UUP在一个很有意思的位置

RSI，down!
MACD，down!
today，close at 50MA！
The Gap on Nov 24 is a nature resistance.
50% Fib retreat target 25!
USO, tremendous volume today!

IBD的Follow-through定义(ZT Cobra)

IBD的Follow-through定义

有同学问IBD说Follow-through day confirmed rally啥的（http://www.hutong9.com/viewthread.php?tid=30236&page=1#pid313898），这里解释一下：



下面一段IBD的Follow Through Day的定义，供大家参考（懒得看得就看我加亮的部份就可以了），跟我的Major Accumulation Day看底部的方法有共通之处，不过不是一个概念。另外，有统计IBD的Follow-through day准确率并不高。俺以前有过讨论，有空俺找找。



Investor's Business Daily
All Major Bull Rallies Begin With A Follow-Through Day
Tuesday July 27, 7:00 pm ET
Jonah Keri


You hear it so much, it's almost become the naysayer's mantra: "You can't time the market."

Short and punchy? Sure. And also completely false.



The market's price-and-volume action gives clear signs of the market's direction. A follow-through day gives you the biggest of head starts -- timing the market's bottom.


A follow-through occurs at the earliest stages of a fledgling rally. After a significant market correction, the market will look to regain its footing. Any up day then counts as Day 1 of an attempted rally.



The next two sessions, Days 2 and 3, don't need to show much in the way of gains. As long as they don't undercut Day 1's low, the rally remains intact.



For a follow-through to occur, you want it to land between Day 4 and Day 7 of the attempted rally. On any one of those days, you're looking for one or more of the major indexes -- the Nasdaq, S&P 500 or Dow -- to rise 1.7% or more in higher volume than the previous day.



Though a follow-through in that span gives the strongest signal for a new rally, one that hits anywhere between Day 4 and Day 10 can work. Follow-throughs that occur after Day 10 yield lower success rates.



Though this method may seem esoteric at first, keep in mind it has decades of IBD research behind it.



To gear up for the next follow-through, study charts of past market bottoms. The Nasdaq flashed a follow-through in October 1998 which kicked off the final, furious stretch that carried stocks to huge gains.



Just remember: Not every follow-through triggers a huge, new bull market. But no raging bull has ever started without one.



After three years of harrowing losses, investors were starved for good news by the time March 2003 rolled around. On March 12 of that year, the Nasdaq fell to a low of 1253.21 before bouncing back for a 0.6% gain in swift volume (point 1). That was Day 1.



The Nasdaq roared ahead 4.8% in massive trade the next day (point 2). Exciting action? Sure. But you still wanted to wait for Day 4-7 to confirm the new rally.



On March 17, the follow-through hit on Day 4. The Nasdaq jumped 3.9% in sharply higher turnover (point 3). Volume was also above average. Though the index stumbled a bit on March 31 (point 4) and a few other times shortly after the follow-through, it never approached its prior lows. The Nasdaq would go on to gain 72% to its January 2004 peak.

几点炒股感悟

炒股，我不是大牛，但是可以说点感受。

1.牛市的时候，随便买都赚钱。

2.熊市的时候，随便short不一定赚钱，因为这个社会和政府总是会想办法去刺激市场
。虽然过几天它也许又会跌下来，但那时那刻，一天涨1000点的时候，任你小熊你100
个胆子，你也会怕的要命。

3.要向大傻蛋学习，大家都能赚钱的时候，出来猛赚一把。大部分人亏钱的时候，抱着
cash待一边看着。

4.天天炒的话，结果就会是今天赚的，明天又亏出去了。我以前炒的挺好的，专门炒以
后，反而进进出出，没赚到钱。

5.没必要羡慕别人赚了多少提了多少灯，一个月赚个800点，一年就是9600点，100%的
return。

具体到现在的形势，我上周末都说过了。就是一个buy in dip，first target 50MA
9250。
http://www.mitbbs.com/article_t/TA/849.html

具体到后天和下周一，我的建议就是继续等，短期回调很有可能，spx 840和spx 825分
别是两个可以买入的点。

Still Bullish

发信人: yyber (散户+游医), 信区: TA
标 题: 说一下我在这个位置bullish的理由
发信站: BBS 未名空间站 (Sun Nov 23 21:14:57 2008)

1. DOW and SPX 都探测2002年底部

2. Dow的fib retract点位非常有意思。看图。

3. 从5月19号开始，到11-21，很典型的5波。其中第四波的8500-1000平台整理更是典
型。

4. VIX现在double top，RSI negative divergence。

5. It is already the worst year in history，worse than 1929.看图。
Seasonally，it favors bulls here。

6. Dollar很有意思，现在是一个三角，不过RSI和MACD都指向向下突破。石油和
commodity板块占spx比重最大。

7. SPX日线MACD positive divergence。CPC目前五日均值1.18，very high level。

A few of charts

Plan your trade, trade your

You might have to cut loss, but that is your plan.
Don't be fear or be greed.
===========================================================
发信人: yyber (散户+游医), 信区: Stock
标 题: Re: buy today, get rich
发信站: BBS 未名空间站 (Fri Nov 21 13:19:44 2008)

这帮人真是怕了。2002年的底，规划了好久，说到了这个点就怎样怎样的。真到了他们
都软了。不得不佩服人的心理。

Bond markets react earlier these two days

Yesterday, green day for SPX but also for TLT.

Today, TLT gap up and close with a white candle, SPX open flat and down all day.

bonder traders are indeed smart than stock traders

bond 早上首先就低开了。



再看1：00PM的时候，bond迅速跳了1%，DIA还没反应过来呢。

再转NL的帖子

(1)先把重要的日子跳出来：

1)12月初，即12月2~5日非常关键；

2)其它要严重关切的日子是11月19~21日；11月11~13日。


(2)关键点出来以后，判断可能的发展方式：

1)第一种可能：




说明：

A）其中有两种可能即下周11月11~13日大盘仍有可能会先下挫一下，随后反弹。

B）12月初的低点可能会低于10月10日的低点，也可能不会，这个问题并不重要，重要的是如果12月初是低点，那么就完全和5月11日的预测吻合，后续几个月大盘会有较长时间，较大幅度的反弹。

C）我个人认为这一种可能发生的概率最大。



2)第二种可能：

说明：

A）和Scenario1的区别在于，11月21日以后，大盘仍有可能会继续上升，至12月初；

B）如果这种情况发生，要特别小心12月后可能会有较大的下跌。

C）我个人认为这种可能性要小于Scenario 1。



3)第三种可能：

说明：

A）大盘下周初继续升，但是在11~13日有可能会掉头向下，如果发生，要小心，可能跌至19~21日。

B）我个人认为Scenario 3发生的概率比较小。



三. 具体的注意事项



1） 大盘现在处于趋势不很明朗的状态。

很多人认为大势任然是跌势，对此我无法完全赞同。如果你检查周线和月线图，可以清楚地发现10月大盘的走势是“崩盘”走法。历史上凡是“崩盘”之后，大盘都有剧烈的反弹，有的情况下“崩盘”代表见底，如87年，97年。



2）大盘上下波动，日线图上预测的难度很大。

为什么我会给出几种不同的走法？我现在能判断的是可能的“时间阻力点”，对于究竟是高点还是低点不能肯定。这和8月份的情况相似，如上面所说，我原来预测8月22日是高点，实际上8月22日成了8月11日和9月2日的中点。道理类似，即使能判断出“时间阻力点”，不代表能确定高低点，在现在这种波动较大的情况下，图形有时会被“扭曲”。



3）具体操作：

在“时间阻力点”附近可以考虑暂时减仓，观察是否会出现“Reversal Signal”， 由市场帮助自己做出判断，这样比较保险。或者，在时间阻力点附近，将止损点移动到比较近的位置。

综合上面几种可能的发展趋势，中线来看，做多较好。

Four advise from Alan Farley

I have four pieces of cautionary advice for my at-home brethren. Listen up, because it’s no longer a question of whether you want to take real money out of the market, or just add a few bucks to the weekly shopping budget. These remedial steps must be taken if you want to survive long enough to take advantage of the real opportunity.

1. Wait for the Market Volatility Index (VIX) to drop below 40 and stay there for a week. Massive price swings require equally massive stop losses, which rarely justify the intended positions. Your only alternative is to stand aside and do nothing, no matter how much it hurts to watch others playing those big rallies and selloffs.
2. Forget overnight positions until the index futures stop gapping 2% or more every morning. These price jolts are great news when you’re on the right side of the trade, but total devastation if you’re on the wrong side. And guess what? You’re not smart enough to predict overnight direction from day to day. Neither am I.
3. End your love affair with popular stocks that made you money during the last bull market. In November 2008, these are the issues that will trigger the most painful and unexpected reversals, which happen right after you’re absolutely convinced your position is the right play. The bottom line: They see you coming, sucker.
4. Get control of the time element in your market strategy. You’re getting killed because you have no patience and forgot how to sit on your hands when your trading edge isn’t in play. Realistically, it could be months before the market works for you again. Would you rather wait it out and survive, or stay busy and get crushed?

I still consider buy on dip

Today's low is last Thursday's low. Will sell if it breaks.

Currently I have: QQQQ, WLT, FCX,DRYS,MEDX.

Sold STP and cut MU today.

Tomorrow keep watch Finance sector: GS,BAC,COF and MA.

传几篇MIT的好文

发信人: slimcan (周易炒股好), 信区: Stock
标 题: 给青蛙特别是见了或者要见外婆的青蛙
发信站: BBS 未名空间站 (Sat Oct 25 01:12:39 2008), 转信

最近股市动荡，不少青蛙损失惨重。很多人面临见外婆的局面。应该再次重申，这实际
上是一件好事。对于投身赌场的新手来说，我们的正确态度应该能劝阻就劝阻。统计表
明，10个里面只有一个人才会赚到钱。虽然大家都很自信，但是没有任何理由表明你就
不是那个赔钱的。

花几天时间，好好总结一下，其实，这是宝贵的财富。如果只是要保住财政不被通膨吃
掉，没有必要到这里来的。投资版其实有很好讨论。版主虽然老不正经，但是还有有货
的。我在chinastock上也发了两篇帖子，希望对大家有帮助。如果决定继续在股市这条
艰难的路上走下去，下面有几条体会希望能有帮助。

第一是要慢下来，耐心等待机会。很多新手不理解。其实班上以前有位朋友说的很好。
股价就像跳舞一样，是按照节奏走的。火候不到，节奏没踩上点就盲目进入，很可能的
结果是两面挨抽。而从投资角度，现在的筹码是不是相当的便宜了. 而新手的最大问题
就是耐不住寂寞，狠不得天天有钱赚。我们看到昨天有位朋友把最后的火种也轻易熄灭
了。这实在是很可惜的事情。

第二点是不要预测。把注意力放在已经发生的事情上，这才是在股市获利的关键。这话
不是我说的，是奥尼尔说的。我是花了一年时间才理解到这个道理。我们看到班上不好
的现象是就是天天预测。预测明天涨还是跌。预测对了就是大牛。一般的人就天天画线
，天天判断。这是在很可笑的事情。正确做法是每天扫描一遍图。然后问自己是不是一
眼就判断出趋势。如果不能一眼就看出来，OK,那么就是没有趋势。耐心等明天，后天
，总有一天会有一个明显的趋势出现。记住，勤奋并不能给你带来利润。过分猜测只会
把你处于危险的位置。

再一点是保守，没有把握不出手，杜绝交易的随意性。养成写好交易计划在下单的习惯
===================================================================================

Unemploy data shows it is indeed worse than 2002

Sell on news

Around Election (zt)

Since the inception of the futures market, there has never been a time when we've seen a gap up on election day greater than +0.5%, so obviously we're seeing yet another unprecedented action here.



There were two times the futures gapped up less than 0.5%, in 1984 and 1988. The market went just about straight down for six days afterward both times, losing 3.2% in 1984 and 4.0% in 1988. Interestingly, buying after that short-term drop and holding for the intermediate-term would have worked out fabulously (gaining about +11% over three months both times).

ignor bad news

Stocks surge as investors anticipate yearend rally
Tuesday November 4, 11:37 pm ET
By Sara Lepro and Tim Paradis, AP Business Writers
Stocks surge as investors anticipate yearend rally, appear steady after Obama win

NEW YORK (AP) -- Investors believing that Wall Street is on the verge of a yearend rally piled into the market Tuesday, brushing off more weak economic data while they scarfed up stocks and propelled the Dow Jones industrials up 300 points to its highest close in four weeks. Stocks appeared set to hold on to their gains following word that Barack Obama had been elected president.

It was the biggest Election Day rally ever for the Dow, which rose 3.28 percent and topped the 1.2 percent gain seen in 1984 when Ronald Reagan defeated Walter Mondale. Prior to 1980, the market was closed on Election Day.

Broader market indexes were also up more than 3 percent Tuesday.

After news of Obama's victory, futures trading indicated a slightly firmer opening for stocks on Wednesday. Dow futures rose 15, or 0.2 percent, to 9,602. Standard & Poor's 500 index futures rose about a point to 1,004, while Nasdaq 100 index futures rose about 2 points to 1,383.

Some analysts said the market rose Tuesday on relief that the presidential election was about to be decided. But others said investors were anticipating a year-end recovery from Wall Street's huge sell-off and bought to be sure they didn't miss out on its start.

"I seriously doubt it has much to do with the election, other than we're all looking forward to it being over," said independent investment strategist Edward Yardeni.

The fact that Wall Street is in the final stretch of a tough year is probably lifting stocks more than the elections, he said. "It's almost been a classic textbook crash in September and October followed by a year-end rally."

Steven Goldman, chief market strategist at Weeden & Co., said, "historically, we were at the most oversold levels since October 1974."

"We've come to levels that would tend to discount a lot of bad news," he said.

There's still a feeling the market might fall back and retest the trading lows reached Oct. 10 before entering a true bull market. But it's possible that the retrenchment won't happen until 2009 -- in similar oversold markets in 1974 and 2002, Goldman said, the return to the lows of the bear market did not happen until two months later.

Analysts predict Obama's policies will likely be guided by the weak economy and the recent flood of government support designed to keep the global financial system from collapsing.

The market again looked past a downbeat economic report, as it did on Monday, when investors calmly received a report of a big slowdown in manufacturing before the Dow finished essentially flat.

The Commerce Department said Tuesday that factory orders fell 2.5 percent in September from August, much worse than the 0.7 percent drop analysts predicted. But investors generally expect data from September and October to be extremely weak, as credit markets began to seize up in mid-September. Analysts believe much of the bad news is already factored into stock prices; last week saw the Dow rise 11.3 percent -- its best weekly gain in 34 years.

"The risk of a depression is off the table," said Ben Halliburton, chief investment officer of Tradition Capital Management.

Still, some analysts say the market's gains might not be sustainable. Though the uncertainty surrounding the election will be cleared, they said there are still many economic challenges, and some of the market volatility seen in October, in the weeks and months ahead.

"In the next couple of days, people are going to focus on the fact that we still have these issues," said Bernie McGinn, chief executive of McGinn Investment Management, referring to the worsening economy. "They aren't resolved."

The Dow rose 305.45, or 3.28 percent, to 9,625.28. The Dow last closed above 9,500 on Oct. 6, when it finished at 9,955.50.

The broader indexes also rose. The Standard & Poor's 500 index gained 39.45, or 4.08 percent, to 1,005.75, its first close over the 1,000 mark since Oct. 13. In the past six sessions, the S&P 500 has rallied 18.3 percent. That includes a 10.8 percent jump that occurred Oct. 28 after last month's steep selloff.

The Nasdaq composite index rose 53.79, or 3.12 percent, to 1,780.12, its sixth straight advance and its longest winning streak of the year.

The Russell 2000 index of smaller companies rose 7.47, or 1.39 percent, to 545.97.

Advancing issues outnumbered decliners by about 4 to 1 on the New York Stock Exchange, where consolidated volume came to 5.45 billion shares, compared with 4.36 billion shares traded Monday.

Energy and industrial stocks led the market higher, while health care names, often a defensive investment, showed more modest advances. Exxon Mobil Corp. rose 4.3 percent, aluminum producer Alcoa Inc. rose 5 percent and Johnson & Johnson advanced 1.2 percent.

There were other signs of the market's growing confidence. Wall Street's fear gauge, the Chicago Board Options Exchange Volatility Index, known as the VIX, fell to 47.73, its lowest close since Oct. 3. The VIX normally trades below 30 and tracks options activity for the companies that make up the S&P 500; it closed as high as 80.06, on Oct. 27.

Investors have overlooked a spate of bad economic data recently, including the report Monday from the Institute for Supply Management that revealed the worst monthly contraction in manufacturing activity. Additionally, automakers reported the lowest level of U.S. car sales in more than 17 years. The market closed narrowly mixed in light trading Monday, with the Dow making just a single-digit point decline -- something that has become unheard of in recent months in the midst of daily several hundred point swings.

"The economic activity in October is obviously very poor," said Halliburton, "and is going to have some very bad numbers reported, and I think that is going to continue in the fourth quarter." As such, investors have begun dipping their toes back in to the market to take advantage of some of the buying opportunities created by the violent swings last month.

The disruptions in the credit markets were at the heart of the recent market volatility, as the evaporation in lending made it difficult for businesses and consumers to get loans, and sparked widespread panic about the economy's ability to avoid a severe downturn. While lending has eased somewhat, analysts contend that the state of the credit markets will remain one of the biggest land mines in the weeks ahead.

The key bank-to-bank lending rate known as Libor fell to 2.71 percent from Monday's rate of 2.86 percent for three-month dollar loans. A fall in the London Interbank Offered Rate indicates that banks are more willing to lend to one another; a month ago, when the credit markets were paralyzed by banks' fear that they wouldn't be repaid on loans, it stood at 4.33 percent.

Investors' demand for short-term government debt remained high, however, a sign that they are still cautious and willing to take a very small return on their investments in exchange for security. The yield on the three-month Treasury bill, seen as one of the safest assets around, stood flat at 0.47 percent from late Monday. A low yield indicates high demand.

The yield on the benchmark 10-year Treasury note fell to 3.73 percent from 3.92 percent late Monday.

The dollar fell against most other major currencies, while gold prices rose.

Light, sweet crude jumped $6.62 to settle at $70.53 a barrel on the New York Mercantile Exchange, a reaction to the slide in the dollar.

Overseas, Japan's Nikkei index soared 6.27 percent, Hong Kong's Hang Seng Index edged up 0.28 percent. Britain's FTSE 100 rose 4.42 percent, Germany's DAX index jumped 5.00 percent, and France's CAC-40 advanced 4.62 percent.

学习NL的两张图

炒股炒的是心态！( zt顺其自然)

<>序：股市如水，变化无常，而赚钱有方。投资非赌，将炒为赌者，久之必输。炒者，火候也，时机也；火候不对，若炒菜，则或生或糊无以下口；若炒股，则损兵折将苦果难尝。拼拼杀杀，杀杀拼拼，斑斑血泪，血泪斑斑，方悟赚钱之道，只有一方：低进高出，高出低进，如此而已！阴阳相生而相克；跌到极低，阴尽而阳生；涨至极高，阳老则阴胜；物极必反，势所使然。若层峦叠嶂，若深涧幽谷，颠倒翻覆，妙用无穷。像那熊熊牛牛，空空多多，追涨杀跌，杀跌追涨，殚精竭虑，玩那针尖削铁的游戏，长赚久赢者，鲜之有也。炒股所恃者，实力也。偕大资本之实力者，所谓庄家也。庄家者，兴风作浪，翻手云雨，压低拉高，拉高压低，多来杀多，空来杀空，真真假假，假假真真，虚虚实实，实实虚虚。他有计划知实情，随心所欲；你无方略被玩弄，处处陷阱！故绝大多数股民，其亏钱也必；宰的就是你，赚你没商量！而于小资本之股民者，所恃者，唯智慧也。智慧者何？有三也。首曰资金管理，风险控制。每只进股当适量。何谓适量？睡得安稳，错亦无碍也。但有资本在手，就可重整旗鼓，再败再战，总有出头之日。最误人者，重仓出击，犹嫌不足，赌徒心理，借钱炒股，其取败也速，破产之捷径也。不知大千股海，潮起潮落，机会无尽，来日方长，何必在一次一时！二曰策略得当，只做自己能理解的。武当少林，无谓短长。你玩你的，我玩我的。只要赚钱，就是好股！又不是觅夫人寻相公，谁管他绩优或绩差，股小又股大，古狗苹果蓬皮查，消息满天好还差！如你见一群狮子老虎在打架，我不信谁会去挽袖掳拳瞎参乎，何不让那些大鳄巨鲨自搏杀，任我等逍遥自在赚易钱，沽酒钓鱼做神仙。三曰技术，勤练自精。譬如剑术，一招一式，比比划划，功到自然成，把您那熟悉的类型搞精熟，就想不赚钱他也难。之后再慢慢扩展地盘。所以说股市如战场，要深挖洞(多钻研)、广积粮(积经验)、高筑墙(防风险)、缓称王(稳赚赚稳)，人生原来都一样！日积月累，自然精熟，经验老道，方能达到“稳、准、快、狠”，手不乱动，大脑先行，以至于心手合一的境界。炒股最忌者蠢贪二字。蠢者，术不精也，眼不明也，心无定也，手乱动也！(有几个炒股生涯没骂过自己猪头的，请举手！)贪者，明明到顶，不肯撒手；明明快马难追，仍然大举抢进；明明跌跌不休，仍然心存侥幸。何也？往往因蠢而生贪，因贪而更蠢，无以自拔。究其原因，一乃经验不足，不懂技术，不识水性。认真学习，不断练习，时日一长，自然提高。二乃心态不正，其最突出者，以炒股为赌博，只望一夜暴富，何曾付出辛苦！不知凡任何事，要想成功，都得努力，都得专业一点。另一不正心态，乃凡稍有挫折，即灰心丧气，颓萎不知所措，岂不知神仙也是凡人做，只是凡人心不坚！当再鼓精气，继续努力。又则忍不得，一点耐心也无；凡股价稍稍偏离，不去仔细分析，即慌慌逃出；本来好股，只赚小钱，甚至亏损。等股价再升，又悔之莫及，匆忙又进，反而被套；这时他倒又不止损，却去固守，幻想反弹。如此反反复复，一年到头，不亏才怪，白忙白了少年头。凡此种种，不一而足，皆成魔障，阻人成功。故更上层楼，大智慧者，则曰心态，曰中庸，曰不贪婪；曰忍，曰顺其自然，顺势而为；曰股票非股非非股，曰心中无股，曰非股票动，乃尔心动；曰人生，曰哲理，曰祸福相倚；曰月白风清，花是红的叶是绿的，曰修心养性。。。如此者再三，而仙道成也。仙者，不贪也，无争也，胜人不如超越自我也；恬淡者，心态也，不强求也，适可而止也，得失一笑，得是经验，失是学习也。歌曰：老君八卦炉中炼，阴阳火候都齐全；烟熏火燎成金睛，点石变金一指仙。石者，何也？垃圾也，彼弃之者，吾取之也；变废为宝，彼求之者，吾与之也，赶快拿去！正所谓，两只投资眼，一片济人心；悟者自悟，不悟者不悟。悟了的，慧眼独具石变金，日日清闲自在；不悟的，盲目从众金当砖，时时苦眉愁脸。咦！股海无边，性定是岸。性定则心明，心明则智慧生，智慧生则股股像如歌之行板，笔笔是精彩的华章。正所谓会的不忙，忙的不会；股市无常心有常，赚钱有方胜无方！此为之序。贻笑大方，权为一哂。



“难！难！难！道最玄，莫把金言作等闲。不遇至人传妙诀，空言口困舌头干！”

一个简单的系统（转帖BP）

Two charts

Overly Strong Reactions Are Often Overreactions( zt Quantifiable Edges)

If you left 10 minutes early on Wednesday you missed a lot. The S&P lost over 3% from 3:50 to 4pm and was down over 4% before bouncing in the last minute. I looked back over the last 25 years to find other times the market dropped 3% or more in the last 10 minutes of the day. This was the 1st. Lowering the requirement to 2% unveiled 3 instances. They are listed below along with the next day’s performance:

10/19/87 – S&P rose 5.23% the next day.
9/29/08 – S&P rose 5.27% the next day.
10/27/08 – S&P rose 10.79% the next day.

This is too small a sample size to use for analysis, but a nice illustration of a simple adage. An overly strong reaction is often an overreaction.

consumer confidence and house price

Histroy

Trend is number one

Page 251 in Murphy

在刚刚破位形成趋势的初期，尤其不要被这些超买炒卖所迷惑。

Bear (zt Brain)

OK, the market’s headed south. What next? You need to be able to balance your natural sense of hope with the reality of what a chart is objectively telling you and learn to respect the destructive power a downtrend can exert on your equity if you choose to fight the trend. In addition, if you are uncomfortable with selling short, or opposed to it for some personal reason, you will be at a severe disadvantage during a bear market.
Picking bottoms is the hardest job on Wall Street, and frankly, nobody rings a bell at the market bottom. Yet for some reason there seems to be an attraction to declining prices among most participants. Natural human optimism and learned behavior of hunting for bargains in a retail environment provides a “slope of hope” along which stage four stocks decline, crushing the dreams and finances of bewildered longs in its path.
We have all experienced the helpless feeling of searching every news source for a shred of bullishness to justify holding onto a stock in the face of declining prices. This fruitless action only delays the inevitable recognition of truth. It does not delay your losses. It is said that “it is better to be in cash wishing you were in a stock than it is to be in a stock and wishing you were in cash.” This is perhaps never truer than the point at which you are “foraging” for a reason to continue on a course that offers little promise.

For long participants, the stage 4 decline is marked by two brands of fear:

-Fear that the stock’s descent will continue to wipe out their equity (a good fear to have as it may portend a proper action into cash).
-Fear of feeling stupid for selling “the loser” at a point just before the stock turns higher (a bad fear to have). Do not fall prey to the short-term pauses in a primary downtrend; the short term action will typically be resolved in the direction of the larger, more powerful trend of the longer timeframe.

For short sellers, greed plays a role in a declining stock as they salivate at the increasing equity of their account balances. Short sellers are not immune to fear in a primary downtrend. Short term rallies can come suddenly and quickly in a downtrend and the fear of evaporating profits motivates short sellers to buy. There seems to be a general mistrust of the shorting process and, as such, they are often very quick to cover their positions at the very first sign of any short-term strength.

I tend to be very quick to cover short positions because some of the strongest rallies can occur in a downtrend. Holding a short in the face of such an advance can lead to quick and dramatic losses. I would rather cover my position with a profit and stand aside during short-term, and often violent, rallies and then re-enter the position as the stock begins to weaken again. It is my experience that short-term counter trend moves in a primary downtrend can occur so suddenly that trading short is more difficult than long.

Because of the greater volatility in a bear market, shorts generally should be traded more aggressively than longs would be in a bullish environment. When a stock experiences the short-term declines that a short seller targets, there can be terrific opportunities for profits as bids thin out from market makers unwilling to take meaningful inventory and from fearful long holders liquidating in a panic mode.

For a stock in a confirmed downtrend, the rallies are generally feeble, low-volume moves that quickly fail as more frustrated buyers come to the realization that a bottom has not been found. A weak stock is similar to a boxer who continues to stand up to his opponent after repeatedly getting knocked down. The stubborn fighter will ignore the chant of his trainer to “stay down,” much the same as buyers keep coming back to the stock hoping to catch the bottom. These participants ignore the shouts of the market to stay away. Yes, the market does “shout” to us, and the screams are represented by the declining moving averages. When a stock experiences a short-term rally, it finds a renewed source of supply at a level which is lower than the last time the sellers took control; this action is represented by the lower highs on the chart. And, of course, a lower low is created as long holders sell out in disgust as they realize they were unable to correctly make their purchases at “the low.” See how interconnected this all is?

A "PUT" on the US Government: Chart One of Three Important Charts (USB)

Chart is actually in the previous post.

October 19, 2008
by J.D. Rosendahl


There are three important charts we should all keep our eyes on, and the first of those three is the 30 Year UST Bond. Why? It's on the verge of a large correction!

The chart above is the weekly chart of the 30 Year UST Bond over the past 10 years. This chart reflects 2 bearish indicators. First, we have a failed break out to the upside during the 3rd quarter of 2008, and a quick reversal back under resistance. Secondly, we have bearish divergences on both the MACD and RSI, and both have rolled over heading downward.

Above is the monthly chart of the 30 Year UST Bond over 28 years.

1.

Most secular bull markets in any asset usually have a dominant trend line that is obvious to all to see. The 30 Year UST Bond market definitely has a strong trend line for the past 28 years.
2.

Notice how the peaks in MACD and RSI have declined on each consecutive new price high in the bond market. That's classic bearish divergence on a grand scale over 28 years. That is a bearish sign for the price of the long bond.
3.

These three lines represent the Fibonacci retracement levels. Price levels we should expect to see before the correction in the long bond is over.

Technical Summary: The bond market is displaying some early warning signs of a correction coming in the long bond price. A possible false break out, bearish divergences in the MACD and RSI, and the MACD on the monthly chart is about to turn down and cross over. The signs are early warning signs simply because the massive trend line has yet to be broken.

POSSIBLE CAUSES FOR DECLINING BOND PRICES

1.

The first possible reason bond prices might fall is from foreign governments selling their US Treasury Bond positions. Some foreign Governments have very large UST Bond portfolios, and they could sell these assets to diversify their reserve holdings, or sell on a lack of faith in the US in general, or because they might need to support their own problems at home and want to raise liquidity.
2.

The US Gov't. That's right, we have serious problems here at home, and the federal government could issue 30 year bonds to fund the money they are going to pump into our system in an attempt to hold up our economy. That new potential supply would adversely affect bond prices.
3.

Lastly, in the recent financial damage, raising liquidity is becoming important, and hedge funds, mutual funds, pension plans, etc. could sell UST bonds to raise liquidity, or sell UST Bonds to take gains that they can net off stock losses. Lastly, some investment houses might short the UST bond and buy government backed toxic paper as a pair's trade.

Summary: To cause a correction in bond prices of a large size as I expect, bonds in volume will need to be sold while demand diminishes. It's been my experience that chart/price patterns usually lead the news, so I expect the correction in bonds to start before we find out why. I expect the smart money is selling now before we break the massive trend line, and when the price of the long bond breaks below that trend line that will trigger technical selling, and as we approach the 200 month moving average and below we will see panic selling.

FINANCIAL IMPLICATIONS

1.

The first implication of declining bond prices is higher long rates. Bonds and rates have an inverse relationship. As bond prices come down the yields on those bonds will go higher.
2.

As long rates go higher, the cost to borrow money especially on homes will go higher. A great deal of the mortgage market rates are set off the 5 and 10 year UST bond yields, which will trend higher with the 30 year bond yields.
3.

As mortgage rates go higher the cost of home ownership related to financing will rise, and thus should place additional downward pressure on real estate values. Just what we need now!

OTHER POSSIBLE IMPLICATIONS

The UST bond market is so large, and the popping of this bubble has possible global implications, which include the possible start of global protectionism between countries, the loss or diminish of the US as the premier global leader or financial power, and a possible rejection of the Western lifestyle in general.

INVESTMENT OPPORTUNITY

Lastly, I look at a lot of charts, and I feel this chart provides an exciting investment opportunity, which is the short of the UST long bond or the purchase of an inverse long bond fund. I currently like this trade more than any other I see, because the bond market has limited upside of $5-10 in my mind and possible downside of $10-30. That represents a 2:1 and up to 6:1 reward to risk opportunity for your investment dollar.

Currently, the bond market sits right at its 50 month moving average, and a breach of that area should send the bond market down to again test its massive trend line. A break below that is the confirmation that the trend is over and a larger correction is underway. Shortly there after the bond market should test it's 200 moving average, which on the bond market is about 101, or a about a 10 percent correction from current levels. If we correct down to the Fibonacci levels the correction will 2-3 times that, and provide very strong returns.

So, if you ever wanted to own a PUT on the U.S. Government this is your opportunity!!!

Some good charts from BP

Warren Buffett: "Buy American. I am."

Warren Buffett (The New York Times): "Buy American. I am."
"The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

"So ... I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100% in United States equities. "Why?

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

"Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

"A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30%. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price.

"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

"You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

"Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: 'I skate to where the puck is going to be, not to where it has been.'

"I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: 'Put your mouth where your money was.' Today my money and my mouth both say equities."

Source: Warren Buffett, The New York Times, October 16, 2008.

Three charts, postive and negative

Mar-2003

IN those VIX=60 days

Nothing is impossible!

IN TA I trust

Today's market review

Today looks very encouraging to me at least.

First time in a week, we did not get a sell off at the final hour.

SPY long DOJI.

TIME：exactly 1 year from the last highest point.

One more thing, today's volume is highest in history for all indexes.

First target, 9100-9200 on INDU and 970 on SPX, where are the 5 day EMAs on 5 min chart.

several reverse charts

9-1-98


7-24-02


10-10-02


3-12-13-03