49 replies to this topic

[IYB]

http://stockcharts.com/c-sc/sc?s=$SPX&p=M&st=1996-01-28&i=p53137874525&a=149688849&r=635.png

I've opined many times here that the 13 month moving average of SPX does a great job of explaining and containing the primary cycle. Assuming for a moment that this time is not different, then where are we NOW in that primary cycle? Was there a period in 2000-2003 primary bear cycle that was "like" the current period? Is this still a bear market?

I will answer my last two questions first by saying "yes" and "yes" and will endeavor to show a direct comparison to the last cycle. But first I would like to define the current environment from my "internal view" perspective:

1. The 13 month moving average defines the primary cycle as currently DOWN.
2. We've rallied from an extreme fear based low back up to the declining 13 month MA, where we would expect it to turn back down
3. We had a seven sentinels sell signal in recent weeks, but continue to stay within a range, weakening as we go
4. The market tried to break down form this pattern, but instead launched a sharp rally off the lows
5. This rally was NOT proceeded by a "set up" to sustain an IT advance
6. We are back now near the top of the range and again nearly at declining the 13 month MA

Did all of that ever happen in the 2000-2003 period? Answer: "YES". When? Here:

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&st=2001-05-01&en=2002-03-07&i=p84777417571&a=173244987&r=135.png

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&st=2001-09-01&en=2002-08-01&i=p14691508978&a=173218271&r=831.png

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&st=1999-01-01&en=2002-03-07&i=p91700479079&a=173250553&r=5676.png

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=2&mn=3&dy=0&i=p57176726570&a=172483578&r=707.png

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&st=1999-07-18&en=2003-06-01&i=p26441285841&a=173248346&r=5096.png

So bottom line, we're right back to this again:

http://stockcharts.com/c-sc/sc?s=$SPX&p=M&st=1996-01-28&i=p53137874525&a=149688849&r=635.png

Am I missing something? Perhaps. Are there differences I'm overlooking? Perhaps. But from my perspective, that is what I see. You may see it very differently. At's that's okay by me. Good Trading, D


Round, like a circle in a spiral
Like a wheel within a wheel
Never ending or beginning
On an ever spinning wheel….

[qqqqtrdr]

IYB: I would not say this is or is not normal action for a Bear Market..... The market is being manipulated higher, but Price to Earnings matters in the long run... Currently I see we could go into a new Bull Market scenario here, but am unsure which way the market will head... This is why I play the dailys and short term..... 1) SPX stocks are way overbought... SPX would need to go to around 300 to properly be valued based upon Q3 projections... 2) Market has been rising on strong breadth over the last week this is bullish for the market as is interest rates..... I don't necessarily think we will always get divergences, but I would think that Seven Sentinels should have a time out for divergences before excepting a direction change....... Short term topping action would mean terrible A/D..... I am looking for the following..... Also, I will look for bearish divergences which we currently don't have... Topping.... Flat day..... on QQQQ ( less than .3% change )... 35% advances on NASDAQ is bearish ( topping breadth ) QQQQ ( over 2% change ) Less than 65% on NASDAQ advances is bearish ( topping breadth ) $NATV:$NYTV has been Neutral and more volume is moving toward $NYTV from NASDAQ.... I consider this bullish in nature.... If so we should have a buy signal next week as $NATV:$NYTV is low during my expected early in the week sell-off.... Barry

[arbman]

Don, so you confirm that we can hit 961 possibly as high as 970s or 980s... well ok ok, at least a new high! I was also thinking something close to 1000. I absolutely do not think the 1050 gap will be closed in this first round, it is the gap and it was the bear market inflection point, it won't be closed, period. So my max target is 1044, and I strongly doubt any higher... Anyhow, the failure of this rally will be catastrophic into 2010-2012 period since the gov't is truly exhausting all options. (see signature)

[MoneyFriend]

IYB, I do not expect much of a sell off from hitting that 13 month MA.
Looking back 50 years, a decline over -20%, followed by a test of the 13 month MA, has yielded only 1 major sell off vs 7 continuations.



Sure, we may see 880 again this year, but a full fledged 2002 style sell off making new lows is very improbable based off of the simple criteria: a decline over -20%, followed by a test of the 13 month MA.
If anything, I'd say that hitting the 13 month MA should be viewed as a very probably signal (7 to 1 odds) that this is a new bull.

Edited by MoneyFriend, 18 July 2009 - 06:30 PM.

[IYB]

MF- I see dozens of rejections at the 13 MMA on your charts, especially during the last secular bear market of 1965-1982. I think if you looked at the weeklies over 5 year periods this would become much clearer. 1974 is a good example, where the 18% rally off the initial low, then full 100% retest of that low to form a base, can't even be detected because the chart is too small and the bars are too big. There are many better examples all throughout that 50 years. And the idea of throwing out all of the rejections by the 13 MMA that you see as less than 20% decline all through periods like 73-74, 80-81, and 01-02, etc. strikes me as a real stretch. All sorts of rejections at 13 MMA from deep levels in 69, 70, 73, 77, 81, etc. But here's perhaps the most important part of my thinking now and always: I will think in terms of bull market AFTER, not BEFORE confirmation occurs via MA's and the rest. But as said - I didn't come here to argue, and won't do so. I simply wanted to share what works for me over time. If you've built a view of history that you've tested in real time successfully and have come to believe in -- go for it. Regards, D

Edited by IYB, 18 July 2009 - 07:03 PM.

[Tor]

MF- I see dozens of rejections at the 13 MMA on your charts, especially during the last secular bear market of 1965-1982. I think if you looked at the weeklies over 5 year periods this would become much clearer. 1974 is a good example, where the 18% rally off the initial low, then full 100% retest of that low to form a base, can't even be detected because the chart is too small and the bars are too big. There are many better examples all throughout that 50 years. And the idea of throwing out all of the rejections by the 13 MMA that you see as less than 20% decline all through periods like 73-74, 80-81, and 01-02, etc. strikes me as a real stretch. All sorts of rejections at 13 MMA from deep levels in 69, 70, 73, 77, 81, etc.

But here's perhaps the most important part of my thinking now and always: I will think in terms of bull market AFTER, not BEFORE confirmation occurs via MA's and the rest.

But as said - I didn't come here to argue, and won't do so. I simply wanted to share what works for me over time. If you've built a view of history that you've tested in real time successfully and have come to believe in -- go for it. Regards, D

Who knows if last week was an abbortation, but the bears sure got killed.

It should go p more under those conditions. Will see.

As for going bullish, I will be truly amazed if those bears go bullish on a breakout. Cast you mind back to 1999, would you be bullish now or bearish, on a breakout to new highs? We arent there yet, but will should do eventually.

We are about half way through this rally in my view, corrections on the way. lets see.

[MoneyFriend]

MF- I see dozens of rejections at the 13 MMA on your charts, especially during the last secular bear market of 1965-1982. I think if you looked at the weeklies over 5 year periods this would become much clearer. 1974 is a good example, where the 18% rally off the initial low, then full 100% retest of that low to form a base, can't even be detected because the chart is too small and the bars are too big. There are many better examples all throughout that 50 years. And the idea of throwing out all of the rejections by the 13 MMA that you see as less than 20% decline all through periods like 73-74, 80-81, and 01-02, etc. strikes me as a real stretch. All sorts of rejections at 13 MMA from deep levels in 69, 70, 73, 77, 81, etc.

But here's perhaps the most important part of my thinking now and always: I will think in terms of bull market AFTER, not BEFORE confirmation occurs via MA's and the rest.

But as said - I didn't come here to argue, and won't do so. I simply wanted to share what works for me over time. If you've built a view of history that you've tested in real time successfully and have come to believe in -- go for it. Regards, D

This is why 20% is the chosen cut off, it's completely logical to do so, we aren't talking about little 10% dips here we are talking about bear markets and how they react to this snazzy 13 month MA.


Switch to weeklies? This is about the monthly.
You say you see dozens, I see 8 and that is all. I can post here close ups for you if you like, there is only 8 tests going back these past 50 years, where the SPX declined over 20% and came back to the 13 month MA.

Best of trading to you.

[MoneyFriend]

Anyways, if you ignore all of this time stuff and just focus on volume, it's clear that it is building higher, in 2001/2002 there was not nearly as much volume being consolidated (in the 1100 to 1150 range) as there is now in this 850 to 900 range, also there was not a higher high, we have a higher high above January that many bears seem to want to ignore.

Edited by MoneyFriend, 18 July 2009 - 07:31 PM.

[CLK]

MACD already turned, don't see how it can still be a bear. We should know soon, if it is, the downside will be even swifter and more surprising than last week. Clearly most were short going into last week, I think most are looking for new lows, the market usually does the least expected, so I don't think we get the same setup as 03. Even though price has not moved up that much yet, the internals have.

[qqqqtrdr]

I think it is wise to treat this as a bull until we get bear confirmation otherwise. It is great to try and pick tops we each have our own mechanism. But IT trend is definitely bullish..... I'm currently trading as not to fight a conclusive IT trend. It is best to run with it..... I do think the LT trend has not changed bullish yet, but that might take 2 more months to change...... Best Regards, Barry