Dow 2006

[Pat494]

Welcome to the thread portora.
Not the only one to lose a bit on recent shorts I expect.
Folks seem to be forgetting all those lovely billions of petro-dollars have to be invested somewhere. Space under the bed is probably a bit limited by now. Into the markets it goes !
I dont think the so-called housing bubble in the USA is going to pop anytime soon. The estimate of 11 million illegal immegrants is probably way short of the reality and they can't all camp out in Central Park.
So onwards and upwards 13000 look out

 

[*JDR*]

"Bad news is not having any lasting effect"

Methinks that what a bull market is all about.

 

[portora]

Methinks that what a bull market is all about.

JDR, I agree the market is very bullish at the moment but it is not reacting to bad news the way it has done previously. Now i'm a bit of a novice on the Dow, but i've been following it for a year or so and where previously slightly negative comments from Fed members and an inverted yield curve brought the market down, it's not happening this time. I was hoping for a bit of a retracement before we moved higher. This makes me pay more attention to the conspiracy theorists that the market is being manipulated prior to the Nov elections.
Anyway as I said, i'll wait until after the elections to look for a short entry point but may well try a few day trades to see if I can scalp some points up to then.

 

[Racer]

The risk of inflation remaining too high is greater than the risk of growth being too low," Moskow said in a dinner speech to a real-estate group.
As a result, some additional rate hikes may be necessary to bring inflation back into a range of stable prices, he said.
Moskow said that he expects inflation to gradually come down, but said there remain substantial risks to this forecast.
"By my standards, inflation has been too high," Moskow said.
He said his comfort zone for core personal consumption inflation is a range of 1%-2%, and the core PCE has been above 2% for 29 months.
The recent declines in oil prices will be a positive factor, and the expected moderation in growth might help reduce price pressures, he said.
But this may be overly optimistic and further price shocks could occur, he said.
Moskow said a key factor for him is inflation expectations.
"If firms and workers expect inflation to be high, they will want to compensate by raising prices and wages or building in plans for automatic increases," he said.
So if expectations start to pick up, then the Fed must hike rates further, he said.
In remarks to reporters after his speech, Moskow said there was a risk that expectations could pick up even if inflation remains at current high level, he said.
"If people ... don't see an improvement, they may change their expectations," he told reporters.
Moskow said also said there "is not perfect measure" for inflation expectations.
He said Fed officials looked at surveys and financial markets to gauge where the public expected inflation was headed.
One key reading is included the University of Michigan consumer sentiment survey, which showed a "little decline" in September, Moskow said. The UMich sentiment survey for October will be released on Friday. See Economic Calendar. Rest of story

 

[ajaskey]

Hi folks,

long time no post, have been busy losing money, am I the only one who thinks that the dow and sp are getting a bit silly and we are near a major top?

No, you're not the only one as noted by all time record high short interest on the NYSE and Nasdaq. Everyone thinks we are near a major top....

 

[rav700]

Of all the articles I've read these last few days, this one seemed v interesting, but Rav won't like it.

Enjoy.

Chris

_____________________________________________________________________


Of the three major measures of the market, the DOW has held the strongest throughout the Bear market. This is perhaps explained by a natural "flight to quality" in light of dizzying losses in the Nasdaq from early 2003, as well as a litany of equity market scandals over the last few years – note that the DOW is comprised of the 30 mightiest American stocks. It is therefore natural that the DOW is right back here attempting to move towards its ATH far ahead of its counterpart benchmarks: the S&P500 and Nasdaq. In early May, the DOW came within 80 points, or less than 1% of its all-time high.

Over the last several weeks, the DOW has fought back and is now attempting to move into uncharted territory. Will it make it? Based on the entire technical picture across a multitude of frames, this is a very high possibility, and can happen within days.

For this week's charts, let's take a look at the large picture on the monthlies for the DOW, and the real benchmark, the S&P500. Based upon what we will see, a move to the new high on the part of the DOW should not really be a cause for bullish celebration as it is likely going to be drummed-up to be by the media. Let's take a look: SEE chart 1







Chart Notations:

The Monthly chart of the Dow Jones Industrial Average above addresses the Intermediate-to-Long-Term time horizon.

Note the DOW has now far exceeded the .786 Fib retracement (red), which technicals suggests a high probability move to greater than 100% retracement. Because this means an ATH is in play, this is therefore a very significant technical signal.

A move to all-time high is always a move to "uncharted" territory, it will therefore be difficult to derive an initial target to where the market is likely to find its next peak. That's where our next chart will come in handy.

See chart 2

Chart Notations:

The Monthly chart of the S&P500 above addresses the Intermediate-to-Long-Term Time horizon.

In May, the S&P500 reacted to resistance from an important peak (marked in blue) in March of 2001 (the last peak before the WTC event).

At this point the S&P500 is back attempting to break through that level. Sustained trade above would put a move to the next technical resistance into play, and that is the .786 Fib retracement of the bear market (red). This level sits at approximately 1384.

If the DOW were to break to an all-time high very soon, it would likely drag the S&P500 along with it and therefore put the move to that .786 Fib mark at 1384 S&P500. If we were to translate this over to the Dow, then that means that if the DOW moves into ATH territory, the initial target there would be at approximately the 12,100 to 12,300 level.

See chart 3



Chart Notations:

The Daily chart of the S&P500 addresses the very short-term time frame only.

Here we see the detail of the peak over this summer in early May. The S&P500 has since come back in a very strong way and already far exceeded the .786 fib retracement – the last frontier of technical resistance.

A new 5½-year high is in play, which coincides directly with the ATH in the DOW. Let's look for the market to keep pressing towards a new high over the next few days, particularly if it is trading in positive territory, and especially if exceeding prior day high.

Let us keep in mind that while the trend is up in this time horizon, the market is also pushed right-up against some very important resistance points in multiple time frames, so the best bet is to remain flexible here. There will be plenty of time to play the upside if the market breaks and sustains above resistance; and vice-versa to the downside, if the market gives us a significant reaction to resistance.

True to your words...........................................................every single one of them

 

[kriesau]

ASSESSING THE QUALITY OF THE EQUITY RALLY FROM JULY 2006
Robert McHugh, October 14, 2006

Most autumns we see a significant decline. This attracts shorts. Bears take aggressive short positions where they buy puts, or agree to sell shares in the future at today’s prices but do not yet own those shares. Interventionists feed off of shorts. The rally since July has been almost entirely short-covering. We get one big move, about once a week, on buying panic, then no follow-up, with slightly down to sideways price action until the next week. What has been missing has been supply. Sellers have noticed these out of the blue short-covering rallies, so have disappeared. The interventionists have succeeded in muting supply pressure. This type of rally can continue for quite some time, and drive prices quite high, as we have seen. But it is a death trap. It is artificial. It will end as soon as some trigger event sends fear into markets, the kind that catches shorts on the sidelines, buyers exhausted, and interventionists helpless to play their game. We believe a Democrat victory in the coming election could be such an event.

Get this: All of the progress of this three month summer/autumn rally, all of it, occurred in only 9 days of trading, and all but one of the nine was a short-covering rally. In other words, without intervention induced short-covering, the Dow Industrials would be exactly where they stood in mid July, at the start of this rally. Other than those 9 trading days out of 63 since July 14th, the other 54 days of trading produced only 4 percent of the upside progress and zero since July 19th. Zero. In 8 of the 9 trading days where upside progress was made, evidence of short-covering was present. That evidence included a larger rise in Demand Power than the decline in Supply Pressure, suggestive that shorts joined the buying. That evidence also included either upside volume, advancing issues, or upside points coming in at or very near a buying panic 90 percent. In each instance, a sharp up move started early in the day, followed by buying panic as shorts felt compelled to cover, pushing the rally higher throughout the day. There was only next-day follow-through to the upside on just one time, August 16th, after a short-covering rally on August 15th, but this too showed evidence of short-covering. No days other than August 15th showed strong upside follow-through. Solid rallies see follow-through. This rally has been manufactured.

Clearly the rally from July has not been broad-based, is not sustainable on its own, is not a classic “Bull” market, but has occurred from a lack of supply and a ton of buying and price pushing from those most pessimistic about the market, not from optimists. There was no net progress in 52 of the past 60 trading days. Think about that. All this market requires to tank is a reason to sell. The buying isn’t there. Overall, the decline in Supply Pressure since July 19th was 25 points, more than the rise in Demand Power, which was 21 points. This is not what we should see in a solid bona fide rally. Sustainable rallies require a stronger rise in Buying Power with a corresponding decline in Selling Pressure. We have the opposite condition here, a weak rise with the decrease in Supply exceeding the increase in Demand. Can prices rise further from here? Sure. Figure another intervention short-covering rally or two before the election, and maybe another 200 points? But, it will stop when an event sends fear into Wall Street, and end badly.

Genuine rallies occur typically with 2 to 1 upside volume, advancing issues, and upside points, with the Demand Power rise about equal to the Supply Pressure decline each day, and we see follow through several days in a row. We don’t see once a week hundred point gains, and then sideways action for four or five days. If buyers are excited about the future, we should see strong steady buying on a daily basis, with periodic profit-taking selling. That is not what has happened since July.

The motive? The November elections. Wall Street loves Republican control.
The means? Hidden M-3 and the lawful actions of the Working Group (PPT) as established by President Reagan in 1988.

If you are a long-term investor, this is not the sort of rally that is likely to last more than a few months. Further, our other technical analysis work suggests we are putting in a major top here. Every single time, since 1913, the Fed raised the discount rate above 6.00 percent, we have seen a substantial decline start within a year thereafter, several as much as 30 percent. That discount rate event occurred again in May 2006. We would rather this rally from July was genuine and not artificial.

 

[Hook Shot]

This is no game for Bullfighters ...........
If geopolitics is likely to get serious I reckon the market will anticipate and start moving down ahead of time........ So AS OF 13th October close - there isn't a cloud in the sky! Why was I so pig-headed ?

The PLUS point is there are still some stocks out there that are ready to join this party......Yes there are some left......quite a few. Amazing!

Hook Shot

 

[rainman2]

any thoughts

 

[kriesau]

Market Celebrates as Bears Turn Bullish
Sunday, October 15, 2006
Bob Carver

The stock market continued into new high ground Friday, despite an early dip, as many of the bears who had sold short at prices far below rushed into the market to buy. Right now, this conversion process is showing up as a definite slew toward option call buying. OEX speculators are in the overly-bullish category right now and QQQ speculators started joining the bullish parade Friday afternoon after being consistently bearish for the last thousand-plus Dow points of rally. This conversion of bears to bulls is providing the final bit of rocket fuel to get the market to ever-higher highs. Once that fuel has been burned though, who will be left to buy?

While overstimulated bulls spout visions of a soaring bull market which makes the NASDAQ Bubble of the 'Nineties look like "play school," these visions are delusions of unhinged minds, not unlike some of the preposterous bear forecasts of a Dow going to 41 you've heard in the not-so-distant-past. No kidding, this is some of the trash that's being spewed on the Internet. This kind of "trash-talk" is very dangerous for the average investor since it entices them to plunge in right at the top and then leaves them stranded with a market likely to quickly taking on water and sinking like a stone.

In case you've looked in your SPAM folder recently, you've probably noticed an exponential increase in tout email for micro-stocks "poised to explode!" Remind you of something? Yes, that's right, the Bubble has sprouted wings again. It only took the market six years to recover from the last one. Maybe recovery from this one won't take quite as long since we're getting such a lot of practice with asset bubbles.

Are we about to repeat the deep bear slide of 2000-2003? Or, is this coming dip a buying opportunity?

 

[optioninvestor]

Interesting Take - Worth a read

I ahve been following a few financial blogs that have excellent daily commentary. I might not agree with everything they say (who would) but it is quite intersting to see their take on where the market is headed over the short-term. My two favorites are http://www.crowderinvestments.com/blog/ and http://www.tradermike.net/. Both gentleman are certainly worth checking out. My trading is constantly evolving and my trading success is directly linked to the multitude of channels out there for learning. I recently came across this board and have found the info amazing so I thought I would share a few insightful blogs that give an interesting daily perspective on where the markets (specifically the major indices) might be headed.

 

[kriesau]

He obviously called just at the moment that the subscribers Dow short was stopped out

http://video.google.com/videoplay?docid=-4663672450629299727&hl=en

 

[Hook Shot]

Cheers Optioninvestor... surprising not much mention of YHOO......

 

[mark twain uk]

I find it truly unbelieveable, and yet, it stares in my face, how can you get such a linear rise of more than 1200 points with no significant pull back?

edited: thanks wasp

 

[wasp]

I find it truly unbelieveable, and yet, it stares in my face, how can you get such a linear rise of more than 1000 points with no significant pull back?

edited: what do I need to do to show them as images without having to click on the link?

save as gif files

 

[kriesau]

I find it truly unbelieveable, and yet, it stares in my face, how can you get such a linear rise of more than 1200 points with no significant pull back?

Patience - it's coming - just have to be ready to jump on board when it finally arrives !

 

[roguetrader]

SOX havin a little trouble at the 200sma 477
COMPQ also at April highs

 

[ajaskey]

SOX havin a little trouble at the 200sma 477
COMPQ also at April highs

SOX had trouble with 540 degrees up from the 351 bottom. If it holds this level it shouldn't have any more trouble until the 510-520 area.

 

[roguetrader]

SOX had trouble with 540 degrees up from the 351 bottom. If it holds this level it shouldn't have any more trouble until the 510-520 area.

Makes sense mate.
Market volume on the light side today, a little apprehension perhaps

This area also a 50% retrace from the Jan highs to Jul lows for the SOX

 

[mark twain uk]

Patience - it's coming - just have to be ready to jump on board when it finally arrives !

But we all know that when it starts to drop it will do so in a swift manner, how do you plan to get in, placing sell orders at critical points?