Dow

[belgarion]

Hoop, the key thing for me when comparing average PEs of S&P or DOW is to compar PEs associated with similar stages of macros cycles.

For example, when the markets are recovering from cyclical events like the GFC1 or DotCom or whatever, then these average PEs should be compared with similar upwards or downwards PEs. Or perhaps another way of expressing the same is to say that PEs should be higher as economies recover, as the market, being forward looking, is pricing in future improvements which results in higher PEs as PEs are, after all, historical. Conversely, on down cycles the market is pricing in future degredations. Thus using average PEs over both recoveries and contractions doesn't really tell the true story.

Thus at this early juncture of the turnaround, with the global economy recovering and expecting 3.5 to 5.5 percent growth, I'd expect PEs to be 15-20 as they're pricing in a future that hasn't occurred yet. (At the other extreme, 15-20 in late 2007 would have way too high and should have been 5-10!)

This is the big danger with PEs - just two factors are involved and one is historical (earnings) and the other is forward looking (price).

[Hoop]

Hmmmm...the media has a lot to answer for...Belg. You sound like me before I read and embraced this site http://www.crestmontresearch.com/content/market.htm (http://www.crestmontresearch.com/content/market.htm) it explains the mechanics of the sharemarket as well as financial physics.

Have a read of the Crestmont Research site..it may take a hour or two (many hours and many referrals for me)...It's heavy going..but persevere...expect your mind to have your ingrained beliefs twisted around, your media brainwashed beliefs purged under protest and excepting the new correct facts/disciplines will be hard to embrace.. but in the end the "penny drops" and it all starts to make perfect sense.

I thank Winner69 for pointing me to this site a few years back.
After I had read the whole site I was surprised how much false logic (reinforced by the media as being true) I had stored in my memory after 35 years of share investing.

As an educational website I rate it as an A+ (I haven't found one even close to being better).:t_up:

It covers what you have mentioned in your last post in depth with facts, figures and tables.

Hint:- :).....the economy and the share market are not statistically correlated.**

**The site will teach you the reasons why it's not.





(http://www.crestmontresearch.com/content/market.htm)

[Yankiwi]

I


Can someone tell me how to delete it.


Hi Hoop,

Go to settings on the top right of a ST web page, then to attachments at the very bottom of the list of links on the left of that page. :t_up:

[Logen Ninefingers]

Dow in triple-digit comeback

By Alexandra Twin, senior writer
June 8, 2010: 4:10 PM ET

NEW YORK (CNNMoney.com) -- Stocks staged a comeback late Tuesday, with the Dow and S&P 500 rallying near the end of a choppy session, following a surge in commodity and financial shares.

The Dow Jones industrial average (INDU) gained 123 points, or 1.3%, and the S&P 500 index (SPX) rallied 11 points, or 1.1%. Both ended the previous session at the lowest point since Nov. 4.

[Hoop]

Hi Hoop,

Go to settings on the top right of a ST web page, then to attachments at the very bottom of the list of links on the left of that page. :t_up:

Thx Yankiwi much appeciated...Gosh a rather complicated maneuver... probably would've taken me years to figure that one out:confused:

[peat]

it would be easier to edit the post ... select go advanced , and then manage attachments and delete the attachment wouldnt it ?
still , what ever works....

[Hoop]

it would be easier to edit the post ... select go advanced , and then manage attachments and delete the attachment wouldnt it ?
still , what ever works....

Yeah Peat .. That was my first thought ..I did exactly that, but there's no delete option there...you would think that managing attachment would include a delete option somewhere wouldn't you...if there is I cant find it....anyway Yankiwi was on to it.

[winner69]

Hoop, the key thing for me when comparing average PEs of S&P or DOW is to compar PEs associated with similar stages of macros cycles.

For example, when the markets are recovering from cyclical events like the GFC1 or DotCom or whatever, then these average PEs should be compared with similar upwards or downwards PEs. Or perhaps another way of expressing the same is to say that PEs should be higher as economies recover, as the market, being forward looking, is pricing in future improvements which results in higher PEs as PEs are, after all, historical. Conversely, on down cycles the market is pricing in future degredations. Thus using average PEs over both recoveries and contractions doesn't really tell the true story.

Thus at this early juncture of the turnaround, with the global economy recovering and expecting 3.5 to 5.5 percent growth, I'd expect PEs to be 15-20 as they're pricing in a future that hasn't occurred yet. (At the other extreme, 15-20 in late 2007 would have way too high and should have been 5-10!)

This is the big danger with PEs - just two factors are involved and one is historical (earnings) and the other is forward looking (price).

This weeks free chart from chartoftheday.com must be espeially for you belg

http://www.chartoftheday.com/20100611.htm?T

The comments that came with it -

Today's chart illustrates how the recent rise in earnings as well as the the recent pullback in stock prices has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the early 1990s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s), surged even higher during the dot-com bust (early 2000s), and spiked to astronomical levels during the financial crisis (late 2000s). Currently, the PE ratio stands at a touch below 18 which is near the lowest levels that have existed since the early 1990s.

[Dr_Who]

Hey Winner. Thanks for that great chart.

[Phaedrus]

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW616.gif

[Hoop]

I'm not exactly a Mark Hulbert fan but his todays article in Marketwatch follows my thinking. I think Richard Russell is a bear, so I agree more with the other 2 ...the bull isn't dead yet but it is sick. The DOW briefly entered the Bear zone, the question has to be asked...was this brief break below the primary support of 9900 the bottom.. hence a bear trap and the cyclic bull lives on?.. or ...have we entered a new cyclic bear market cycle and we are currently experiencing a bear market rally (sucker rally)which is due to peter out?


By Mark Hulbert (mhulbert@marketwatch.com) , MarketWatch
ANNANDALE, Va. (MarketWatch) -- The Dow Theory jury is still out.

But we at least know more than we did as recently as late May. According to one of the three Dow Theorists I monitor, precise parameters are now established for what the bull must now do in order to avoid a death sentence. The second of these Dow Theorists appears to agree.
The third member of the jury, however, has already said he is voting for that death sentence.
So the bull market has its work cut out for it to keep even this shred of hope alive.
The Dow Theory, of course, is the oldest market timing system still in widespread use today. Although its adherents don't always agree on its interpretation -- as is the case now -- the Theory has received an academic seal of approval for having beaten a buy-and-hold in the past. So it behooves us to pay attention to what the Dow Theorists are saying.
You might wonder why there is any room for disagreement in the first place. The reason is that the Dow Theory's creator -- William Peter Hamilton, who introduced the approach in numerous Wall Street Journal editorials over the first three decades of the last century -- never codified his thoughts in a set of complete and precise rules.
Consider the three Dow Theory preconditions for a sell signal. Though they are clear enough as far as they go, they still leave an enormous amount of room for interpretation -- especially in the definition of "significant" in Step #2 below:


Step #1: Both the Dow Jones Industrial Average (DJIA (http://www.marketwatch.com/investing/index/DJIA) 10,409, +4.69, +0.05%) and the Dow Jones Transportation Average (DJT (http://www.marketwatch.com/investing/index/DJT) 4,419, -47.99, -1.07%) must undergo a correction from joint new highs.
Step #2: In their subsequent "significant" rally attempt following that correction, either one or both of these Dow averages must fail to rise above their pre-correction highs.
Step #3: Both averages must then drop below their respective correction lows.


Consider how these rules applied to the situation immediately after the so-called "Flash Crash" in early May. Following the lows that both the Dow industrials and Dow transports hit on May 7, both indexes rallied -- gaining 5.0% and 8.4%, respectively. But in that rally, neither average was able to surpass its earlier highs. And then, on May 20, both proceeded to break below their May 7 lows.

Richard Russell, editor of Dow Theory Letters, interpreted this sequence of events to unambiguously satisfy all three steps of this sell-signal process. Writing after the market closed on May 20, he wrote: "The curse, it is cast. ... [The breaking of the May lows] means that the primary bear market is resuming. The monster is creeping toward Bethlehem." And in the several weeks since then, Russell has become even more apocalyptic in his pronouncements.

But Jack Schannep, editor of TheDowTheory.com, and Richard Moroney, editor of Dow Theory Forecasts, argued that the market's rally off its May 7 lows was too short to count as "significant" -- it lasted just three trading sessions, in fact. On their interpretation, therefore, the market throughout May was stuck in the correction that constitutes Step #1 -- two steps shy of a sell signal.

What about this month's rally, which began on June 7? After Tuesday's impressive triple-digit increase, that rally has now lasted six trading sessions and tacked 6.0% onto the Dow Industrials and 10.6% onto the Dow Transports.

Schannep, for one, thinks that's enough to be "significant." On his interpretation, that therefore starts the clock ticking: If both averages now proceed to close above their highs of six weeks ago, then the bull market will receive another lease on life.
But if they fail to surpass those highs and then close below their June 7 lows, then Schannep (and perhaps Moroney) would join Richard Russell in declaring a primary bear market to be in force.

In the meantime, according to this interpretation, the market is in the "no man's land" between reconfirming the previous bullish signal and declaring a fresh new bear market signal.

This indecision will no doubt frustrate investors who want black-and-white certainty in their market timing judgments. But, given recent volatility, it is a situation that is likely to be resolved in the very near future.

Fasten your seatbelts and hold on for the ride.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

[Phaedrus]

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW630.gif

[Jess9]

Hi Phaedrus.

Have you posted an recent ASX one also?

[karlos]

Hi Phaedrus.

Have you posted an recent ASX one also?

Hey Jess9, hows things?:). My days been good, Ive been in Thames today doing a job. Worked out sweet. I trust lifes good where you are:). Phaedrus mentioned just over a week ago hes off on holiday, so wont be posting charts. No worries:). With his good nature, when he is back from R&R, he will assist the good folk like yourself:).

[Jess9]

Thanks for that karlos.

Is P's above chart the latest on this board? Its dated June. With the States recent return to some emergency measures (printing money again) wondering where that little line is today...I'm guessing still red.

[Corporate]

Jeez I was expecting to see the DOW down overnight...but BANG 160+points

[Phaedrus]

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW925.gif

[Corporate]

hey P...i can't see it?

[Financially dependant]

hey P...i can't see it?

I can see it ok!

Dark green....can't get any stronger.

[Lizard]

This 11,200 level on the Dow seems to be pretty significant, as we've seen the market fail around there numerous times on a daily and intra-day basis.

Am interested in TA as to probability of this breaking up or down? I am presuming any move is like to be quite strong once the magnetic pull of 11,200 is broken?

[Phaedrus]

I don't see 11,200 (or any other level) as being of particular significance, Liz. Looking at the short-term chart below we can see that 11,200 has been broken plenty of times before and doubtless will be broken again.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DJI113st.gif

Long-term I guess you are referring to the April peak of 11,309 when the Close was 11,205. Certainly the Dow closed today below this level, but that was just another peak in an uptrend that is still intact. A clear break above this level would simply re-confirm the uptrend.

Here is an update of the long-term Dow chart. You can see that the plot remains resolutely Green and the MSI is as high as it can go. Is that not positive enough for you?! It certainly is enough to keep me Bullish! In my opinion, there is a high probability that the Dow will break "up".

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DJI113.gif

[Hoop]

Hi Liz
As P says there is no significance at 11200. However if you use candlesticks or OHLC format you can clearly see the 11250/60 resistance (see chart)... There has been a couple of intra-day attempts recently to break this level and each time it has failed. (see my first chart)

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW021120101year.png

Chances are there could be a correction as the market rally has reached its TA target point and the purple Bollinger bands are squeezed at this moment indicating a trend change (see my second chart)

The market has had a good rally lately (Sept - Oct) and maybe this could signal time for the market to catch it's breath.

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW021120103year.png

If there is a market correction ..how big??..All rumours suggest the institutions will be buying into this next anticipated correction so maybe it will be a shallow correction (-5%) downwards to test the trend lines somewhwere around the 10700 area (there's a support line here too, not drawn in on the chart).
There's been traps this year so a bear scare such as seeing a break of one of these trendlines is possible around this 10700 area***. Remember trendlines aren't foolproof and false breaks are common....of course if this happens the usual Doom watchers noise will no doubt be deafening and negative media feeling will result.

Overall: ...In my Opinion I see a short small dip (correction) looming. Usually when a Down trendline is broken there is high chance the index will fall back to test that trendline before it continues to rally upwards again [***Note: This may result in seeing a temporary breaking of the long term primary uptrend line (bear trap) ]...... then I agree with P's opinion.

As my comments is a prediction only ..it would wise to take things day by day ..The present day( as at 2 Nov 2010) the key chart points to watch are :
......climb above 11260+ back to bull market mode and rally continues...
......a fall back to 10700, no problem...P's MSI probably won't be red
......fall back to below 10700, start to worry

[Lizard]

Thanks Phaedrus and Hoop. Yes, I am very "general" in my use of 11,200 as a level - just a visual squiz at the chart when I open my eyes most mornings and surprised at how many times it has hovered around/above this level before retreating back down.

Thanks, as ever, for the comments, charts and thoughts.

[Phaedrus]

In my opinion, there is a high probability that the Dow will break "up".There - that didn't take long did it!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW115.gif

[Hoop]

There - that didn't take long did it!

Nope..and painless as well

[Hoop]

The Dow retested its new major support line today (11255) and respected it to move back higher to close at 11357 (up 10)

Note how it did this retesting mini correction action after it broke its previous 10720 resistance (blue circle).

Also of TA interest was the pull back retesting of its falling wedge after break out

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW10112010intraday.png

[Hoop]

There - that didn't take long did it!

Closed 11193 (-91) Friday.

DOW teasing us with a break back down below that major 1255 line...

It seemed the DOW broke up through that major (but weak?) resistance 1255 level into cyclic Bull market resumption area in a attempt to reach its 11500 TA target goal (Market correction due point) but met sellers on the way and broke back down under that 11255 level again.

Some could argue that short term temporary upward push was artificially caused by the influence of QE2 ... but in theory it still qualifies as a break upwards.

TA Target 10720 + (10720 - 9940) = 11500

Cautious at present but still bullish in the longer term...Green is good..eh

[winner69]

Hoop DOW is in a shocking downtrend if GOLD is your currency

Jeez - just over 10 years ago the man says ou needed 45 ounces of gold to 'buy the DOW' but now it only costs 8 ounces of gold

What a disaster ..... and still nobody really believes the US economy (and by implication the US markets) is truly stuffed .... munted in a big way

Chart of the Day
For some perspective on the stock market, today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes a mere eight ounces of gold to "buy the Dow." This is considerably less (82% less) than the 44.8 ounces it took to buy the Dow back in 1999. While the actual Dow continues to make new post-financial crisis rally highs, the most recent rally that occurred in the Dow priced in gold is fairly similar to several bear market rallies that have occurred since late 1999. It is also of interest that the Dow / gold has often tested (and is currently testing) resistance (red line) of its accelerated downtrend but has failed to break through on each occasion.

[Hoop]

Interesting chart Winner... it seems it all began at the start of the secular bear cycle in 2000 - as well.

[airedale]

The other side of the coin is that gold is in a startling uptrend dating back to 2002.

"Hoop, DOW is in a shocking downtrend if GOLD is your currency"

[Hoop]

The other side of the coin is that gold is in a startling uptrend dating back to 2002.

"Hoop, DOW is in a shocking downtrend if GOLD is your currency"

Correct me if I not included something but I think the chart is made up of 3 variable factors...Dow index priced in US$, gold price, P/E Ratio.

P/E ratio is gradually falling (long term secular style) and we expect it to fall another 50% before the secular bear market cycle ends which still could years away...downward pressure on chart.

POG expected to go up some say to $us2000......downward pressure on chart

US $ still in downtrend but treasury bonds look to be bottoming......still short term downward pressure on chart...but possible upside medium term.

These variable factors point to continuing downtrend action...


Been thinking about this chart Winner posted ...I know the USA economy is stuffed but by x6 fold decrease in the last 10 years ..I find that hard to believe.,,,something is over cooked here...8 or 9 is too low.....
to get back to a still low 15 it would need a 60% decrease in POG or 60% increase in the DOW increase or some sort of combination of the two...I can't imagine the annualised PE ratio rising by any large amount.

Thoughts?...

[Hoop]

14-11-2010 11:10 AM

Closed 11193 (-91) Friday.

DOW teasing us with a break back down below that major 1255 line...

It seemed the DOW broke up through that major (but weak?) resistance 1255 level into cyclic Bull market resumption area in a attempt to reach its 11500 TA target goal (Market correction due point) but met sellers on the way and broke back down under that 11255 level again.

Some could argue that short term temporary upward push was artificially caused by the influence of QE2 ... but in theory it still qualifies as a break upwards.

TA Target 10720 + (10720 - 9940) = 11500

Cautious at present but still bullish in the longer term...Green is good..eh

2 1/2 weeks later the DOW is revisiting that 11250/11260 R&S zone again.
That huge 2.1% rise today did not break any technicals..however a small rise tomorrow will trigger a bull reaction which should see the end of this correction.

This correction sofar has been smaller than normal (about -5%) but it was predicted to be -10% or less.

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW01122010.png

[belgarion]

Trichet's remarks about how the ECB deals with the remaining PIIGS should see some positive action ...

[Hoop]

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by Phaedrus http://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=324990#post324990)
There - that didn't take long did it!
.................................................. .................................................. .................................................. ..........................

Well a month later and the DOW has cracked the same 11260 level again after that early November false start.
Maybe the Bull rally this time ...eh?

closed 11362 up +107

[Phaedrus]

Well Hoop, as far as I am concerned, the DOW has been strongly positive for over 3 months now. So long as this situation continues, I remain resolutely Bullish.

The 5 month "medium-term" uptrend continues, as does the 20 month "long-term" uptrend.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOW123-1.gif

[Hoop]

2011...Will it be another Year of the Bull or is it Bear-time once again?

Well, we now know who won the race in 2010? The Bulls :t_up:..The Dow ended the 2010 year up +11%:)

Good news..eh another "up" year following the 2009 year of +19% :)

Therefore 2011 going to be better, especially with the global economy in recovery mode, you would think..huh?...Out with cash and lets buy up stocks...3 years of a rising market is common I hear you say...the dates and figures below proves it so...eh
1924 - 1928....4 years in a row
1933 - 1936....4 years in a row
1942 - 1945....4 years in a row
1949 - 1952....4 years in a row
1954 - 1956....3 years in a row
1963 - 1965....3 years in a row
1970 - 1972...3 years in a row
1985 - 1989....5 years in a row
1991 - 1999....9 years in a row...wow:eek2:

and 10 years have past us by ...so ...we must be overdue for another 3+ years..eh

Ok..party pooper time... here's the bad news....note the blue date

History shows us that since 1901 ...only once has there been 3 "up" years in a row in a Secular Bear Market Cycle
1970...+ 5%
1971...+ 6%
1972...+15%

The DOW has seen many 3+ "up years in a row within the Secular Bull market cycle as shown above (the black dates)

.... unfortunately the DOW is presently in the middle of a Secular Bear Market Cycle (2000-????):(

It's 2011 now and it's another blue date... do you still feel lucky?

2009 - 20??....? years in a row

[belgarion]

Hoop, I'm feeling pretty lucky and will go out on a fairly solid limb to predict 2011 will be another 5%-10% year for the DOW. I did something a bit similar to what you did above but focussed on the years following recessions (US and worldwide/regional) that would affect american sentiment/confidence. (I also indulged in some macro tweaking to recognise "significant events", eg. oil shocks, US dollar unpegging, WWs, etc.) These events don't always lead to the indexes crashing as they did with the GFC and sometime the indexes just go nowhere - or take breather. This might happen in 2012 but 2011 I'm predicting to be pretty good as investors will be getting leery about the risks posed by being too overweight in bonds. Another factor is inflation. While there is some overcapacity in many areas, there are constraints (both price, e.g. oil and supply, e.g. rare metals) in some core areas which will push up prices and bonds will come under pressure. How the Fed reacts to this going to be interesting but I don't expect them to anything more than dovish with reagrds i-rates. Another factor is that the USD should be under more downside pressure than it is currently and if the USD weakens in a managed way, the DOW will go up.

[Hoop]

Well Belg...so far so good nearly half a year gone and the DOW is headed for its third up year in a row....
Statistics say 3 up years in a row is rare in a Secular Bear Cycle
and....
Simple basic market theory and Hypothesis sees the DOW bull market could be maturing in its possible BM phase3.
as I said a long time ago on this Thread any distance above 11500 would make me worry.

Can the DOW keep above 31 December 2010 figure at 31 December 2011?

http://www.imageurlhost.com/images/bhbxc12ifyfgzlj9rs0.png

[Hoop]

That rare 3 years of rises in a secular bear market is looking distant now

The DOW Theory just signalled a primary tide Bear Market confirmed on the 2nd August 2011.

This event happens when both primary up trendlines break...... the DOW Ind index gets a confirmation with the DOW Transport Index or vice versa.
Edit: forgot to add the extra requirement ::: as well as the primary trendbreak, the index has to drop below their previous low point (Not drawn on the chart)

The DOW theory although looks simple on a chart is a highly reliable signal indicator.

http://www.imageurlhost.com/images/mw8ijly0qv0hup337jf0.png

[belgarion]

Hoop, I'd love to agree with you but feel the trend line breaks are driven by macro events that have limited long term effects. E.g. Japan earthquake, US debt bollocks, European debt, etc. Meanwhile the BRICs, the engines for global growth, just keep on keeping on albeit some of the BRIC's govts are reigning in growth (and inflation). Time will tell but I'm not convinced the cyclical bull is over just yet. (That said I'm pretty cashed up and not seriously buying anything unless a) has a history of growing earnings and b) has a high current yeild and c) is protected from FX movements.

[Hoop]

Hoop, I'd love to agree with you but feel the trend line breaks are driven by macro events that have limited long term effects. E.g. Japan earthquake, US debt bollocks, European debt, etc. Meanwhile the BRICs, the engines for global growth, just keep on keeping on albeit some of the BRIC's govts are reigning in growth (and inflation). Time will tell but I'm not convinced the cyclical bull is over just yet. (That said I'm pretty cashed up and not seriously buying anything unless a) has a history of growing earnings and b) has a high current yeild and c) is protected from FX movements.

Time will tell

The market index charts is a only a historic visual display of group equity investor behaviour. Secular market human group behaviour follows patterns..

How can the sharemarket fall when the economy finally comes right????? one might ask

It is interesting atm in the USA because the American companies are making record profits!!!! yet the sharemarket doesn't fully recognise this... it has rallied into a cyclic bull market since 2009 but not to record highs...why? because of the group investor demands for higher yields to offset higher perceived risk...This is typical behaviour in a secular bear market environment
What is happening next???...record company profits are unsustainable and expected to see a tapering off their record highs in 2012 ..this effect will see a general downward pressure on Equity prices..........The economy is expected to suddenly come right and this will create less perceived risk resulting in upward pressure, but it is not enough as an improved economy causes inflationary events triggering a tightening of money supply higher interest rates, currency gains and all these have a larger combined large downward effect on the Equity Market and that market has to again increase yields to now compete with the money/currency and other markets.

The economy has no long term effect on the sharemarket...It may sound like a paradox but the economy runs just as good during a secular bear cycle as it does during the secular bull cycle...the difference is the group investors behaviour as they demand better returns and take less speculated risks during secular bear periods than in secular bull periods...hence causing a long term downtrend in the P/E Ratio over the time of the secular bear market cycle.

Therefore PE Ratio is the key driver and inflation is its secondary driver effecting cyclic and secular cycles of the Sharemarket. Economic events have only "ripple" effects within cyclic cycles.

[dumbass]

looks very much like the end of the bull market and this becomes my preferred count.
5 completed waves up from 09 low, so now looking for a 3 wave bear market going south.
clear break of 3 year trendline.
head and shoulders topping pattern printed with neckline break.
total bugger really !

http://i183.photobucket.com/albums/x107/joicey9999/dow.jpg

[Hoop]

looks very much like the end of the bull market and this becomes my preferred count.
5 completed waves up from 09 low, so now looking for a 3 wave bear market going south.
clear break of 3 year trendline.
head and shoulders topping pattern printed with neckline break.
total bugger really !
Thanks for the EW Dumbass
Even more of a total bugger when the differing TA disciplines all agree to the same conclusion...eh?
The US Equity markets may seem fundamentally OK but this latest weakness has created huge technical damage.

[dumbass]

do you have any thoughts on targets and time frames Hoop.
im thiking its most likely going to run between 1 to 3 years with a target around 9700 or worse case low 8000's.
in corrections wave patterns can run from simple zig zag patterns to complex affairs but will always be 3 main waves.
need to keep your wits about you when it comes to trading with long grinding down waves with counter trending sharp rallies.

http://i183.photobucket.com/albums/x107/joicey9999/dow-1.jpg

[Hoop]

Damm...internet dropped out and lost my reply spent 20 minutes on it I wont retype
Dumbass..short version if it is a bear market cycle we will see all the 3 stage patterns over an unknown life span ( average 15 to 18 months).. the severeity is unknown could be a cuddly teddy bear or a man eating grizzly.
The next couple of weeks we may see 11000 there is a support to break first however...watch for pullback to test the neck-neck trendline happens 64% of the timebefore the next posssible fall off (Ref Thomas Bulkowski)

http://www.imageurlhost.com/images/gvujcd5nddwwm2r2rukt.png

[dumbass]

this is my trading plan for the next week or two , of course it wont pan out so neatly but looking for

1 fourth and fifth waves of this decline , market may have already put in a base aroun 11,100 will be loooking for a double bottom and indicator divergence to go long with risk and target defined
2 looking for test on either h+s neck line or green trendline
neck line should be aroung 61.8 retracement of wave down then looking to go short with risk defined amd open target at the moment
3 all bets are off if the 11 100 does not hold then the market is in serious trouble and will short the living daylights out the market
4 my feeling the credit downgrade will not be market moving in the short term.

http://i183.photobucket.com/albums/x107/joicey9999/dow-2.jpg

[dumbass]

currency markets open and not much of a reaction on nzd
looks like a move into swiss otherwise muted opening.
my personal feeling is not much of a market mover but no doubt volatilty will be high.

[Corporate]

3517

I'm a charting novice and for me simple is better. But, I don't like the look of this at all....

[dumbass]

So downtrend losing momentum and shaping up for what looks like a good long.
Still need one more wave lower ( fifth wave ) before its safe to enter long.
Could be a double bottom or a new low but its getting close.

[STRAT]

So downtrend losing momentum and shaping up for what looks like a good long.
Still need one more wave lower ( fifth wave ) before its safe to enter long.
Could be a double bottom or a new low but its getting close.Hi Dumbass.
Looks over done to me.
Nice little divergence with RSI last couple of days.
Lookin for a higher low.

[dumbass]

hi strat, i still think there needs to be a final wave down to finish this pattern.
i hold 8 short positions and have rode the big move down , due to market volatilty stops and targets are a little redundant.
no real divergence yet on dailies so far.
fingers crossed but will look to unwind into this down wave.

http://i183.photobucket.com/albums/x107/joicey9999/sp500.jpg

[Hoop]

I agree with Dumbass..as chances are that another drop could happen shortly. ATM the different TA disciplines are agreeing each other which increases the certainties of the forecasts.


Using pattern formation analysis method ....when a possible pattern is still forming it can be a little dangerous to assume what it is.... Usually the pattern is not identified until after it has completely formed.....However....lets assume this is a dead cat bounce(DCB) pattern forming and speculate. Lets note firstly that there is no gap down usually associated with DCB formations so we should be extra wary of this assumption. The rest of the actions look similar though long candlestick bars volatility and high volume so apart from the gap down everything else resembles the first half of the DCB pattern....


...so whats next if it is still looks like a DCB pattern?


Often people assume a DCB pattern to bounce up quickly within a day or two...yes that can happen but a DCB pattern usually has a longer time frame than many people think in its bounce. Quote Bulkowski "...Bounce. Prices bounce up, recovering much of what they lost during theevent decline. The recovery typically ranges between 15% and 35% and takes between 5 and 25 days to reach the top of the bounce....."

If we assume a typical average 35% recovery bounce it shows a target of 11600 which highlights and also adds more significance to that medium term resistance level which is also at that 11600 level....so for the DOW to recover back to where it was in July it would need a complete change of investor attitude, so to create strong buying pressure to force the 11600 resistance break and also break the 11900 resistance to turn this bear market back into a bull....This is not impossible chart-wise as the chart still resembles some sort of an uptrend with a possible large bull correction in progress. Note...Bull market corrections do break primary supports and trends.

However...there has been a technical change to a primary downtrend or bear tide which is usually a good name to use when an analyst thinks the cyclic change point has been reached but too early to be sure... the signs of a cyclic change are there ..primary trend breaks, MA200 broken, primary supports breaks and when combined with high volatility it indicates a cyclic shift...so..... until the market confirms otherwise one should assume that the DOW has shifted into a cyclic bear market cycle and therefore an investor should expect lower highs and lower lows.

if there are higher lows and higher highs again in the near future then we can re-evaluate the assumption to that it was just a huge Cyclic Bull market correction and we can alter our invest strategies again with out any harm done to our portfolios.

.....but...

with this present bear tide... the immediate DCB pattern assumption can not be ruled out...so in theory we should not get too excited about a recovery going up to that 11500/11600 area thinking that this insane market has finally got over itself and the market will keep going up. ...it may bust through 11600 and keep going up but remind yourself there's also a good or better chance it won't.

The last part of the DCB pattern after the bounce (part recovery) is a downturn to below the previous fall of 10700 (support)...If this happens it will confirm that the DOW has had a cyclic shift to the Bear market.
Quote Bulkowski "...Decline. After price peaks during the bounce, it drops, falling slowly, until reaching a trend low 15% to 45% below the bounce top. It makes this journey in 10 to 50 days, usually.

The biggest investor enemy in the next few days when (if) the bounce happens will be the media..Remember Media reports peoples emotions so expect to see "cheap shares" "Average PE Ratio at 11 is now below the long term average" "The economy is recovering" "Record company earnings" ...blah blah... all positive feel good stuff which may fuel this bounce.


With Media is mind ..did anyone read recently how the big corporate investors sold out and rumour has it that they are now piling back in with the insane low prices bottoms to strengthen their portfolios...I have added the OBV to the index chart below...normally the OBV is less reliable with indexes but it does highlight the fact that there has been no wholesale buying recently, just evidence of the increase volume coming from short term buy/sell opportunists activity.

More Balanced Assumptions from this Post ...I have mentioned the bearish side which I'm biased towards atm,,,however on a bullish note...if the index rises above 11600 this weakens my DCB pattern forming assumption ..a rise above 11900 suggests it may be just a bull market correction and weakens the bear tide assumption. ..a rise above 12800 confirms the cyclic Bull market is still intact

http://www.imageurlhost.com/images/f1pgq1xwudmi1bi1kwvi.png

[dumbass]

reviewing the SP weekly chart, which shows nicely the major trends over that period, i would say you could draw the following conclusions

1 you need to trade the market , if this was a stock we would rightly say its in a trading range from 1997 to present day.
if you held from 1997 you be at break even.

2 any significant trend change has dispalyed a divergence on the rsi, currently no divergence on weekly or daily charts too.

3 the market is no where near oversold on rsi

4 if the market was to rally from here and continue the bull market it would far exceed any other correction in a bull market looking back over the last 17 years
the only similar situation was a sharp correction in 1998 ( circle in chart ) where trendline was broken but this was a secondary trendline not a primary trendline and the magnitude was not as great as this drop and the divergence from the trendline is much more significant.

5 the market is close to rallying from here but in the context of this chart it will be a rally in a confirmed downtrend.

in summary it looks like the start of a bear


http://i183.photobucket.com/albums/x107/joicey9999/sp500weekly.jpg

[peat]

hey DA
Twiggs trading diary quote of the days says


I came to learn that even when one is properly bearish at the very
beginning of a bear market it is not well to begin selling in bulk until there
is no danger of the engine back-firing.



~ Jesse Livermore in Reminiscences
of a Stock Operator (http://astore.amazon.com/incrediblecha-20/detail/0471770884) by Edwin Lefevre.

I reckon major resistance around 1250 (S+P)
3532

[Entrep]

Big gains on small volume - looks weak to me and might short from here.

[Hoop]

hey DA
Twiggs trading diary quote of the days says


I came to learn that even when one is properly bearish at the very
beginning of a bear market it is not well to begin selling in bulk until there
is no danger of the engine back-firing.



~ Jesse Livermore in Reminiscences
of a Stock Operator (http://astore.amazon.com/incrediblecha-20/detail/0471770884) by Edwin Lefevre.

I reckon major resistance around 1250 (S+P)


When you sit down and take time to think about this quote it doesn't take long to see it is poor logic.

Hint: risk v reward

Agree ..resistance at 1250 if it fails to crack that its extra confirmation of a bear market and its only 4% away.

For the DOW 11600 which is 1% away...or the next level up at 11900 which is 4%

[dumbass]

hi strat, i still think there needs to be a final wave down to finish this pattern.
i hold 8 short positions and have rode the big move down , due to market volatilty stops and targets are a little redundant.
no real divergence yet on dailies so far.
fingers crossed but will look to unwind into this down wave.

http://i183.photobucket.com/albums/x107/joicey9999/sp500.jpg


final down wave now in progress , this will finish the first wave down of this bear market and should therefore provide a good long entry.
i still hold my eight short positions which i will sell this week , around 1230 spx points in total for the trade and each short is a 100 unit contract which is currently a profit of about $123,000 US dollars.
When the market is so volatile the waves are very clean and balanced, my favoured point will be around 1080 to 1090 and will be a double bottom pattern or may shoot lower to provide divergence on longer frame indicators.

in summary will look to reverse shorts and go long . good luck everyone.

http://i183.photobucket.com/albums/x107/joicey9999/sp500-1.jpg

[BIRMANBOY]

Obviously not as dumb as your name!!! :-)
final down wave now in progress , this will finish the first wave down of this bear market and should therefore provide a good long entry.
i still hold my eight short positions which i will sell this week , around 1230 spx points in total for the trade and each short is a 100 unit contract which is currently a profit of about $123,000 US dollars.
When the market is so volatile the waves are very clean and balanced, my favoured point will be around 1080 to 1090 and will be a double bottom pattern or may shoot lower to provide divergence on longer frame indicators.

in summary will look to reverse shorts and go long . good luck everyone.

http://i183.photobucket.com/albums/x107/joicey9999/sp500-1.jpg

[dumbass]

i like to think not but some would disagree.

[Entrep]

final down wave now in progress , this will finish the first wave down of this bear market and should therefore provide a good long entry.
i still hold my eight short positions which i will sell this week , around 1230 spx points in total for the trade and each short is a 100 unit contract which is currently a profit of about $123,000 US dollars.
When the market is so volatile the waves are very clean and balanced, my favoured point will be around 1080 to 1090 and will be a double bottom pattern or may shoot lower to provide divergence on longer frame indicators.

in summary will look to reverse shorts and go long . good luck everyone.

http://i183.photobucket.com/albums/x107/joicey9999/sp500-1.jpg

Very impressive - when did you start going short exactly?

Currently short the SP500 also, but not to the same degree as you!

[dumbass]

the little inverted triangles are the trades , so started early july mainly , then early august for main positions.

the last down triangle was a shorter term trade that stopped me out for about + 30 yesterday which i didint include.

i would be carefull now entrep as this is the end game for the first leg of the bear!

[Entrep]

Thanks, yup I am only going short term and keep tight stops. I too see this bottoming soon and am just trying to take advantage ;)

[Entrep]

Not looking good for the bulls - tried to go higher this morning but failed. Volume was very weak. Added to my short at EOD.

Man there will be/are some bargains out there though!

[Hoop]

Not looking good for the bulls - tried to go higher this morning but failed. Volume was very weak. Added to my short at EOD.

Man there will be/are some bargains out there though!

The wise words from Dumbass.... be careful as this is the end game for the first leg of the bear.

DOW rose 322 (+2.97%) to 11177

The first leg and "recovery" is the denial stage....This volatile more up than down "recovery" (sucker rally) lasted 4 months back in the last Bear market Cycle stage 1 (denial stage) (end Jan 2008 to May 2008)..."bargain" hunters put counteracting upward pressure back on the index....until the next bad news hits.

[Entrep]

The DOW rose on bad news. Apparently this is good now though because it will force QE3... what a joke. Volume was weak again too. That said I covered 1/3.

[Joshuatree]

Charlie Aitkens newsletter today shows 3 charts of Bank Of America ( Holds 25% of all U.S bank deposits;too big too fail,yeahh right) Meryl Lynch and Goldman sachs all falling away badly. combined with death spirals on many European banks we are on "the cusp of another round of bank counterparty risk". Take profits on any lifts methinks.

[dumbass]

overnight action seems to confirm a bottom is in on the sp 500.
i would now trade from the long side with extreme caution as the primary trend is still down.
uptrends in a bear market can be sharp and powerfull , i will look at potential targets for this up wave.
for the more technically minded punters some charts confirming eacy other.

firstly the bottoming pattern looks like a cup and handle bottom set up on a truncated fifth wave compromising of and ending diagonal pattern. which basically means the true price bottom was the third wave down and the fifith wave did not set the price low as there was no bear momentum left to set a new low.

http://i183.photobucket.com/albums/x107/joicey9999/cup.jpg


next looking for 5 waves up and 3 wave correction to confirm uptrend


http://i183.photobucket.com/albums/x107/joicey9999/elliot-1.jpg

and finally a text book bullish pattern called a gartley



http://i183.photobucket.com/albums/x107/joicey9999/gartley.jpg

[peat]

and finally a text book bullish pattern called a gartley



not exactly textbook ;+) B point was at 50% not 61.8

as per my post #804 (http://www.sharetrader.co.nz/showthread.php?6114-Dow&p=354553&viewfull=1#post354553) , there is a support zone around 1110-1160 and so congestion may occur here. and on the shorter time frame we've now found support at 1150 itself.
I drew this before last nights trading.

3565

[belgarion]

Debt Will Haunt the Market for Years to Come (http://finance.yahoo.com/banking-budgeting/article/113393/debt-haunt-market-for-years-marketwatch;_ylt=AvKgJpaoYrXtIe_FodF4CN9O7sMF;_ylu =X3oDMTFidXUxdmRjBHBvcwMxMARzZWMDc3BlY2lhbEZlYXR1c mVzBHNsawNkZWJ0d2lsbGhhdW4-?mod=bb-budgeting)

Good read that largely reflects my view of the markets for years to come ... basically trading sideway (but the dips and tips are plenty for me)

[peat]

3565


3590


so we have now hit that upper area of resistance and bounced off.... may retest of course.

[winner69]

ZERO jobs added ... and down the DOW etc goes

ZERO jobs should be good news for the market .... bullish in the short term ..... will make the Fed do something to stimulate the economy ..... but that would only make the inevitable crash even bigger when it does happen

[Hoop]

ZERO jobs added ... and down the DOW etc goes

ZERO jobs should be good news for the market .... bullish in the short term ..... will make the Fed do something to stimulate the economy ..... but that would only make the inevitable crash even bigger when it does happen


Winner..yes that rise did not happen.....another warning sign..ehh??

It seems from the technicals that investor behaviour is becoming "strange?"..something like an uneasy calm before a storm......there must be insider rumours operating to get these technical patterns forming (not all shown here).

My survival instincts are flashing a "get the hell outa there" sign..

11600 resistance tested and held... the possible Dead Cat Bounce (DCB)target 11600 has been reached...this could be the start of the "rout".

My chart below.....the yet to be complete DCB formation has a flag incorporated in it (Flags are not a formation on their own)...A flag raises the chance the DCB formation will be completed successfully.

Thomas Bulkowski cites a flag as being "road kill" within a trend formation ...a small bump on the highway...it this case the steep downtrend highway.

Its becoming clearer that this "reinforced" DBC formation when competed (breaks the 10700) is going to hurt long investors.

The failure rate of flags in a downtrend in a bear market is very low. For the optimist..if a flag continues it turns into a rectangle or triangle formation with better failure rates..This flag on the chart below is nearly "done" therefore it should breakout downwards any day now..if not it turns into a triangular formation and creates a slightly upward holding pattern until the lines nearly intersect around November.. this is unlikely though.

Where to if the breakout downwards occurs??.......failure rate is low so expect the 10700 support to fail.

Target price 11600 - (12750 - 10700) = 9550

Target prices are influenced by well established Support lines ...there is one at 9700 going back to Jan 1999 which has been tested numerous times. I suppect that this 9700 will be the next pause.

http://www.imageurlhost.com/images/kiiu15p1sk57p03rtyt.png

[Hoop]

For those who want good news.... here's a balancing:D post


Dow 13,600, here we come
http://www.marketwatch.com/story/dow-13600-here-we-come-2011-09-02?link=MW_story_popular

[belgarion]

Note that Eisenstadt's model uses other economic indicators, Hoop. So clearly Eisenstadt believes (as do I) that market behaviour does have a semi-predictable relationship with the overall economy albeit its a very complex one - but probably less complex than understanding weather patterns and predicting weather tho. :)

Another intestering note is that the 10 year treasury yield is at its lowest level ever. Methinks the Fed can't do that much Winner. I'd suggest that just maybe Congress will get its act together and get some spending reallocated to infrastrcuture projects. (Thye should have don this ages ago but ... well you know how hopelessly f'cked up US politics is). This would have an immediate effect on the unemployement and the economy as there are a large number of builders (skilled and semi-skilled) and youths (highly mobile) out of work and both groups will spend pretty much every penny they earn.

[ananda77]

...starting buying - Q3 in pipeline ready to be unleashed - US = RIP - they will not be able to fix their internal problems unless ???WHO??? will take action to reign in the F.I.R.E - anyway, get ready for the next global Super Boom

Kind Regards

[Hoop]

A significant technical event happened today on the DOW..a retest failure which is bearish...surprise surprise you may say.

Well...not everyone is in an agreement that the Stockmarket is stuffed. I've had a couple of very optimistic people telling me that a very rapid rise is about to take place basing their limited knowledge on this double bottom / semi-complex Head and Shoulder looking formation....Hmmm...well... the neck line broke and the retest today failed ...I dent in their optimistic thinking...probably not as there is tomorrow and the next day etc for the DOW to do another retest...If it does succeed it will throw the cat amongst the pigeons or a better phrase throw the bear into the bull ring.
It has to be remembered that the countries that are economically in the crap still have their stockmarkets in cyclic bull market cycle...its the economically sound Countries such as China India Brazil Australia etc that have their stockmarkets in a cyclic Bear cycle...a paradox? ..nah..it can be explained by Stockmarket Theory.

So.. with the DOW and S&P500 displayng this strange type of bullish H&S formation within what is thought to be a bearish Dead Cat Bounce There is obviously evidence to recite for both Bull investors and Bear investors......so who's right??

TA tells the past and the "now" not the future so we don't know who's right or wh's wrong.... yet!!!

However past history gives us a better chance of being right and when TA formations gives conflicting signs you add many other TA indicators and other stockmarkets that have an effect on the one you are trying to make sense of.

so...caution is advised as the bigger picture still looks bearish...for example my chart below still shows the DOW in an area of grave concern...It is still flaunting with the cliff edge and until it moves away from this area I'm staying bearish and away from the market.

Today's bearish move down away from the retest back towards the 10700/10600 supports and the candles having wicks both indicate that the selling pressure has returned....this highlights the need to be cautious and bearish rather than blindly optimistic. ATM with this volatility, the reward could be 8% (target 11860) but the risk is a larger 10%, a possible capitulation down to 9600/9800 target if the 10700/10600 support breaks.

http://www.imageurlhost.com/images/7qbbsf142kudltzpdfjf.png

[winner69]

Keep at it Hoop .... its all unfolding to plan

This was written in 1997 (Strauss/Howe 'The Fourth Turning') - The Crisis is upon us and over the next 20 years the world will change and will be much different than it is today .... and investment markets will have got rid of a lot of rubbish that has accumulated over the last 20 or so years and will operate on solid foundations where most things are 'real'/actually exist


Quote - “Through the Unraveling, people will have preferred (or, at least, tolerated) the exciting if bewildering trend toward social complexity. But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities–and vice versa.”

[Financially dependant]

The Dow is in repair mode...just above a pivot point...or another trap??

3642

[Hoop]

Keep at it Hoop .... its all unfolding to plan......

Yep Winner...however this event is being drawn out like a good soap opera ...Some good days lately to gee up the the Fundies ..

For me though it resembles a dead cat being shaken around inside a box...so I'm still bearish

The only good signs are these two factors.... this prolonged continuation pause and time...the more time factor increases the odds of a break up outside this 11600/10600 trading range area (Rectangle formation) rather than the favoured odds on break down.

http://www.imageurlhost.com/images/1v3hf6a164qlxhn5yjic.png

[Hoop]

The Dow is in repair mode...just above a pivot point...or another trap??

In theory the DOW has made a slightly higher high thereby weakening the bear tide....This is a bullish signal
Remember the DOW is technically still in a cyclic bull market cycle unlike some others e.g China Australia Brazil etc
Bull market corrections of 20% are possible and caution should wane with each confirmation points being broken through.
Expect a retest of the 11555 support line and/or a retest of the resumed up trend line (both marked with an orange A). If these lines hold then the Bull is still alive.

http://www.imageurlhost.com/images/y7u84b2dk6d1f4xpf9ib.png

[Hoop]

Didn't have to wait long for the retesting
Support 11555 line broke down and the DOW dropped further to retest the resumed upward trend line (orange A) by resting right on it at close (11397)

[Hoop]

It seems from the recent number of positive confirmations that the 20% decline was in fact a very large Bull Market Correction...therefore climbing to a new high is quite possible
The DOW seems to retest everything atm so expect a 11900 support retest when this relief rally loses momentum
If the 11900 retest holds then expect the 12380 Resistance level to come under attack...
If the 11900 retest fails then the resumed up trend line comes back into play (orange dotted line).

http://www.imageurlhost.com/images/snegyhl180lvyetum5n.png

[Hoop]

Its all bad news....The US stockmarket is broken again...The suddeness is the worry..Expect the DOW to retest the next watched line (orange) 10700 if it fails to get above that old support (now resistance line) 11555 (orange)

EDIT 30 minutes to closing There is a rapid late rally to regain some losses..very importantly it has regained the MA50 and the11555 to be at 11622 a very bullish very short term scenario.EDIT 10.49am...then it turned to custard again to close at 11547 ....support 11555 failed but still above the MA50 (11533)

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW21112011.png

[Hoop]

Today we have witnessed Market Euphoria due to a good dusting of pixie dust.

When it wears off...the big bogey of the market intervention effecting market signals will appear...Just look at my chart!!! a red/blue arrow mess. Hoop does not like his charts being messed around like this...from my past experiences this is a bad omen.....where's the exit?

EDIT: DOW closed at 12044 (+4.23%) higher the best day rise since March 2009 (the end of the last bear market) ....on my chart the close is testing the top trend line of the pennant feature (my highest orange dotted line to watch).
If 11900 support holds and this downward sloping line is breached expect the testing of the 12230 /12280 resistance zone (not marked on my chart)

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW01122011.png

[Hoop]

2011...Will it be another Year of the Bull or is it Bear-time once again?

Well, we now know who won the race in 2010? The Bulls :t_up:..The Dow ended the 2010 year up +11%:)

Good news..eh another "up" year following the 2009 year of +19% :)

Therefore 2011 going to be better, especially with the global economy in recovery mode, you would think..huh?...Out with cash and lets buy up stocks...3 years of a rising market is common I hear you say...the dates and figures below proves it so...eh
1924 - 1928....4 years in a row
1933 - 1936....4 years in a row
1942 - 1945....4 years in a row
1949 - 1952....4 years in a row
1954 - 1956....3 years in a row
1963 - 1965....3 years in a row
1970 - 1972...3 years in a row
1985 - 1989....5 years in a row
1991 - 1999....9 years in a row...wow:eek2:

and 10 years have past us by ...so ...we must be overdue for another 3+ years..eh

Ok..party pooper time... here's the bad news....note the blue date

History shows us that since 1901 ...only once has there been 3 "up" years in a row in a Secular Bear Market Cycle
1970...+ 5%
1971...+ 6%
1972...+15%

The DOW has seen many 3+ "up years in a row within the Secular Bull market cycle as shown above (the black dates)

.... unfortunately the DOW is presently in the middle of a Secular Bear Market Cycle (2000-????):(

It's 2011 now and it's another blue date... do you still feel lucky?

2009 - 20??....? years in a row


Hoop, I'm feeling pretty lucky and will go out on a fairly solid limb to predict 2011 will be another 5%-10% year for the DOW. I did something a bit similar to what you did above but focussed on the years following recessions (US and worldwide/regional) that would affect american sentiment/confidence. (I also indulged in some macro tweaking to recognise "significant events", eg. oil shocks, US dollar unpegging, WWs, etc.) These events don't always lead to the indexes crashing as they did with the GFC and sometime the indexes just go nowhere - or take breather. This might happen in 2012 but 2011 I'm predicting to be pretty good as investors will be getting leery about the risks posed by being too overweight in bonds. Another factor is inflation. While there is some overcapacity in many areas, there are constraints (both price, e.g. oil and supply, e.g. rare metals) in some core areas which will push up prices and bonds will come under pressure. How the Fed reacts to this going to be interesting but I don't expect them to anything more than dovish with reagrds i-rates. Another factor is that the USD should be under more downside pressure than it is currently and if the USD weakens in a managed way, the DOW will go up.

These posts were written a year ago on 3 January 2011...

Congratulations Belg...well done. The historic odds were against you but you came through as a winner. You were spot on with nearly everything you predicted except the USD which bottomed out mid year.

So for the second time in modern history the DOW managed 3 consecutive up years within a secular bear cycle....

We now focus on 2012... Is it going to be another up year and see that 4th consecutive up year record ....surely not???

Interesting to see the DOW outperformed the S&P500 which for the year came in just on the redside of zero. (-0.002%)...also the DOW is one of the few equity exchanges to be positive for 2011.

DOW Statistics.for the record books.
Year 2009...+19%
Year 2010...+11%
Year 2011...+ 5% .. (+5.5%)

Others Year 2011

NASDAQ... - 1.8%
S&P500.....- 0.0%
FTSE........- 5.6%
NIKKEI......-18.0%
AllOrds......-15.2%
NZX50.......- 1.8%
Shanghai...-21.6%
India(BSE).-24.6%

Interesting to note that the world is perceived to be relying on the big economies in Asia yet they have had the largest stockmarket falls.

[winner69]

So 5 +ve years in the last 6 and still the US markets go nowhere over time

Still an informative rable this one
http://www.crestmontresearch.com/docs/Stock-Secular-Chart.pdf

DOW was 11497 at the beginning of this secular bear market in Dec 1999 .... 12 years on it is only 6% higher .... so much for the a buy and hold strategy .... and jsutifies sensible trading strategies as outlined in other threads to manage your way through such markets

Hoop - and seeing the USDNZD is about the same as a years ago thats a great perf from the DOW eh .... esp relative to the rest of the world - spooky eh

[winner69]

Another interesting chart from chartoftheday.com

This rally a bit of a fizzer so far ..... maybe heaps more to go eh ......

The Dow made another post-financial crisis rally high Thursday. To provide some further perspective to the current Dow rally and in response to several requests, all major market rallies of the last 111 years are plotted on today's chart. Each dot represents a major stock market rally as measured by the Dow with the majority of rallies referred to by a label which states the year in which the rally began. The difference between today's chart and last week's chart is that for last week's chart a rally was defined as an advance that followed a 15% correction (i.e. a major correction). For today's chart, however, a rally is being defined as an advance that follows a 30% decline (i.e. a major bear market). As today's chart illustrates, the Dow has begun a major rally 13 times over the past 111 years which equates to an average of one rally every 8.5 years. It is also interesting to note that the duration and magnitude of each rally correlated fairly well with the linear regression line (gray upward sloping line). As it stands right now, the current Dow rally that began in March 2009 (blue dot labeled you are here) would be classified as well below average in both duration and magnitude.

[Halebop]

Not surprised it looks likes a fizzer against some of those benchmarks. To me the Dow is merely approaching the top of its 15 year (15!) range. At least the likes of 1987 and 1921 were making new highs. Still, a low of 7,000 to 13,000 in 3 years is nothing to sniff at.

[Hoop]

The DOW has again today confirmed its resumed cyclic Bull market cycle by beating its May 2008 13000 high ....so the market is looking very rosy for the time being.


Not surprised it looks likes a fizzer against some of those benchmarks. To me the Dow is merely approaching the top of its 15 year (15!) range. At least the likes of 1987 and 1921 were making new highs. Still, a low of 7,000 to 13,000 in 3 years is nothing to sniff at.

The DOW can still travel some distance upwards....but...14150 is the primary resistance level with theoretical secular bear market constraints. This is the ultimate hurdle to jump some time in the future.
As the market climbs it increases the secular bear gravitational force.... Theoretically the physics show that at the 14150 level the index will then have such a big gravitational pull back to contend with, it will struggle to keep going up and will eventually fail.
Therefore increasingly well above average buying demand will be needed to combat that increasing gravitational force.

Secular bearwise..... 14150 real estate area includes a bull cemetery

Note :..The S&P 500 is already moving upwards in this real estate area

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW28022012.png

[Toulouse - Luzern]

I looked at Bernanke testimony/address to Congress on CNBC.
As CNBC puts it.
"Stocks dipped into negative territory Wednesday amid Fed Chairman Ben Bernanke's testimony to Congress on the economy"

Something of an understatement.
Dow is at 12948 as i write this. Down 107 from the intraday high.

When I started watching cnbc about 4.00am NZT all 12 Europe exchanges and indexes on Yahoo Europe summary were in the green.

After his speech all had declined and 4 are in the red.

Dow composite hit an intraday high of 13055 up about 50 before the speech.


The DOW declined as it got closer to Bernanke prepared speech (some may say spin) and rose somewhat on recognition of positive factors (eg employment, signs of recovery) and then declined on negative factors (eg Euro).

Biggest decline (and wealth destruction) was when Congress spokespeople had 5 minutes each to make points and ask question (some may think of this as grandstanding).

If the initial US players negativity is not reversed then World markets including NZX and ASX may be in for a hit today.

[Hoop]

TL....... short term market influenced by media events are soon forgotten. In reality..when a market gets toppy and bearish divergences appear the investors and media will ignore the good news and focus on any bad news (even a week late news will do) as an excuse to get out.

When the market has bullish momentum as it did last week this announcement (28th Feb) Euro little changed after S&P cut Greece to "selective Default" (http://www.investopedia.com/forex/news/dailyfx/EuroLittleChangedafterSPCutGreecetoquotSelectiveDe faultquot.aspx#axzz1oNDSsAuP) which I considered very bad news never got much mention as it virtually says S&P has downgraded Greece from CCC to C which is the lowest grade possible. C is the default level with two parts, a better selective default or the worse disorderly fault. Finch also downdraded Greece to this level as well. Usually this downgrade stops foreign bold holders from investing further money as it is near 100% they will never see their money again...so foreign funding to Greece become nigh impossible...strange and bizzarre that Mr Market dismissed it until today................ so todays news (http://www.marketwatch.com/story/us-stocks-hit-by-greece-global-growth-fears-2012-03-06?dist=afterbell) comes as no surprise to me charting the DOW as Mr Market is using this excuse (a catalyst) to correct an overdue toppy market.

The Dow fell 204 to close at 12759. It tested the first major support of 12750 (12753) it dipped below it intraday (giving a warning that this major support may fail in days to come) ...then closed above the support again at 12759. (see my chart in above post).

Forget the media BS......Technically, the DOW outlook has to be viewed as a negative........ todays event should be considered as a possible start to a Bull Market Correction.

[Hoop]

A few days after my above post Europe gave Greece an expensive pill and was told it to go to bed and rest..... the global market was happy with that and the US Equity Markets bounced off that 12750 support and continued their Bull Run and squeezed out another 4% rise..In April the worries returned and the 12750 support got busted only to bounce back up to resume the bullish mood creating a 12710 support with an equal top .....until now!!
Now we are at another TA critical juncture today a break of that 12710 support to a lower low. The very slight Broadening formation has been created, it is descending in character, that being of equal tops and lower lows...this formation is under threat of a breakout to the downside as well.

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW14052012.png

[Hoop]

The DOW broke out downwards from its slight broadening top formation towards its target of 12100.
This target will need selling pressure (e.g bad news) around the support zone if this target is to be reached...
In the meantime the downward movement has been arrested by a pullback which is common event (occurs 50% of the time) after a formation breakout.
Expect this pull back to test the bottom boundary of the old broadening top formation or it could go back inside it to test the 12700 area. If the pullback fails these tests expect the DOW to fall again towards it's target 12100 testing the support zone.
If the pullback is strong and busts back through the 12700 area expect it to rise to 13000 in it's quest to gain a new high which would indicate the Bull market Correction is over.

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW22052012.png