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

[Riz]

Dow Jones 10510.01 -12.80

NASDAQ 2068.38 +41.25


Merrill Lynch added to the buy on the dips spirit in US with a bullish call on the chip industry saying "We believe that the worst of the downturn is now behind us,"

But the Dow though was +ve most of the session ended the day down -12.80 as sellers got more vigorous in the cyclical, drug and retail sectors...still intact however after yesterday's upbeat rise...

This recent continuous +ve movements in US led some analysts pointing to signs suggesting stocks may be in the early stages of another bull market...

"The NYSE advance/decline line is in an uptrend and telling us that the average stock is higher now than it was at the end of last year. And that's taking place in the face of an earnings recession and in the face of heightened skepticism on the part of investors...There's evidence the Fed's stimulus is starting to work and the market is looking forward to better earnings in the fourth quarter and next year," said Clark Yingst, chief equity strategist at Joseph Gunnar

More interestingly Jay Suskind, director of trading at Ryan Beck & Co said that a positive is the fact the averages have spent time building a base over the past months. "The market is waiting for specific leaders to say they've turned the corner. And if the economy show signs it's picking up, people will [commit]..."

"Things have been so gloomy, (but) now many people sense the bottom is here and we'll start to drift upward," Michelle Clayman, chief information officer at New Amsterdam Partners (cnnfn)

The report on the manufacturing sector showed factory activity contracting for the 12th straight month, but this didn't cause all doom and gloom as it also lifted hopes for lower interest rates from a Federal Reserve...

Well as I said in my earlier posts, once again it's been proved that it's not one-way down street as most UK traders believed and caused the doom and gloom sentiment lasting for some time, this also seems to be changing since most of the rises in last few days are caused by short covering...

Things don't all look pink and gloomy, and it's too early to announce the start of a sustained long-term rally, but one sure thing is that the US has neither given up on their economy nor the stock market...thus not allowing their indices to retest their lows of the year

So it's still bounces both up and down but indicating the end of the bear market in the US, this certainly doesn't refer to a day or week but rather a period or process, it will proved to be right if the US indices don't make new lows...

Still for us the point is we should make the best use of these movements no matter what and in order to do this we need to keep an open mind and go with sentiment and momentum neither blindly short nor long...both can hurt a lot

Riz

 

[Riz]

Dow Jones 10551.18 +41.17
NASDAQ 2087.38 +19.00

Another +ve day in US markets...as Intel's saying that business may improve in the second half of the year made chips and computer stocks popular among investors...

June factory orders however caused concern and prevented indices to hold on to their intraday highs...

Tomorrow the Labor Department issues its reading on the job market in July, investors are hoping this will clear up some uncertainty...

Therefore its best to wait till tomorrow before making further comments...

Still Marty Cunningham's words (head of Nasdaq trading at Schwab Capital Markets) are worth noting, "These days you'll find one bull for every bear..."

As there was a time when you'd find a few bears for every bull...

So let's just see what comes up tomorrow...

Riz

 

[madasafish]

............FTSE100...DOW.... NAS (C)
26/6 ......5662 ....10472 .....2065
6/7........ 5479 ....10252..... 2004
20/7...... 5387 ....10576..... 2029
2/8.........5585.....10551......2087


Hmm US up slightly in a month, UK down.

Expect a September /October US fall as reality of Q4 expectations forecasts in earnings seasons meets the exaggerated hopes of a Q4 recovery...

UK panic 1/4% interest rate cuts will probably be followed by a ECB cut soon.

The world economy is slowing... and slowing down.. time for a big fall when reality intervenes...

 

[madasafish]

Well I hate to say it but

............FTSE100...DOW.... NAS (C)
26/6 ......5662 ....10472 .....2065
6/7........ 5479 ....10252..... 2004
20/7...... 5387 ....10576..... 2029
2/8.........5585.....10551......2087



30/8.......5333......9946.......1792

(as I write at 5.45pm)


Recovery? What recovery?
FTSE to 4500 or less
Dow to 9000 or less
NAS to 1400?

 

[ChartMan]

Time to bail out. Minor recovery on the dow , after it dropped below 9900...tomorrow will be a bloodbath

 

[madasafish]

Funnily enough I expect a small uptick on the DOW tomorrow

 

[titus-uk]

Bl###y hell!!!

Just returned from a week away.....couldn't have timed it better!! I am tempted to ask "what happened" - but I suspect it would take too long!!

Luckily, I trusted my instincts and so have not been part of this awful mess.....I hope no-one here was caught out, but I suspect that would be just wishful thinking.....

Well, off to catch up on the news...however, I am not in a rush to get back in - despite the fact that I have been warned by my self-select ISA that I have been to much in cash recently!!

All the best
Mark

 

[ChartMan]

I meant FTSE blood bath, and I think it's up on the dow tomorrow, having been overdone yet again...and then back to "as you were"

 

[shelman]

I have a sneaky feeling that history will repeat itself and we will see a large bounce similar to that after April 4.
Don't forget the coiled spring analogy. The difficult bit though is guessing at what level this will occur. Will the low of that date be the signal or are we looking at something worse or will the market anticipate and pre- empt it.
Get it right and make loads of dosh ... now where's that crystal ball

Steve

 

[madasafish]

The downward triangle

in the Dow has been broken and gives a count of 9100.


The FTSE one has not yet broken a close below 5250 for 3 days is required.. implying a fall to 4500 ish..

Just look at the charts over the past 12 months and the trends are quite clear .. which is why I was and am sceptical of all this recovery stuff... let alone reading decidedly negative economic news:-(

Where are the profit and sales UPGRADES ? Until they come....

 

[Riz]

Well both Nasdaq and Dow had a terrible month with the last week been the worst...only this thread is not about gloating when both indices go down, it's about following their directions both ways to help us with our trades...and ever since we started this they have had big bounces both up and down, so let's keep tracking and making comments on both directions...

Both indices are still well above their lows though, Dow's lowest close of the year is 9,389 on March 22, now at 9,949 it's still 560 points above its year low...in the mean time it rose over 11300 which makes around 2000 points above its year low...

the Nasdaq formed its year low at 1,638 on April 4...but it went up above 2300 from there which means a rise of 700 or so, now at 1805 it's still 167 above its year low...

Over all both indices are still well above year lows, the question now is still whether they will test and break year lows for a final capitulation or those levels will hold and mark the beginning of a recovery...well it's still there, isn't it?

In the mean time "The market applauded news that the manufacturing sector may be finally showing some signs of stability: the Chicago Purchasing Mangers Index rose to 43.5 in August, nicely above July's 40 reading. The new orders and employment sub-indexes also gained traction.

Additionally, factory orders rose 0.1 percent in July vs. expectations for a 0.4 percent decline, with the gains due primarily to an increase in defense contracts. Finally, the Michigan Consumer Sentiment Index fell to 91.5 in August from July's 92.4 level."

But "About 18 months ago, all news was good while now all news is bad. Just as the events of 18 months ago came to an end, so will the current spate of market numbing negative news," commented Tobias Levkovich, chief U.S. equity institutional strategist at Salomon Smith Barney... pointing out that technology accounts for less than 5 percent of GDP and 7 to 8 percent of industrial activity and reminded investors to not "view the world from this single focal point as Wall Street has become prone to do."

Only it is obvious that without positive corporate news starting to flow no one can see the start of a bullish long uptrend in the market...

Just as Donald Selkin, chief market strategist at Joseph Gunnar says, "We need some consistency, We need companies to start telling us that they see a bottom or get signs of a turnaround in the economy from the economic numbers. Until then, it will continue to be a struggle for investors..."

Charles Payne, head analyst at Wall Street Strategies however "is encouraged by the high level of investor negativity, which – though counterintuitive – often signals a bottom." "I still see reason to be optimistic," he said adding he's also heartened by the Federal Reserve's interest-rate cut campaign.

Still even analysts are nervous, "I'd say this is the most nervous summer I can remember," said Donald Luskin, CEO of the Luskin Report...

So no doubt investors will continue to struggle, but how about us traders? I'd say keep enjoying bounces both up and down, this is how it will carry on for some more time, it's not a one-way-down movement...actually since end of March end beginning of April when Dow and Nasdaq formed their year lows it's been more upbounces than down ones...so keep making use of them...

Riz

 

[y2k]

Volumes should begin to return and thus give us a clearer picture. Trend is still firmly downwards and it’s just a matter of time before the FTSE and DJI sink to new lows. At the moment European markets are ahead of the US, hence the less dramatic falls. I feel that in September FTSE will go sub 5000, as the world comes to terms with imminent recession looming after the doom and gloom that will follow from the forthcoming important earnings reports coming up.

Banks and retailers, many investors saving grace over the past 20 months, are beginning to look more and more vulnerable IMO.

 

[Riz]

Looks like David Schwartz and his indicator also suggest that we have already seen the bottom of the bear market of 2000-2001 or are currently close to it...the following makes interesting reading...

Riz



Source FT weekend MONEY p3.

David Schwartz has obviously not changed his mind and is continuing to defy the market doom and gloom merchants article follows.

Time to prepare for the upturn

Analysis of previous cycles suggest that the worst may soon be over

History suggests we are near the bottom of a bear market. Spotting the precise point when a bear market ends is quite easy after a reasonable passage of time. There is nothing like a long-term graph featuring a sharp drop followed by a step rally to peg a key reversal point.

But spotting such a point is difficult in real time when prices rocket up or down from day to day and fresh economic or political news changes emotions in a flash.

Fortunately, there is an interesting statistical link that has done a fine job of spotting the lowest points in UK bear markets for many decades. This link is not a precise market timing tool, but often flashes its buy signal near the start of a new bull run Given widespread conerns about currnt stock market conditions, the message being providd by this historical tool is relevant.

History teaches that, in the 20th century, the bottom of a UK bear market was typically associated with two events.

The current price of a broad index had to decline enough to drive it below its one year average. A drop of this magnitude is more challenging than one might guess at first blush. The FTSE 100 did not drop below its one year average until mid 2000, many months after our most recent bear market began.

Once the one year trend line was breached, a bull market signal flashed when a rally closed the gap between the current price and it's one year average. The bear market of 1998 serves as a useful example. By the end of September in that year, the FTSE 100 had fallen to 8% below its one year average. But the October rally closed that gap to minus 1%, signalling that a new bull run was under way.

History teaches that this indicator needs to be monitored just once at the end of each month. Some sophisticated investors will sniff at the thought that simple schoolboy calculations, mindlessly applied every four weeks with no consideration to current economic conditions, could spot the bottoms of bear markets. But the facts speak for themselves.

There have been 17 occasions sine the second world war when UK investors suffered a sharp downturn. A rally eventually narrowed the gap between the current price and the one year average. History shows that a new bull market began within a few months of that "gap closure" in 16 of those 17 occasions.

Remember that gap closures are not precise market timing signals. They typically flash within a few months, not a few days, of the actual markt bottom. Judgement is still required to pick the lowest point.

The strengths and weaknesses of gap analysis have been obvious in the past few months. Rcall that the FTSE 100 fell to the 5300 area in late March and was in the midst of a solid rally when the signal flashed at the end of April. Shares returned to the 5300 area in late July. Even so, if history is any guide, we have already seen the bottom of the bear market of 2000-2001 or are currently close to it.

David Schwartz is a market historian. For additional stock market trends, see www.schwartztrends.com

 

[Riz]

Alternatively you may prefer to read Jon D. Markman of MSN who says, One of the weird consequences of the stock market’s recent downturn is that it has encouraged people who can barely program their VCRs to try their hand at forecasting the economy.

And suggests the readers to have a look at what Lakshman Achuthan, managing director of the Economic Cycle Research Institute (ECRI) in New York says...

ECRI has developed the confidence to pinpoint turns in the economy and pound the table for the benefit of its clients, who are primarily large financial institutions and government agencies worldwide that pay as much as $50,000 per year for weekly reports.

Well take a look it makes most interesting reading regarding the bottom and turning point and the way the stock market anticipates it...

It's week end after all

Riz

http://moneycentral.msn.com/articles/invest/models/7041.asp?Printer

 

[madasafish]

Fascinating

I have live through and remeber the recessions of 73-4, 80-2 and 90-1 (I'm old and grizzled).

The reason why I am so negative is like Acuthan I recall what recoveries need. I'm not a statiistician nor economics modeller but an accountant with an interest in economics and a chartist to boot.


I can't see any signs of an economics upturn: true things may be getting worse less quickly in the US: but they are NOT getting better and as far as the world economy is concerned, just look at Japan.

As far as the UK and Europe is concerned the economic forecasts are still for 2% UK growth this year. That means an acceleration in Half 2 as half 1 was only about 0.7%.

Believe it? I don't.

My charts say the same things: as far as tech stocks are concerned I can see much more downside as capital spending on IT can always be delayed (I was an FD so know all about cutbacks in recessions



Great URLs - thanks I've bookmarked both..