Where is the Dow & others heading in 2005?

[RUDEBOY]

FC, you owe me one? The way i jinxed that one was market timing at its best!

 

[RUDEBOY]

Late rally? More downside! I've got to laugh.

 

[orky]

will it attempt 10000?

 

[RUDEBOY]

Doesnt seem much interest in moving/stopping this slide? We'll see?

 

[orky]

10020 at close is my prediction

 

[vocalist]

Boy do the bulls love these late evening V's!!!!

 

[vocalist]

Will the bears do the bussiness though this time.

 

[Bigbusiness]

To be honest BB i'm starting to think the same. Here's one though, lets say the Dow is at a critical point at the mo( for upside movement), if it can make gains in the next week say, with little support, would you agree that downside vol has taken the lead and will be more effective( bears have lost the hold)?

I am quite happy making money one day at a time. I am working on the ideas in the 'Trading day by day' book and that might help me with longer term trading but that will be following the current trend, or a trend that has been firmly established. I am just not good enough at working out the market direction over the next month or several months. Having seen a lot of experts try it, I don't think there are many people who can consistently say where the markets are moving over the longer periods of time.

It is interesting that the title of this thread is "Where is the Dow & others heading in 2005?" and most of the time my answer would be, I haven't got a clue

 

[Racer]

It is interesting that the title of this thread is "Where is the Dow & others heading in 2005?" and most of the time my answer would be, I haven't got a clue

Of course the answer is up a bit, down a bit, sideways a bit in no particular order or amount and from day to day and the amount could alter a lot or not

 

[kriesau]

Techs like HP, Intel and Microsoft are holding it up at the moment with GM and IBM also resisting. SOX is still up 2.7% and the Nas 100 is up 0.85%.

 

[RUDEBOY]

BB, that last bit is very correct, nor have i. Every time frame has a tale to tell, its up to the individual to try and piece them together, the best they can. Believe it or not, i used to think longer time frames were easier to predict, CRAZY, i know. RB.

 

[kriesau]

Looks like 10150 is the resistance level at the moment. It's had four attempts to breach it in the last 30 minutes.

 

[Racer]

Looking at chart, think we may have had false break to the upside from downtrend from earlier part of the year, failed and now opening potential lower targets, next week I would expect a fight over the 10100 to to 10200 area , more violence to come before the bulls or bears give in to the winner and then watch out.. it will move very fast!!!
(as long as the cavalry are fully booked on prior celeb appointments)

 

[Racer]

Just looked at yahoo finance web site and saw the article below Who is going to pay all the interest on the debt when the money disappears from their paper wealth?
Over mortgaged, debt, debt and debt... a credit nighmare is being swept under the carpet and no-one is listening until it is too late


Real Estate
Housing Bubble Exists Regionally
MarketWatch
By Mark Hulbert

ANNANDALE, Va. (MarketWatch) -- Until 2002, according to Yale University economics professor Robert Shiller, the phrase "housing bubble" was hardly ever mentioned in the pages of this country's major newspapers.

And then the number began to skyrocket.

Indeed, to the casual observer, a graph plotting the number of mentions of "housing bubble" over the last 30 years shows all the telltale signs of a bubble -- a long relatively horizontal line followed by a huge spike upwards.

And yet, we will never know for sure whether housing currently is in a bubble unless real estate prices eventually plunge. Until then, it will be the subject of endless speculation -- and great fodder for journalists and columnists.

 

[counter_violent]

My take as of todays action ...f w i w.... 370/400 is twice support area this year .......spike this week just into the 400....possibly taking out a few stops......todays action ( daily candle) doji long shadow.....could this be setting up for the reversal of recent up move !!.....the doji is in the correct place for it ........I guess mon/tues all will be revealed......so on balance I think shorts have it !


counter

and the rest is history

 

[aspex]

I was not amused when my Nas short was wiped out by one point while the other idices were obviously stumbling.
I will persevere with a new short on Monday.

 

[roguetrader]

Highly unusual that the Nas didnt track along with the other major indecies. This is interpreted by some to be a bullish signal and I think the reverse is true in this instance. The Nasdaq should join the party downtown fairly soon, next week.

As a rule of thumb you should always consider the other indecies as supporting evidence only and not a consideration of first weight. Maybe if the signals within the index are strong enough then you could consider trading on that evidence alone, otherwise, simply trade the others that are leading in the direction you expect, anticipated and have the strongest signals.

Divergencies like this are giving large messages.


Julian

Hmmn can't essentially disagree with a lot you say there Joules, would be interested in your view on the "large messages" that are being given.

I tend to look to the Nasdaq for leadership, I have always espused to the view that the Nasdaq leads and the others follow to some degree or another, Further that the SOX leads the Nasdaq.
Obviously to throw that up and blindly follow it to destruction would be foolish, this view has to fit with a bigger picture. For example to buy the SPX yesterday purely on the strength that the SOX was on fire would have been an expensive mistake, as you say buy strength and sell (short sell) weakness. However the optimum time to sell the SPX yesterday was when the SOX started to falter.
The divergence I see here to be honest, I am not sure how to interpret, though as an intra-day trader, whilst such interpretation can be helpful it is not essential. I find myself asking, if the Nasdaq truly leads could this action be fortelling of a turn in the markets? On the other hand if you look at the performance of the major indices the Nasdaq has led to the downside with some gusto, and it lagged badly the last move up, in late '04. Therefore it may be fair to say that this is simply a corrective phase on the part of the Nasdaq and that when all the indices are back in sync we will see a ferocious move.

 

[kriesau]

Hmmn can't essentially disagree with a lot you say there Joules, would be interested in your view on the "large messages" that are being given.

I tend to look to the Nasdaq for leadership, I have always espused to the view that the Nasdaq leads and the others follow to some degree or another, Further that the SOX leads the Nasdaq.

The divergence I see here to be honest, I am not sure how to interpret, though as an intra-day trader, whilst such interpretation can be helpful it is not essential. I find myself asking, if the Nasdaq truly leads could this action be fortelling of a turn in the markets? On the other hand if you look at the performance of the major indices the Nasdaq has led to the downside with some gusto, and it lagged badly the last move up, in late '04. Therefore it may be fair to say that this is simply a corrective phase on the part of the Nasdaq and that when all the indices are back in sync we will see a ferocious move.

Hmmm.......well this is an interesting scenario. There has been clear divergence between the techs and the Dow over the last two days. Is the Nasdaq lagging the Dow or is it a harbinger of an imminent upturn in the markets ?

I don't quite agree with the premise that the SOXX leads the Nasdaq. The Soxx, composed of only 19 tech stocks, is more volatile than either the COMPX or the NDX. Yesterday, for example, the SOXX was up 2.86%, the NDX was up 1.1% and the COMPX was up 0.66%. The Dow and the SPX were both down 0.5%.

The volatility of the SOXX can be seen in the attached two year comparison

http://finance.yahoo.com/q/bc?s=^NDX&t=2y&l=on&z=m&q=l&c=^SOXX,^IXIC

The SOXX overshot the COMPX and NDX between Sept 03 - May 04 and then significantly undershot them July 04 to the present. The SOXX does impact the NDX but it does not lead it. The NDX is clearly much more convergent with the COMPX but, because it is all tech and has only one fifth of the COMPX stocks, it can be more volatile than the COMPX on a day to day basis.

If we now compare the DOW with the COMPX and NDX we can see the following

http://finance.yahoo.com/q/bc?t=2y&s=^NDX&l=on&z=m&q=l&c=&c=^IXIC&c=^DJI

The COMPX and NDX has out performed the Dow since August of last year but has gradually been moving towars greater convergence with the Dow since February, until last Wednesday when the gap was suddenly expanded by the Dow declining and the COMPX/NDX rising.

Is a 3 day divergence significant ? I think that it is unlikely. Tech stocks have been boosted this week by Dell and Delphi with some support from large Dow techs like Intel and Microsoft. There is also some anecdotal evidence of recent investment rotation back into tech stocks, which have underperformed against other sectors since the dot com crash.

On the basis of this I would tend to agree with Joules that the divergence between the COMPX/NDX/SOXX and the DOW/SPX is just a short term blip. The Dow is more volatile than the SPX yet they are currently moving convergently and I think that this is a better template to look at than the COMPX and the tech indicies. It's therefore probably more likely that the COMPX/NDX will be subsequently impacted by a downpull on the Dow/SPX than being the lead horses of an upswing.

On the otherhand of course, with the high volatility at the moment, anthing could happen and the divergence with the techs over the last few days might mean that they are just ahead of a rebound on the Dow/SPX. Anything is possible at the moment but I think that the balance of the evidence suggests that the techs are more likely to follow the Dow/SPX than the other way round.

Just my 10 cents on this subject !

 

[kriesau]

Asked in kind and replied in kind,

RT

1 I think the optimum time to sell is when that specific pattern tells me so and there is some anecdotal evidence by the action of external charts (sometimes). The DJIND does not always track along with the SPX. Let's also allow room for the head fake which is natural attrition. Take a look a the Nasdaq at 2000 high then take a look at the low now consider the percentage of move by that index to the DJIND or SPX.


The tech driven market (Nasdaq et al) so speculative, as to be laughable, in my view , brings up the issue of interpretaion and here you see mine.

The Dax went into a major decline in early 2000 and bottomed in Mar 03...somewhere in that time the German version of the US Nasdaq was closed. The DAX went from above 8k to below 2.5k in cap value ...now, compare that loss to the US declines and tell me the Nasdaq is not (arguably still) a manic, radar ping, to a mad 1999 bull mania ! Prove that I am wrong on that and you have yourself a friend with a large pair of horns poking out the top of my bonce. :-0

I want you to consider for a moment that most traders don't think there is a cap to buys...most people have never considered the idea that there exists by our actions a natural cap or ceiling to the hieght that market s may reach before they have to by the law s of nature come back and be corrected in a very large degree. Think of your favourite pair of shoes and the price you paid for them. Ok, let's say you paid 17 times the original price now think of that price...you probably wouldnt buy them for 17 times. Now, think of those same shoes an divided the original by 17 and think of that number...you'd probably by several pairs in several different shades of colour. Ok, now think of your interpretation of the bargain you were getting for those same shoes yet you were broke and couldnt afford to eat....interpretation is a tricky beast and when combined with emotion can lead to a tricky market place.

Someone once said to me that making money is not about anything unknown it is simply about the zeros and how you view getting them. There are two ways to make money in the markets and they carry equal weight.

RT I went off the track a tad here and normally these thoughts would be in my diary and your proposition was too well presented for me to pass. Thankyou.

For all of us, I think we may agree, we are on an interesting learning curve.

Julian

Joules - just read your reply to RT

Great post and a really clear and interesting analysis - I really enjoyed reading it.

 

[counter_violent]

Only Two numbers to watch this week

10,040 / 10,000 ....both of which could be taken out in One move as I expect will be the case..... take your pick on the day this will happen but a minus 150 move would'nt be a shock ...... clean break / failure at 10,000 will leave free space all the way to 9,700

Upside from support trendline at 10,040 rising 10,050 this week .......well I just can't see it somehow, although never say never etc

All this ties in nicely with the bearish rising wedge that's been developing over the last few weeks........so when it breaks ,it will be violent !! :arrowd:
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