Dow 2006

[Pat494]

New week

Morning all - new week
My indicators are sending mixed signals which usually means a flat period of oscillating prices ( nothing is certain in this business ) imho.
The big drop in the Nikkei may not be hugely significant. Pronouncements of various bodies are usually soon forgotten.

 

[leovirgo]

I've been away on holiday while the DOW hit new highs. It seems that the party is still on. A lot of talks about PPT and inflated prices and so on. I noted the word 'several' from FOMC meeting minutes..

Committee thought that several further tightening steps were likely to be necessary.

Several means more than two..

However, profitability is the key. As long as PE is not too inflated, DOW will keep rising with occassional corrections. The big bear cycle may not commence in near future as many hope.

 

[kriesau]

I've been away on holiday while the DOW hit new highs. It seems that the party is still on. A lot of talks about PPT and inflated prices and so on. I noted the word 'sevaral' from FOMC meeting minutes..

Committee thought that several further tightening steps were likely to be necessary.

Several means more than two..

However, profitability is the key. As long as PE is not too inflated, DOW will keep rising with occassional corrections. The big bear cycle may not commence in near future as many hope.

Well I think that we will see a Fed Rate of 5.5% (three more hikes) before they stop.
Whilst oil remains above $70 and tensions with Iran continue, then this could set the scene for a retracement, probably at some point next month. We're probably looking at a retracement to the 10400 - 500 range with quite a bit of volatility and whipsaw during this move down.

 

[aspex]

I don't know if this has been posted but it did interest me.

Market Showing Signs of Deterioration
As we move deeper into the second quarter the stock market is showing definitive signs of deterioration. Since early December stocks have been moving up in fits and starts, with the S&P 500 rising only about 1% in the last four months. Each successive new high in the index has barely exceeded the old high before selling off again. Furthermore, for some time now the number of new daily highs on the NYSE has been diminishing with each new high in the averages. The ten-day average of new daily highs reached about 480 January 2004, 320 in November 2004, 290 in July 2005, 260 in early February 2006, and only 200 on last week’s highs.

Daily transaction volume has tended to increase on down days and decrease on up days, while the market has generally opened strongly in the morning only to sell off during the rest of the day. In fact the two most recent multi-year highs in the S&P 500 were made soon after the opening on days when the index finished far below the prior day’s close. As if this weren’t enough, the DJ Utilities average topped out six months ago on October 4, and is now 13% below that level today. All of this is typical of a market in the process of making a cyclical high prior to turning down.

The weakening technical situation is a reflection of the declining fundamentals typically seen prior to bear markets and recessions. The ten-year bond rate has now crossed over 5% for the first time since mid-2002, and the Fed has probably not finished hiking short-term rates. Oil prices remain high while gasoline prices are headed higher for the important summer driving season. Housing is weakening as is indicated by declining sales, soaring inventories, substantially lower levels of affordability and a drop in plans to buy homes. These are the forward-looking indicators that investors must watch. The coincident or lagging indicators such as GDP, industrial production, consumer spending and unemployment are still fairly solid, but will not show weakness until it is far too late for investors to act. The last three short-term market corrections bottomed at 1245, 1253 and 1268 successively. We think a break blow 1268 may well be the warning sign that the cyclical bull cycle is over and that the secular bear market has resumed.

 

[kriesau]

I don't know if this has been posted but it did interest me.

Market Showing Signs of Deterioration
QUOTE]

What is the source, and who is the author, of this commentary ?

 

[kriesau]

Be Careful Out There !

It's a real jungle and the PPT are lurking in the undergrowth.
Oil just under $74 this morning !

 

[Racer]

I don't know if this has been posted but it did interest me.

Market Showing Signs of Deterioration
QUOTE]

What is the source, and who is the author, of this commentary ?

http://www.comstockfunds.com/index....t Commentary&newsletterid=1236&menugroup=Home

 

[DepthTangent]

Iam expecting an aggressive move forward anytime over the next few days, if not this week then next week is looking highly probable. Ofcourse a shake out can be expected (although not necessarily certain to happen) ahead of any aggressive move forward, so one must be aware of that potential and study the price action very closely when it occurs. If a move to the downside occurs this week, buying that low is almost an absolute cert buy. However as it appears time is running out to make the all time high before "market fundamentals" switch the direction into a bear market, this may suggest that no shakeout will occur... But we all know the dow, its capable of moving 150 pts either way and still ending on its opening price. Still, I suggest a buy of any sizeable drop and you wont go far wrong. Ofcourse if your a highly enthusiastic bear then you may think Iam wrong.

Iam looking to buy any pull back now with maximum confidence, if the pull back/shake out does not occur we could be in for minor oscillation before the thrust for the high occurs. I suppose thats about as accurate an assessment one can provide, if anybody can do any better please do post. The only remaining question to be answered is, am I correct ?

 

[Pat494]

Iam expecting an aggressive move forward anytime over the next few days, if not this week then next week is looking highly probable. Ofcourse a shake out can be expected (although not necessarily certain to happen) ahead of any aggressive move forward, so one must be aware of that potential and study the price action very closely when it occurs. If a move to the downside occurs this week, buying that low is almost an absolute cert buy. However as it appears time is running out to make the all time high before "market fundamentals" switch the direction into a bear market, this may suggest that no shakeout will occur... But we all know the dow, its capable of moving 150 pts either way and still ending on its opening price. Still, I suggest a buy of any sizeable drop and you wont go far wrong. Ofcourse if your a highly enthusiastic bear then you may think Iam wrong.

Iam looking to buy any pull back now with maximum confidence, if the pull back/shake out does not occur we could be in for minor oscillation before the thrust for the high occurs. I suppose thats about as accurate an assessment one can provide, if anybody can do any better please do post. The only remaining question to be answered is, am I correct ?

I should say imvho the answer to your last question is without doubt and for an absolute certainty ------ yes and no or to put it another way no and yes !!!!!!!! LOL

 

[kriesau]

I should say imvho the answer to your last question is without doubt and for an absolute certainty ------ yes and no or to put it another way no and yes !!!!!!!! LOL

That's an unusually definitive stance on your part Pat

 

[kriesau]

Iran to shun UN watchdog if hit by sanctions
Tuesday April 25, 01:25 PM

TEHRAN (Reuters) - Iran said on Tuesday it would suspend ties with the U.N. nuclear watchdog and speed up its atomic programme if it were hit by international sanctions. "How are you going to prevent our activities by imposing sanctions? If you impose sanctions, Iran will suspend its relations with the agency (IAEA)," chief nuclear negotiator Ali Larijani told a conference on nuclear issues in Tehran. "Suspension means we will accelerate our activities." He also said Iran "cannot be expected to act transparently" if it was attacked militarily, a last-resort option the United States has refused to rule out.

U.S. Secretary of State Condoleezza Rice said in response: "I suppose the Iranians can threaten but they are deepening their own isolation." She told a news conference the world must take "credible steps" to curb the Islamic Republic's nuclear work and the U.N. Security Council had to take action "in light of Iran's continued defiance of international norms". The verbal sparring preceded an influential report on Iran that International Atomic Energy Agency (IAEA) chief Mohamed ElBaradei is to deliver to the Security Council on Friday. "I think we are going to have take a next step," Rice said. "It seems logical that we should consider a Chapter 7 resolution under the Security Council's mandate."

A Chapter 7 resolution allows for sanctions or even military action. The United States, Britain and France favour sanctions unless Iran backs down very soon. The council's other veto-holders, Russia and China, oppose punitive measures. France said it has provisionally scheduled May 2 for a meeting of political directors of the council's five permanent members plus Germany to discuss the next moves on Iran. The U.S. ambassador to the IAEA said he expected ElBaradei to report that Iran had failed to use the 30 days it was granted to comply with demands that it halt uranium enrichment. "Given the announcement they made 2 weeks ago and the apparent failure to cooperate further with the IAEA, we can only expect a negative report," Gregory Schulte, told Reuters.

Iran said this month it had for the first time enriched uranium to the level used to fuel nuclear power stations and that its next goal was industrial-scale production. In Vienna, a diplomat familiar with IAEA operations said ElBaradei would "lay out the facts", not pass judgement on Iran. The U.N. nuclear watchdog has previously said it cannot yet confirm Iran's assertion that its atomic activities are purely civilian. But it has found no hard proof of a secret military programme, which the West suspects Iran is pursuing. The diplomat said Larijani's threat to freeze ties with the IAEA suggested Iran might quit the nuclear Non-Proliferation Treaty. It has refused since February to answer questions about or grant visits to sites where undeclared activity is suspected.

"We don't know what they mean. But relations are already down to the minimum. It's just basic safeguards," the diplomat said, referring to IAEA access to declared nuclear sites. "The only meaningful thing they could do now is kick out inspectors and withdraw from the NPT, as North Korea did." The diplomat said an Iranian delegation was tentatively expected to visit the IAEA in the next two days and might provide some last-minute information before the report. A European diplomat said ElBaradei's report was likely to "add grist to the U.S. mill" on Iran.

Schulte said Iran was refusing to answer IAEA questions about advanced P-2 centrifuges, designs of which it received from a nuclear black market run by disgraced Pakistani nuclear engineer Abdul Qadeer Khan. President Mahmoud Ahmadinejad disclosed this month that Iran was "presently conducting research" on P-2s, which can enrich uranium faster than the P-1 model the Iranians now operate. Schulte said Ahmadinejad's comments had fuelled suspicions Iran may have hidden P-2 activities from the IAEA. He said the IAEA also wanted Iran to answer queries on other issues such as documents it received from the Khan network related to the production of the core of an atom bomb; experiments with high explosives; and alleged administrative links between its atomic programme and the Iranian military. Iran has repeatedly rejected demands to restrain its nuclear activities, such as a freeze on enrichment.

"Iran's nuclear technology is like a bullet that has already left the barrel and it is impossible to push it back into the barrel," influential former Iranian President Akbar Hashemi Rafsanjani told the Tehran conference. French Foreign Minister Philippe Douste-Blazy said there should be no talk of unilateral military action. China urged restraint and a peaceful solution, in comments echoed by visiting Russian Defence Minister Sergei Ivanov. "Both Russia and China favour political, diplomatic measures. We do not see an alternative to the negotiation process."

 

[Pat494]

That's an unusually definitive stance on your part Pat

Hahaha
good one Mike
Was flat yesterday though, as forecast. Same look today until it will suddenly make a dash but when and in which direction is as yet uncertain to me.........

 

[DepthTangent]

There's the bulk of the shakeout, all we are waiting for now is the PPT to join in and you will see very long candles in 5 min time frames. Perhaps another move down to about 11260 will trigger the PPT.

 

[leovirgo]

There's the bulk of the shakeout, all we are waiting for now is the PPT to join in and you will see very long candles in 5 min time frames. Perhaps another move down to about 11260 will trigger the PPT.

Looks like PPT couldn't bear to wait til 11260. 30pt up candle is shining in 5min chart..

 

[tricks]

Ppt

There's the bulk of the shakeout, all we are waiting for now is the PPT to join in and you will see very long candles in 5 min time frames. Perhaps another move down to about 11260 will trigger the PPT.

Hi DT,

Whilst I am not new to trading, please could you explain what PPT is and it's obvoius significance?

cheers - tricks

 

[kriesau]

Hi DT,

Whilst I am not new to trading, please could you explain what PPT is and it's obvoius significance?

cheers - tricks

PPT = Plunge Protection Team

Set up by Reagan in 1987 after the market crash to try and prevent it from happening again. Run by Bernanke - other members are Sec of the Treasury, Head of the SEC and Head of CFTA. The Fed prints money (remember M3 no longer reported) and intercedes in the market to prevent any major fall. Works closely with all the U.S. exchanges and Wall Street banks, including the largest derivative risk holders Citibank and JP Morgan Chase.

Plenty of evidence however to indicate that they interfere in the markets on a regular basis in an attempt to control economic consequences resulting from government problems (like massive trade deficits, budget deficits etc) and other outside factors like escalating oil prices. They were really in evidence last Tuesday when oil hit a record $75 and simultaneously the Dow rallied by 200pts. The markets are manipulated by the Fed who can print money to fund this activity.

 

[tricks]

Ppt

PPT = Plunge Protection Team

Set up by Reagan in 1987 after the market crash to try and prevent it from happening again. Run by Bernanke - other members are Sec of the Treasury, Head of the SEC and Head of CFTA. The Fed prints money (remember M3 no longer reported) and intercedes in the market to prevent any major fall. Works closely with all the U.S. exchanges and Wall Street banks, including the largest derivative risk holders Citibank and JP Morgan Chase.

Plenty of evidence however to indicate that they interfere in the markets on a regular basis in an attempt to control economic consequences resulting from government problems (like massive trade deficits, budget deficits etc) and other outside factors like escalating oil prices. They were really in evidence last Tuesday when oil hit a record $75 and simultaneously the Dow rallied by 200pts. The markets are manipulated by the Fed who can print money to fund this activity.

Hi Kriesau,

Thank you very much for that excellent explanation. I now understand an awful lot more, why I've lost a fortune trading the DOW over the last 5 years. I have just closed a short on the DOW June contract short @ 11312 from 18 April. I took a hit for £120 on the trade and breathed a big sigh of relief! I was down £2k earlier today. Overtrading badly on the trade!! Classic knee jerk entry on the trade, after taking another loss on the 18th. Will I ever learn? Your reply also underlines how difficult it is to succeed with trading the DOW, perhaps I'll re-focus on trading FOREX. I wonder how much that is manipulated though by Governments. Thanks again.

 

[kriesau]

Hi Kriesau,

Thank you very much for that excellent explanation. I now understand an awful lot more, why I've lost a fortune trading the DOW over the last 5 years. I have just closed a short on the DOW June contract short @ 11312 from 18 April. I took a hit for £120 on the trade and breathed a big sigh of relief! I was down £2k earlier today. Overtrading badly on the trade!! Classic knee jerk entry on the trade, after taking another loss on the 18th. Will I ever learn? Your reply also underlines how difficult it is to succeed with trading the DOW, perhaps I'll re-focus on trading FOREX. I wonder how much that is manipulated though by Governments. Thanks again.

Don't let the existence of the PPT put you off trading the Dow. Whilst it is manipulated by them from time to time they cannot exert complete control and they are not always around trying to pump the market up. They just represent another factor that should be taken into account when trading US indices.

 

[leovirgo]

I will see if it can close above 11312. Then I might consider going long.

 

[tricks]

Ppt

tricks, I dont have time intra-day to post the specifics of the PPT, however kriesau beat me to it. Just do a google search and you will find plenty links explaining their function. But the problem is, I dont see how you now want to run from the market since you know this is going on ?? Surely with this knowledge you can create a strategy to exploit the fact that they are propping up the market. Its like a golden handshake....If you have traded the Dow for 5 years then this type of market action should be common knowledge/experience in your daily analysis, just now you have a name to place on why the big 5 min candles arrive out of nowhere for no "specific reason". So the way I interpret this info is that you should be embracing it and not rejecting its influence, please explain your rational ?

Thanks D T, where do I start?

Yes, you are right, I will embrace this information. However, I wasn't aware of the PPT hitherto, and it's enormous influence. I guess I've always thought of it as the 'so called' big boys intervening, i.e. the Institutions etc with orders triggered at certain levels. Obviously they have a similar effect, when it comes to the big sudden movements. I will continue to trade the index, and try to choose future entry points with more care. Thanks again.

cheers - tricks

P.S. Just gone long at at 269 (15 point stop) on the cash!