rockin) is coming into favor. Notice a few days ago I took crap, but not bad the way I look at it.
Anyway, got another 10 contract of my SPX credit spread on the top into strength (gotta love it). Your post has helped me forever and I will continue to watch your thoughts forever.
REAL QUESTION: WHY ONLY 250 POSTS, dude you were the KING of some of the greatest financial software? I love it and enjoy seeing what you are looking at with that "PROFIT" system. You da man!!!!
Good tradin'!!!
another TIM
Hurricane5 rocks! NTRI is just starting it's rise!!! Keep up the posts. DUDE seriously, I like your thoughts and admire your ability to take this boards crap!
Tomorrow might be another up day; however it will not be strong.
It will seesaw.
I doubt it will break he S&P trendline.
In fact, I don't think it will ever break the trendline; although it is going up to 1285 allright in the "mid-term".
Scenario will be the following:
Let's say up tomorrow - no one can tell (only that it will not be a strong climb if climb there is).
Might even do a lower low!
Then friday, as some on said, bad news and down for at least two days.
HOWEVER, the thing should go back strongly northward to the 1285 mark after that short slide southward (up within three days or so).
After that a good 8 trading days or so on the down side (target below 1220) and back up 10 days (lower high).
After that, folks, it is southern winds for two years (target 590).
Yep! And maybe the big one (-25%, if the cycle decides to go fruity on us.
A bear's dream. An assuasive surfing journey on the big wave of Mother Nature's recovery.
Just be watchful of month end mark-ups by the Hedgies. Let this NOT shake our Bearish ground. Don't get Sore and Short some More!!
tr, I think Tim and the rest just give Hurricane5 hell because they can, and it's all in fun. I mean, he is (or was?) the only regular bull that would keep coming around to entertain/educate us.
Personally, I think NTRI will keep going up (trends that way) and it really doesn't show much slowing down. People used the change in personnel to scrape some profits. It will keep going up as Hurricane5 said, but I'm not sure what the top is. But it will come back down when it gets to the top if the air that is under it no longer supports it.
-------------
Today's market was perfect for what I expected to happen. Tim may find it boring, but I find it exciting, as the pull of gravity and time will draw the market to its corrected value.
The DOW needs to get under 11000 for 10400 to be possible in Aug. It is rare for the DOW to move more than 600 points in a month, but has done about 600 points several times in the past 6 months.
That being said, the DOW will get under 10500 by the Aug OE.
The market has made some nice falls into the 10,700 area. Everytime it does this, it recruits a few more bears, as such the next downleg (which will be the third), will be the most serious one. Expect the Fed to kick it off Aug 8th by not pausing. Bulls are now marked for death. Anyone remember August 2000?
-Frank the Tank
Oldsoothsayer,
Why just the 38.6% retracement? Why not 366 or lower?
The Nikkei bottomed out below it's 23.6% retracement at 7K. The Dow in 1929 also did.
Are you basing this on a wave ccount?
costas writes:
'This is what I read from the chart that you are posting on AAII bullish percentage. Everytime the AAII bullish percentage dips below 35% it correlates with a market bottom. It seems to me that this indicator picked up the 1998 bottom (which you ovelooked to circle), It picked up the 2003 bottom and the 2004 bottom. The faulty signal in August 2000 you are refering to, it is not an extreme reading. It is only a 40-42% bullish sentiment, not even a borderline situation. Even if I include the August 2000 reading this indicator has worked 3 out of 4 times, which is a 75% success rate. I would not dismiss this indicator as meaningless.'
I noticed the same thing. The reading Tim highlights in green is clearly not an extreme in bearishness, so concluding that AAII is a meaningless indicator from this observation is a curious observation.
There is no doubt bearishness is rife in the markets. Short interest is possibly a more meaningful measure as it involves people putting their cash on the line as opposed to stating their opinion in a poll. June saw the largest ever rise in Nasdaq short interest. Almost twice as big as the last record rise. People have already slammed the market with the short trade, and (so far) support has held. From a sentiment/positional point of view the conditions are ripe for an explosive rally.
dash
Tim--
I noticed one thing on that chart of investor sentiment. The low you noted that corresponded with a market high was not actually an extreme low. All the major lows had sentiment down around 30%, which is where it is now according to that graph. The one you circled is only around 40%, a low, but not a historical extreme by any means. I gotta say, this chart actually presents a bit of a bullish case. If markets break over their intermediate downtrend lines then I'm going long until 11,675. If not I'm on the short side and looking for Dow to finally crack 10,650...that'll be a huge!
I think this market is totally exciting...those trendlines are converging so prices have got to find a direction soon enough. I'll bet the direction of that break will send us in some direction finally.
Tim,
Today's sacrificial lamb was the Dow Transport which has shed 200 plus over the last 2 days.
The DJT shed 123pts. today and the DJI was only down a mere 1.20.
My friend this says strengh in spades and move over Dow 11280.
The office was a buzz today with my favorite song by my bullish cohorts:
Lions & Tigers & "Bears"..Oh my !!
Lions & Tigers & "Bears"..Oh my !!
What they don't know is that I am long the Micap 400(EMDU6) from 716.25 and as you remember I went long the $XAU per the $132.50 call option(.swohg)filled at $5.00 and the YGQ6(Mini Gold) at a break above $606 and I was filled at $606.90.
My eyes will be dead on the Dow Transport and if it breaks above 4400 we're off to the races.
My stops are set but maybe a bit to lose at this time ..may adjust them early a.m.
In closing this day let me share this... don't allow your readers to think that we have some open marketplace here ..cause we don't.. it just sounds good and pulls in the suckers who think that a 100 lot buy or 1000 lot buy moves the market.
Soros moves the market..Rothschilds move the market..Goldman/Sachs moves the market.. so the moral is.. just be satisfied with what the market gives and hold on as the market moves to Dow 12000.
At that point(12000) maybe the sponsors will send the market into the tank and hopefully we're along for the ride.
Bulls & Bears & Diamonds..Oh my!!
Bulls & Bears & Spiders.. Oh my!!
Ya gotta love this blog.. it tolerates a jerk like me!!!!!!!!!
Here's a big high five "paw" to ya!!!
(Not) Always a Bear
Just saw costas posted essentially the same as me...guess I should read through the blog more thoroughly before posting. cheers to you costas!
Your humor, wit and insights are priceless! Thank you for taking time out of your busy day -- you are very much appreciated.
Question: Will the outcome of Google's click fraud settlement suit have much of an affect on their stock? Thinking of straddling my put...
To: Jessica_Rabbit
I am quite sure that every reader of this blog has a opinion about straddling your put!!!!!!!!!
My question is do you have the experience for this kind of spread?
Questions:
Are you in-the money on your put and looking to straddle or out-of-the money and looking to strangle??
Are you looking for a long straddle or a short straddle??"
Are you seeking to profit from potential "adverse" volitility??
Lots to consider in advanced option strategies.
Give us a little more info about "straddling your put" and we'll light up the board for you!!
I remain,
(Not) Always a Bear
FTSE now above its July high. Often acts as a precursor for the S&P.
dash
We have a clean breach of the falling trendline on the dow. This market is going up, next crucial resistance is 11260. If thats breached, we are turn bullish on the intermediate trend.
everyone is bullish all of the sudden wow....never seems to amaze me.....why are we in rally mode...this is just going to lead to a harder fall when it does occur...
I think we rally up until August 8th, no pause and the markets will give back all of this rally. Todays data again was stronger then anticipated. This only means a definite 100% chance of a .25 raise on august 8th most likely followed by no pause. If there is no pause 2:15pm august 8th short this market.
Someone please tell me why this pos market is keep going up?
I only hear bad news coming.
Mike Stone,
Why not the next ones?
It is a possible scenario.
We will see then where the situation leads us.
For now, it is definitely 590 in the next two years.
Yes, I guess the pattern for a 3 waves down goes along with the cycle moves and patterns so far.
This is why things are, on a probability level, a very contingent assumption.
Indeed, if in the next ten days or so, the market starts to sink heavily, it might be a good sign that this trend is on its way.
bsi what price did you get in on DXD im looking to get in around 67.50-68 area...
QID i own already, bought in the upper 70's but a very small position, looking to add to that around $70
I was looking for opinions as to whether a favorable ruling for Google might give the stock a positive boost --which could easily translate into a 15-30 point move. It hasn't really been receiving much attention which leads me to believe it's not a big deal (at this point anyway).
But then again, anything is possible so as a precautionary measure, I thought about legging into a long straddle. Just trying to mix things up.
Thanks for your feedback.
--JR
Post a Comment