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  1. #661
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    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.

  2. #662
    SRV is a God STRAT's Avatar
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    Quote Originally Posted by dumbass View Post
    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.
    Last edited by STRAT; 12-08-2011 at 04:34 PM.

  3. #663
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    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.

    Last edited by dumbass; 12-08-2011 at 05:45 PM.

  4. #664
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    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

    Last edited by Hoop; 13-08-2011 at 01:39 PM.

  5. #665
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    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



  6. #666
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    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
    by Edwin Lefevre.

    I reckon major resistance around 1250 (S+P)
    Attachment 3532
    Last edited by peat; 16-08-2011 at 06:04 AM.
    For clarity, nothing I say is advice....

  7. #667
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    Big gains on small volume - looks weak to me and might short from here.

  8. #668
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    Quote Originally Posted by peat View Post
    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
    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%
    Last edited by Hoop; 16-08-2011 at 11:48 AM.

  9. #669
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    Quote Originally Posted by dumbass View Post
    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.


    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.

    Last edited by dumbass; 21-08-2011 at 01:31 PM.

  10. #670
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    Obviously not as dumb as your name!!! :-)
    Quote Originally Posted by dumbass View Post
    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.


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