This looks like the end of the bear market...

Riz

Experienced member
I think that's it, it's time to put the bear hat on the bottom of the wardrobe and keep the bull one handy...

No more sell on the rallies, it's time to buy on the dips...

Having said this I am not suggesting big rallies are imminent, but we're going to oscillate for a while firming the bottom based recently even more and forming higher highs and higher lows from here on...

The risk to get fingers burnt is now in going blindly short not long...

Investors will start to move from defensives to cylicals first...

As for the Techs they will probably carry on with bottom basing through the summer and start rallying (those who manage) in autumn...

Those from CI BB will remember me starting the TMT crash discussion last October when most people still putting their money in techs...

Now I see the end of bottom basing and think it's time we take proper positions to make the best out of it...not without caution of course as the big rallies haven't started yet, but big crashes have stopped and the resulting oscillations are forming higher highs and lower lows...

So for me as I've been doing since 3rd week of April it is: BUY ON THE DIPS...

Riz
 
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Although the apparent low came later, Thursday March 22, was the turning point for me. On that day the US plummeted followed by an equally dramatic recovery,scaring the wits out of the shorters.This was probably a result of smart money testing the water. A similar thing happened in '87 which i can only just recall.
I remember posting on someones thread about it being possibly the best opportunity for longer term investing for some time.
Thats why i have been cautiously bullish and trading the same stocks which i consider good long termers...as you say Riz "buy the dips"

Steve
 
Riz,

I broadly agree with your posts though I have some reservations about the rate of change on the DJIA and feel that the telecoms sector is going to weigh down the FT100 for a while.

I believe that many tech stocks will consolidate over the summer though I suspect that the best gains may be elsewhere. The new market will bring new leaders in the small cap and fledgling indices and these are/will breakout make new highs sooner.

I'm moving to a longer term investment stance and will be using my t.a. skills to assist in market timing.

Whatever the market, I'm sure that the techs will provide rich pickings for the short term trader.
 
I go along with the view that telecoms will be the last to recover, it makes sense with so many competing. There will be lots of mergers or takeovers in this sector in the next few years and then they will establish a solid position in the major indices just like an unchallenged BT once did.
Steve
 

Riz

Experienced member
Thanks Darth, Steve...

I've been writing similar posts for a while, all results of the signals I get out of my research into US markets, I have therefore changed my bear sentiment for quite a while so I don't miss out on the change in the market sentiment in general... I hope other members also seeing the change and taking appropriate positions...

Good Luck to everyone

Riz
 
I'm making hay whilst the sun shines......!

When I got into IQE last week, it was already marked up by its 6%. However, felt that even with commission costs, 215 was a reasonable price - on a rally tends to go up to about 250ish. So today was a good day. This does seem to be a bit of an upleg, but I remain cautious. In a sideways market (as I do not think we will go below prev lows), its all about trading the tops/ bottoms. Once Naz hits 2500, I will be looking to exit quickly if things retrace. Otherwise like I said its win-win, as long as you know the type of game, and its rules (not always the case!)

Good luck, but keep one eye over your shoulder,

Mark
 
Well done Mark... welcome to the cautious bull club.
As for me, i've just closed most of my longs, the suns shining and i'm going to relax in the garden. Pity the pub aint open.

Steve
 
Well, there you go - IQE - 250ish!

Will be watching carefully. Whilst a resistance break may occur with a strong Naz move, I will be looking to get out quiockly if things don't go to plan.

One of my greatest lessons from my first year is not to trade on a whim. I do not have to be in the market all the time, unless I am watching it. Over the last 2 months, I have made a series of successful trades, but have prob only been in shares for 10% of the time, the rest in cash. Just goes to show how patience rewards, whilst using full conviction when the time is right.

Still cautious, though happy to make hay whilst the sun shines.....complacency and cockiness are the greatest enemies.....

Mark
 
New article from Vince Heaney at FTmarketwatch. He's feeling optimistic now - not sure whether thats good or bad !!!(prev contrarian posts on the press and market direction!)

Just tried to post the link, but keep getting an error. So the article is cut and pasted - as I have credited it to him, and FTMarketwatch.com, I hope it is not breach of copyright!!

LONDON (FTMW) - Okay I admit it, I was looking for a Nasdaq pullback.
Previous commentary after the Fed rate cut last week highlighted the lack of initial follow-through by the Nasdaq [US:COMP] to the positive fundamental news, suggesting that the good news was all priced in.

The chart picture showed a market that had been in a range for four weeks and, despite several attempts, had failed to break decisively above the 2,200 level.

A range trading market will often test both sides of the range before breaking out in one direction or the other.

Having failed to break higher, the market moved lower to test supports. Previous commentary highlighted that moving average support had stemmed the decline. The 10 and 20-day moving averages had been broken, but while the Nasdaq had traded below the 30-day average, it had not closed below it.

At that point I was in favour of the supports giving way and the breakout occurring in a downward direction, especially when the lacklustre response to the Fed rate cut was taken into consideration.

Wait for the signal

The trading principle that has since been firmly illustrated is to always wait for the signal.

Go to the interactive chart for the Nasdaq with 10, 20 and 30-day moving averages, relative strength indicator (RSI) and slow stochastics added. The chart has been expanded to show the last three months' price action for clarity.

Last Wednesday the market opened below the 30-day moving average, on the back of disappointment with the Fed rate cut.

However, disappointment was short-lived with the market turning higher and closing Wednesday's session back above all three moving averages.

The RSI, that had been threatening to break back below the 50 level, rebounded and moved higher. The slow stochastics that had moved into oversold territory, below 20, turned, crossed over, and moved higher.

There was no bearish signal. The market did not close below the 30-day average. The Nasdaq now looked as if the supports had held at the bottom end of the range, but was still range bound. As noted above, range trading markets will often cross the range several times before a decisive breakout is seen.

One side to the other

Having been unable to breach downside supports, the market moved higher to test the top end of that range once more. Monday saw the Nasdaq finally take out the top of the consolidation range.

The market reached the previous high of 2,232, set on May 2, in early trade on Monday and powered through the resistance to finish 106 points, or 4.85 percent higher on the day at 2,305.

A breakout always looks more compelling, when the move is large and closes the day up on its highs. However, this year has seen many false dawns and investors are understandably cautious.

Market playing by the rules

What can really be said about the chart picture at this point? The main observation to make is that the market has done absolutely nothing wrong since the year's lows were posted on April 4.

The market rallied more that 35 percent from the 1,619.58 lows, unfolding in a five-wave sequence reaching 2,202.86 by April 20. Given the sharp nature of the rally the market entered into a protracted correction/consolidation of that advance, which lasted for a month until the May 21 breakout.

From the chart you can see that the correction unfolded in a three-wave pattern between April 20 and May 16. The rise since last Wednesday can be interpreted as the first wave of the next upmove. From an Elliott Wave perspective a five-wave advance that is then corrected by a three-wave pattern is exactly what is to be expected.

The pullback from the April 20 highs was only corrected by 35 percent - short of the first Fibonacci retracement of 38.2 percent. It was partly this fact that led me to look for the third leg of the correction to move deeper. But in the event the moving averages were sufficient to stem the correction and are currently providing a good guide to the Nasdaq's direction.

Where to next?

Elliott Wave counts are notoriously open to alternative interpretations, so let's keep it simple. The market has rallied 35 percent, corrected a little over a third of that move and has now broken higher after holding above its moving average supports.

If the breakout does prove durable it is not unreasonable to expect a further upmove of similar size to April's rally. This would give a market objective above 2,600 on the Nasdaq.

The move will not unfold all in one go, and you should note that the slow stochastics are showing a near-term overbought situation (indicator above 80). But while the market remains above its moving averages any short-term dip is a buying opportunity.

Mark
 
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Riz

Experienced member
There we go...Nasdaq up again rising 7 sessions out of 8, after going up for six straight sessions...the momentum and market sentiment has to be grasped properly..the determining factor seems to be the fact that the US investors are showing continued faith that the market will benefit from the rate cuts and that not owning stocks may be riskier than owning them...

I wouldn't go bearish right after every single nas or dow retracement, even in the most bullish markets the indices don't just go straight up every day, they go up and down, whether the highs and lows are higher or lower is what matters...

So long as this sentiment continues the indices will carry on forming higher highs and higher lows and the Americans will continue to buy on the dips, they simply don't want to miss out on the rising stocks...

As for me I'll keep holding my longs (till I feel I've run them enouhg) and buying on dips till this sentiment changes, ignoring comments of overvaluation, down channels and trying to overcome the fear gradually formed since the Nasdaq started tanking just as I should have tried to overcome the greed fromed by the overyhype of TMTs...

Riz
 
Things kinda quiet at the moment.......

Its a funny time for me, as I have only ever known the "bad times" ie. since last March, so I am learning how to think in a different environment. So, there is a new game I have to learn to play!!

However, psychologically there has been a huge shift in peoples minds. You can see this from all the BB's etc. The downtrend is at an end, as I feel that unless there is a seismic event, we will not see lower lows. The speech by Greenspan last night, where he hinted that he was still being aggressive re. rate cuts, will help to underpin peoples opinions regarding further direction, that the "Fed is on their side".

So Riz, as I've been saying awhile, I agreee the bears are finished in the long term. Rise and fall is the state of play for the midterm. We have seen the lower targets, we are still defining the upper (for the Naz, will it be 2300, 2600? Figures bandied around by people who don't know themselves). What is true is that such a range allows excellent terms to make short term profits. I will also be buying the dips in companies of value, fully aware of price goals, and selling t that level, until we breakout.......

Mark
 

Riz

Experienced member
Well it's still buy on dips, hope everyone here is making the best out of it...once more we get a setback and the US investors considered it as a buying opportunity...

Riz
 
it was also interesting to note that the following indices:

ft350 general retail
ft350 electricity
ft350 engineering and machinery

all made new highs yesterday.

Small cap and fledgling indices are poised at key resistance levels and breaking through.

My claws have turned to hooves and I have an increasing tendency to go moo!.
 

Riz

Experienced member
DOW 11090.74 20.50 +0.19%
DOW Fut 11161.00 3.00 +0.07%

NASDAQ 2264.00 46.27 +2.09%
NASD Fut 2007.00 29.00 +1.46%

S&P 500 1276.96 6.93 +0.55%
S&P Fut 1289.00 4.8 +0.34%

30 YR Bond 5.67 % 0.02 +0.35%
10 YR Bond 5.28 % 0.01 +0.19%

and Intel stands by estimates....

Hope you haven't neglected buying on dips...well I haven't :)

Well good luck for tomorrow

Riz
 

Riz

Experienced member
We got another upday in US..
Dow up +68 to 10,715.43 after rising as much as 112 points, Nasdaq +27 to 2,058 rising for for a third straight session...

After hesitating due to PW session, US investors again started looking beyond the latest round of sales and profit warnings...with the help of economic data offering some optimism. "The government said the number of Americans filing for jobless benefits fell sharply last week. And a survey of business conditions by the Philadelphia Federal Reserve showed that regional manufacturing contracted at a smaller rate in June and came in ahead of forecasts..." and believing that "lower interest rates can stem the declining corporate profits that have hammered stocks this year..."

"Positive earnings reports combined with an absence of negative ones could be enough to get the market going," said Jeffrey Benton, NYSE trader at LaBranche & Co., (CNNfn)

Once again it looks like we've seen the end of the bear market, but we haven't seen the start of a bullish trend...

Maybe a range trading period before that starts, but I don't think we're going to test previous lows...

That's for the US of course, UK seems to be taking things differently, US goes up we go flat waiting to see if the gains are sustained..US go down we go down twice as much beating drums of US recession...

Ever since the rally in April, UK not responding US accordingly...it follows -ve but objects +ve developments...US investors started to look beyond the 3rd quarter long time ago, UK investors not looking at anything but the first 2 quarters, therefore staying away from the market leaving it to traders giving the shorters the upper hand...they've got carried away so much that no share prices can consolidate; take BLM for example, around 40 still the focus of UK shorters, how can the price consolidate on this sentiment...

Looks like only a sustained US uptrend can bring UK investors back to the market and stop the shorters hammering any share prices they get their hands on...

This of course will cause strong upward share price movements..when will that start not clear yet

As for me I am still chasing shares hammered down by UK shorters and waiting for them to cover their positions in panic, so buy on dips still the name of the game...

Riz
 
more evidence from the sunday times?

Tech shares are doomed, warn experts


Robert Winnett








THE technology sector is dead and only a handful of companies will survive.

The drastic warning was issued last week by some of the world's biggest investment banks. Private investors are therefore urged to act quickly to mitigate any further losses.

People who are prepared to take a risk and buy shares now in the handful of firms tipped to succeed could make big profits.

Tens of thousands of small investors hold technology shares and technology funds are among the most popular Isas.

Technology shares have fallen sharply since March 2000 - some are down more than 90%. The Techmark index has fallen 48.1% from its peak and America's Nasdaq market is down 59.2%.

Although technology shares have climbed slightly over the past month, further falls are imminent and some investors could be left with nothing. Therefore, now may be a good time to sell to take advantage of the recent rises.

Khuram Chaudhry, a stock-market strategist at Merrill Lynch, said: "I think it is fair to say that there will only be a handful of technology firms in a few years. You will see a big clean-up of the industry as companies go bust."

Steve Russell, strategist at HSBC investment bank, said: "A lot of these businesses are real basket cases. Many will not survive beyond next year. I believe that the sector will take a decade to recover."

The three companies tipped by Merrill Lynch to survive the storm and ultimately become the big winners are Vodafone, the mobile phone firm; Logica, the software company; and ARM Holdings which designs microchips. HSBC also tips Vodafone and Logica together with Spirent, a telecoms equipment maker, and Sage which makes accounting software.

Shares in these firms could soar when the economy recovers. They should then continue rising and prove good long-term investments.

According to a study carried out by Josef Lakonishok, an economist at the University of Illinois, the growth in profits at surviving technology firms - which usually determines the rise in the share price - will average about 6% a year in future.

This is about the same as for any other type of firm and is far lower than the big rises seen over the past few years.

However, the outlook for most technology firms is bleak. They are predicted to go bankrupt over the next few years or be bought at rock-bottom prices by the handful of solid, successful players left in the sector. Many experts previously predicted that internet firms - the so-called dotcoms - selling online products and services directly to consumers would bear the brunt of the crash in technology shares. These businesses were widely expected to go bust, while other companies manufacturing or designing computer hardware and software would thrive in the long term.

However, the scope of the technology meltdown now appears to be much wider. Firms such as Baltimore Technologies and Psion, which were both briefly in the FTSE 100 index, together with Redstone Telecom and Autonomy could now face serious trouble.

Jeremy Batstone, head of research at NatWest Stockbrokers, said: "Even among the well-known technology firms all is not well. There are simply too many companies and many will have to go."

Chaudhry said: "Baltimore shares may look cheap but, it is only worth buying something that is going to be around in five years."

The country's biggest fund managers are also taking ultra-cautious decisions when investing in technology-related firms. John Ross, head of strategy at Fidelity, said: "We are now being highly selective and will invest only in profitable firms with proven track records. It's difficult to see technology shares recovering to the old highs for a very long time."

The news marks a blow for the thousands of investors who piled into technology funds at the beginning of last year. Although the fund managers should be able to move money into the better technology companies, they are still likely to take years to recover.

The technology meltdown provides a stark reminder of the danger of investing in fashionable stocks on the basis of past performance. Adverts for investment funds typically boast of several years of stellar returns. But in reality such growth is rarely repeated.
 

Riz

Experienced member
I wonder what they were saying 10 months or so ago when we started discussing the possibility of a TMT crash, hyping many shares they are ridiculing now no doubt....

Of course some tech shares are bound to go under, but I don't think I can agree with doomsters (hypers last year) that there are only a couple of tech companies that can survive...there are many over there with strong business perspectives and enough cash to take them to profitable times or already making profits....summer is stock picking time, this is what we need to concentrate our discussions on, just like last year a contrarian approach may pay out...

Riz
 

madasafish

Well-known member
Can't agree with any of you.
SP500/NAS and DJ formed double or treble tops. FTSE100 at critical support.
Last throw of bulls FOMC cut 0.5%..
Dow may rally to 10900, NAS will not top 2200

Then reality intervenes.. NAS to 1750, Dow 9500 and FTSE100 brelow 5300.

Mike
 
Hi madasafish,

the great think about the markets is that there are many indices, sectors and stocks.
There is no single point in time when everything turns...

from the point of view of indices I agree things still look difficiult for the ftse to break 6000 soon and the nasdaq may well test the april lows ( or go lower) as the telecoms and techs get more punishment.

Elsewhere there are signs of life that show the interest cuts are working. People have more money in their pocket with lower mortgage payments and consumer confidence is still buoyant. This is where I see a bullish case.
 
 
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