Dow

[ananda77]

Hoop:

...according to my long-term market model (see attachment), we are dealing with a market low, followed by attempts of a bottoming process, which is unfinished business up to date;

...and according to the long term market model, we are quite a long way away from an upside reversal;

...fundamentally, Central Banks need to come up with a satisfactory answer to the bank insolvency disaster FAST FAST FAST like yesterday (not buying or guaranteeing toxic assets but putting banks into receivership and fixing the CDS market) otherwise

...liquidity inflows including foreign into the US market keep melting away and institutions will extent their distribution of core holdings; if they changed their mind about fair value of core holdings and start selling when the 20th November low is tested, we will have a major crash on hand;

...remember: THE CRASH happens in extreme oversold territory;

Kind Regards

[Hoop]

Hoop:

...according to my long-term market model (see attachment), we are dealing with a market low, followed by attempts of a bottoming process, which is unfinished business up to date;

...and according to the long term market model, we are quite a long way away from an upside reversal;

...fundamentally, Central Banks need to come up with a satisfactory answer to the bank insolvency disaster FAST FAST FAST like yesterday (not buying or guaranteeing toxic assets but putting banks into receivership and fixing the CDS market) otherwise

...liquidity inflows including foreign into the US market keep melting away and institutions will extent their distribution of core holdings; if they changed their mind about fair value of core holdings and start selling when the 20th November low is tested, we will have a major crash on hand;

...remember: THE CRASH happens in extreme oversold territory;

Kind Regards

As always another interesting post Ananda

Your S&P chart shows that respected very long trend line as did mine with the respected long term support line for the DOW. Naturally if either one breaks down it will cause a selling panic and a possible another round of capitulation (crash).

As most trading these days is based around TA indicators any break below a very long term trend/support line will trigger a huge computerised selling event ...yes a possible crash..a breaking of a primary trend/support line has the makings of a mass panic sell off.. yes...agree a crash can occur at anytime (random event theory) and yes.. paradoxically, a crash event seem to occur more often during an perceived "undervalued"/oversold territory period......

However I'm a little more optimistic than you that these supports will hold....or if broken a new bottom formed not far below the old one.

My reasons are outlined in full here Post #149 and an update #154

[AMR]

The fundamentalist in me is surprised at the very very rapid decline in earnings projections. Sony for instance had to turn last week's project profit into a projected loss this week after a further downgrade in October.

I was reading Twigg's trading diary and he mentioned the Dow holding support at 8000 but he did not do an SP500 analysis, which shows a negative divergence? If you look closely at the Dow it appears to bounce off 8000 as support, but if you look closely at the SP500 it appears to have broken through 850 and then bounced off as RESISTANCE?

[AMR]

As shown in the attachments.

[Hoop]

The fundamentalist in me is surprised at the very very rapid decline in earnings projections. Sony for instance had to turn last week's project profit into a projected loss this week after a further downgrade in October.

I was reading Twigg's trading diary and he mentioned the Dow holding support at 8000 but he did not do an SP500 analysis, which shows a negative divergence? If you look closely at the Dow it appears to bounce off 8000 as support, but if you look closely at the SP500 it appears to have broken through 850 and then bounced off as RESISTANCE?

AMR
yeah I too noticed what Colin Twiggs said about the DOW

I have found that the 8150 (approximate 8130 - 8180 band) old support line, now resistence line is becoming more important. At a quck glance it seems the DOW is (sort of) in a trading pattern between the 8000 - 9000 range


Also remember (as you did AMR) Ananda's post referring to the S&P500's 816 and it did break....it sets off those red light warning bells in your head doesn't it.

Edit:.... AMR ..that orange support line in your last chart is a 7882 line not a 8000 line (the caption box referring to intraday respect of that line). If you drag up that orange line to 8000 it tells a different story and if you drag it up to the 8150 which I was referring to in my post it looks similar to the S&P chart (don't you think?)

[ananda77]

...fighting between Bulls and Bears continues and no doubt, attempts of a bottoming process remain ongoing;
comparing daily no. of stocks shifting between being strong versus daily no. of stocks shifting between being weak in strength makes for 'stealth upside building' since last October, but overall the difference still in negative territory

...the outcome still completely open;

...on the SPX 500, respecting the 804 level tonight and closing >816 suggests a rally to test 858 as most likely next week; however, resistance at 858 will be considerable

-liquidity inflows incl. foreign negative
-distribution of institutional core holdings only easing slightly
-VIX above resistance

...fundamentally:

-liquidity does not solve insolvency problems = ineffective monetary stimulus
-public debt wave –inflation risk –rising interest rate risk = ineffective fiscal stimulus
-Central Banks/Governments -NOT buying or guaranteeing toxic assets -shut down insolvent banks
-reform CDS market (= under pressure from JPM, C, BoA, GS, one way the new US administration may show it's commitment to political/economical 'CHANGE')

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+)
-accumulate stocks -medium to long term-

Kind Regards

[winner69]

The DOW is a load of old crock anyway the way it is structured '

The first bit of this article is interesting
http://www.investorsinsight.com/blog...p-3-and-4.aspx

So even if Citii , GM, Bank of America and Alcoa opened tomorrow at ZERO it would impact the Dow by only 157 points

Interesting the unwritten law that go under $10 and you are out tof the DOW .... impagine the impact on the US ego if Citi and GM weren't in the DOW ... funny eh

If course if they chnaged the stocks in the DOW it would go up.

Even though not that perfect either that is why i use the S&P500 as the proxy for the US market .... and that is on a PE in excess of 20 as well

So still more pain I am afraid

[Hoop]

The DOW is a load of old crock anyway the way it is structured '

The first bit of this article is interesting
http://www.investorsinsight.com/blog...p-3-and-4.aspx

So even if Citii , GM, Bank of America and Alcoa opened tomorrow at ZERO it would impact the Dow by only 157 points

Interesting the unwritten law that go under $10 and you are out tof the DOW .... impagine the impact on the US ego if Citi and GM weren't in the DOW ... funny eh

If course if they chnaged the stocks in the DOW it would go up.

Even though not that perfect either that is why i use the S&P500 as the proxy for the US market .... and that is on a PE in excess of 20 as well

So still more pain I am afraid

"......and that is on a PE in excess of 20 as well

So still more pain I am afraid" A rather pessimistic outlook from you Winner


I won't show the image as it's copyright protected but the link is shown below but firstly.....
For ST readers without a clear understanding of Secular Cycles before you see the chart read the 3 Notes below
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Note 1: The DOW is presently 8 years into a secular Bear market cycle (2000- ?)

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Note 2: It is the P/E Ratio figures not index figures which governs the secular cycle.
Rough guideline : years of rising P/E = secular Bull Market cycle
years of falling P/E = secular Bear Market cycle

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Note 3: you will have to click on the link below to bring up the chart otherwise this post will not make sense

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The link http://www.crestmontresearch.com/pdf...%20Through.pdf


Note the very similar situation in 1974 as to today scenario:-

* Capitulation 8 years into a secular Bear cycle
* Falling P\E Ratios each year (the trait of a secular Bear cycle)
* Note that within two years after the 1974 capulation the DOW index nearly doubled (annualised out at +38%) but the (annualised) P/E ratio still fell.



This is not an aberration event because during secular bear cycles there are years of big index increases (a bull market within the secular bear super cycle). Long duration secular bear cycles have roughly 50 /50 ratio of years of index increases/decreases.

Some large +% gains examples during secular bear cycles (annualised %)

1904 +42% 1905 +38% 1907 +47% 1915 +82%
1938 +25%
1976 +38% (example mention above)
2003 +25% 2006 +16%

In all the above examples these rises produced little to no increase to the P/E Ratio but those bull events probably paradoxically helped to prolong the life of the Secular Bear and its associated criteria of the cycles' period of falling av P/Es

[ananda77]

In an interview published in Monday's edition of the U.K. newspaper Metro:

Jim Rogers: "US Car Industry Should Be Allowed To Fail"

"Anybody who fails should be allowed to fail," Rogers said, "Capitalism without bankruptcy is like Christianity without Hell -it doesn't work otherwise."

-YEAH RIGHT-

Kind Regards

[Hoop]

Iraq's oil exports raise in December ... reluctant to post this on any other thread as the radicals will spin any such thinking processes into oblivian with their dogma. .... My view? ... If oil supply stays plentiful and constant ... Wayhey!

Oh ..yes!!!!

Ditto for other commodities.
Low prices great for Commodity user companies, many of which investors have't woken up yet to as they are side-tracked with the doom and gloom news.