# markets trend



## thenegotiator (May 23, 2012)

It is interesting how mkts and the usual herd mentality can act in situations like we have seen till now.
therefore i am posting something that might interest everyone here.
If u do not agree with the aforementioned writer post ur observations.
GLTA







TAKING STOCK: Bulls Should Resist The Urge to Buy Dips This Time

Published: Feb 21, 2013

--Investors should resist urge to buy on dips this time

--"Key reversal" patterns and worries that Fed may slow asset purchases could trigger a lasting selloff

--Dow's break of support at 13850 suggests investors should adopt a new "sell-on-rallies" stance


By Tomi Kilgore


The market's dip is different this time.

There have been several underlying technical warning signs suggesting a selloff in stocks may be imminent, but they weren't enough to dissuade investors from a "buy-on-dip" mentality. Until now.

Bears now have "key reversal" patterns in the Dow Jones Industrial Average and some previous market-leading sectors to go with a fundamental primer to trigger what could very well be a lasting selloff.

As noted in previous "Taking Stock" and "Technically Speaking" columns, the fact that some momentum indicators have been trending lower for over a month, a reversal signal in the 10-year Treasury yield, and a decline in the number of new highs also indicated the early stages of a pullback has already begun.

But while the Dow Jones Industrial Average had a lot of trouble sustaining gains above resistance at 14000--it rose above that level nine times intraday this month but could only barely close above it three times--a clear reversal message was still missing. That changed on Wednesday, in more ways than one.

The Dow closed at a multi-year high of 14035.67 on Tuesday. Then the Dow rose to a new high of 14058.27 in intraday trading on Wednesday, before pulling an abrupt U-turn to close at 13927.54, which was well below Tuesday's intraday low of 13977.90.

The Dow was down 61 at 13866 in midday trading Thursday, just off an intraday low of 13845.46.

That two-day pattern is known as either a "bearish engulfing" or a "key reversal." Either way, it suggests bears have absorbed the bulls' best shots, and have come back swinging.

In addition, there were similar reversal patterns in some key market segment trackers, including the iShares DJ Transportation Average exchange traded fund (IYT), the iShares Russell 2000 ETF (IWM), the SPDR Consumer Discretionary Select Sector ETF (XLY) and the SPDR Industrial Select Sector ETF (XLI). Those sectors had all led the market higher since the bull run started in mid-November, so signs that they may have peaked can carry a lot of weight.

Still, bearish technical signals are like body blows; they can weaken the market enough to bring it to the edge. But many investors still need a fundamental knock-out blow before they fully abandon their "buy-on-dip" stance.

The minutes of the Federal Reserve's last policy-setting meeting seems to have been that punch, as they indicated some officials felt the pace of stimulative asset purchases, or quantitative easing, may need to slow even before the economy fully recovers.

CMC Markets senior market analyst Colin Cieszynski said while technicals already suggested a correction was due, "the Fed news appears to be the straw that broke the camel's back."

He noted that the end of Fed's two previous asset purchase programs, also known as QE1 and QE2, were followed soon by selloffs of greater than 10% in mid-2010 and mid-2011. "Speculation that QE3 could be scaled back sooner than thought could limit near-term upside for stocks, or spark a significant correction," Mr. Cieszynski said.

Slipping intraday below 13850, which was the bottom of a key support zone bulls have leaned on since they began their assault on 14000 back on Jan. 28., confirms that this dip is different.

In other words, it may be time investors adopt a new "sell-on-rallies" stance.

The next key support level to watch is around 13610 to 13660, which was previously strong resistance from mid-September through early October. In addition, the 50-day moving average, which many view as a short-term trend tracker, comes in today just below that support at 13583.

-Write to Tomi Kilgore at [email protected]


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## lonewolf (Jun 12, 2012)

Thenegotiator

interesting post, draw a line from the 2000 intraday high & through the 2007 intraday high in the dow near that line I go short.


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## thenegotiator (May 23, 2012)

u got me curious on that one.
i will check it anyway.
in all honesty lone i try to look for things a lil more forward since fundamentals and trading on its own is much different than eevents that happened at different times.
nevertheless i always look for stuff that someone may try to point to me.


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## Hobotrader (Feb 10, 2013)

I think the Fed is bluffing. It's cheap credit that's keeping this merry go round continuing. I think they learned from Lehman, no pain anymore lol. 
Plus, mainstream finance media is the best contrarian indicator...I'm staying on sidelines, but if markets are this high, given our economic conditions, and you remove the Fed/MBS monetization factor, I'd go short in a New York minute.


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## james4beach (Nov 15, 2012)

I'm talking speculative technical analysis here: look to see if the S&P 500 actually makes a new high. All the current heights don't mean a thing unless the S&P 500 makes a NEW all time high. It should close several weeks above the old high, to really be considered.

When technicians look at long term charts, a quick blip to a price level is not enough. There definitely has to be a weekly close, and probably a few, to really make the point on the long term chart. A chart like this:
http://www.greatponzi.com/charts/spx-long-20130104.png

But what really seals the deal is a year-end close notably higher than the previous peak (somewhere around 1600 would do it). That changes everything. Personally I don't plan on doing anything throughout this year, as I'm waiting to either see a new all time high (year-end close) or signs of a breakdown and triple top.


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## james4beach (Nov 15, 2012)

Also I think you're better off watching the S&P 500 than the Dow for your big picture technical analysis.

The hedge funds and big speculators all trade based on the SPX. The futures and mini-futures market is incredibly liquid and actively traded.

Global stock market all follows the SPX. "Stock investment" has become such a joke... everything correlates to this index, you can try picking individual stocks but in the end they all do what the SPX does ;-)

This is in fact why most hedge funds will base their activity on the SPX. You can let the retail investors swap cute stories about individual companies but it's all a bunch of noise on top of the core story.


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## dogcom (May 23, 2009)

I believe other charts show a megaphone pattern which means new highs will not do the trick unless it breaks above the megaphone.


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## dubmac (Jan 9, 2011)

james4beach said:


> Also I think you're better off watching the S&P 500 than the Dow for your big picture technical analysis.


Why?
What information does the S&P provide that the DOW doesn't?


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## Hobotrader (Feb 10, 2013)

james4beach said:


> Also I think you're better off watching the S&P 500 than the Dow for your big picture technical analysis.
> 
> The hedge funds and big speculators all trade based on the SPX. The futures and mini-futures market is incredibly liquid and actively traded.
> 
> ...



This is exactly what I think/seen. This is because of HFT algorithms and Central Bank activity. Money flows to asset classes than individual stocks now. It's really been a beta trade as of late. Markets are so broken now lol. ES-Mini contract is probably all you need to watch for stocks, you see something good? Get something high beta lol.


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## Hobotrader (Feb 10, 2013)

dubmac said:


> Why?
> What information does the S&P provide that the DOW doesn't?


Trading volume + amount of people following it. S&P has a larger representative sample of the economy as well. So I guess for gains, going for DOW, for seeing what the market is doing, S&P.


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## lonewolf (Jun 12, 2012)

Dogcom, I think nailed it

Draw an extended line from the 2000 high through the 2007 high. 
Draw another extended line through the 2002 low that conects to the 2009 low on the dow.

Using a semi log chart the angle of degree the top line is heading up is almost identical of the bottom line heading down. This is a rare pattern that is not yet complete. Will be complete when the upper line is touched. When the upper line is kissed perhaps even a few times the price pattern that has occured before major crashes will be complete.

On safe haven Robert Mchough has a few articals on the jaws of death pattern & shows the current pattern. I think this pattern is forming in the dow


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## thenegotiator (May 23, 2012)

lonewolf said:


> Dogcom, I think nailed it
> 
> Draw an extended line from the 2000 high through the 2007 high.
> Draw another extended line through the 2002 low that conects to the 2009 low on the dow.
> ...



i did not forget about it.
not looking anymore though.
it has been drawn by my closet chartist artist lol:tongue-new:
things can accelerate when one least expects though.


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## gibor365 (Apr 1, 2011)

lonewolf, Could you please publish your chart? I tried to draw those lines, but probably I'm bad in drawings


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## liquidfinance (Jan 28, 2011)

Looking at the chart for the spx it could be a time to jump and then buy back in once it's either confirmed the new highs or suffered a substantial correction. 

Where do people feel the markets will be heading from here?


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## gibor365 (Apr 1, 2011)

it's like you are asking if to bet on red or black while plying roulette  same probability...

sorry for my bad English, but can you explain meaninh of your expression "time to jump and then buy back" ?


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## lonewolf (Jun 12, 2012)

gibor

I was using the free charts that Robert Mchough posted on safe haven a while back.

The chart he had drawn it is hard to get exact numbers I guess that reserved for subscribers. I dont have a program for drawing charts. So i did the following (I lost the paper I made the calculations on 

All I did was go to dow historical prices @ yahoo finances got the intra day high as well as the closing high for the dow in 2000 & 2007.

I then calculated the number of years & part of the year to the decimal from high to high.

I then went to the compound interest calculator & typed in the high made in 2000 & the number of years to the decimal ( 2 figures) to the 2007 high. Then by trial & error I just kept typing in difernt rates of interest till I got a rate increase that would match the 2007 high both for intra day & for closing.

Knowing the rate increase & a starting date in 2000 & or 2007 calculations can be made as to where that line will touch in the future.

I know we have a ways to go before the line is touched so I have not run the numbers again but when I do I will either post them or private message you the numbers.


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## liquidfinance (Jan 28, 2011)

gibor said:


> it's like you are asking if to bet on red or black while plying roulette  same probability...
> 
> sorry for my bad English, but can you explain meaninh of your expression "time to jump and then buy back" ?


I'm just nervous of the markets at the moment and debating whether or not to jump ship (liquidate all my holdings) 
That way I can sit with the cash and take advantage of falling prices. Or if the current prices hold then I can buy back in As everyone seems to be saying the market really needs to produce new highs and it doesn't look like that is going to happen at the minute. Especially after how the news from Italy spooked the markets this afternoon.

There are just too many ways to play this game to know which is going to lead to the best outcome.


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## liquidfinance (Jan 28, 2011)

Not sure what to make of this either. 

http://www.multpl.com/s-p-500-price/


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## james4beach (Nov 15, 2012)

liquidfinance said:


> I'm just nervous of the markets at the moment and debating whether or not to jump ship (liquidate all my holdings)
> That way I can sit with the cash and take advantage of falling prices


My experience is that timing markets like that is just about impossible. But I would say that your stock exposure should only be to a degree you are comfortable with. If portfolio fluctuations are making you feel uncomfortable, then you need to have fewer stocks and more cash/GICs (in my opinion).

When I end up with a stock position that's making me nervous, I don't liquidate it all at once. I prefer scaling out... maybe sell off 1/3 and then revisit it again later.


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## thenegotiator (May 23, 2012)

liquidfinance said:


> I'm just nervous of the markets at the moment and debating whether or not to jump ship (liquidate all my holdings)
> That way I can sit with the cash and take advantage of falling prices. Or if the current prices hold then I can buy back in As everyone seems to be saying the market really needs to produce new highs and it doesn't look like that is going to happen at the minute. Especially after how the news from Italy spooked the markets this afternoon.
> 
> There are just too many ways to play this game to know which is going to lead to the best outcome.



u sound very confused.
u sound like u have no thesis as to whatever u are buying.
therefore if ur not comfortable .... go cash ... liquidate.
reevaluate.
and then reenter when u have a thesis and u are comfortable.
i have been short for awhile and i am just watching it unfold.
why would u ask?
i had a thesis and i had reasons to be short.
except the USD that i am long and i have 1 stock atm CCO.
i may liquidate that position if i am uncomfortable .
my ACB is wayyyy below today's price though.


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## thenegotiator (May 23, 2012)

i am going to try and revive this thread and see what everyone thinks.
please post ur thoughts.
when u do so try and explain ur thesis behind ur thoughts.
are we going to make a new high and breakout on the spx500/DJIA?
how about commodities?
GLTA


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## dogcom (May 23, 2009)

Chasing dividends and bank stocks is the name of the trend game right now and all is sunshine. Sunshine however can go on longer then we think so I wouldn't short it.


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## thenegotiator (May 23, 2012)

Dog.
if i had a boatload of money I would let divvys take care of me.
the story about divvts is IMO for the rich man.
i am not rich.
therefore i take risk.
i think u also do.
GL in ur trades.


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## lonewolf (Jun 12, 2012)

possible NDX nadaq 100 triangle B 

June wave A
Sept wave B 
Nove wave C 
April wave D
In wave E

Final thrust up will be wave C



In Dow

Dow 1987 top wave 1
1987 crash low wave 2
2000 high top wave 3
2002 low wave A bottom of expanded flat of wave 4
2007 high wave B top
2009 wave C bottom


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## thenegotiator (May 23, 2012)

numbers please ?
next wave on spx500 for 2013 please?
are u into analysis?
lets not work with DJIA ok ?
i will tell ya why .
30 stocks compose such index.
lets broaden it to 500.
what u see and i see everyone sees.
therefore nobody is blind in technical analysis.
question that lies ahead is since everyone sees the same thing would a breakout be in the cards?
that is what i am asking.
i truly cannot answer .
just speculate.
i gave solid numbers for the spx.
u gave no numbers for absolutely nothing.
one more thing i do not see a need to go all the way back to 1987.
in 1987 everything was different than today's economics.
that imo

p.s
by the way the spdr 500 is showing rsi divergence but bollinger bands do not suggest yet that a top is in.
again everyone sees that do u?


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## Toronto.gal (Jan 8, 2010)

thenegotiator said:


> 1. are we going to make a new high and breakout on the spx500/DJIA?
> 2. how about commodities?


I'll get back to you on the waves after I have finished reading 'The Wave Principle'. 

*1.* I'll be optimistic [like so many have been by the numbers] and predict that the S&P 500 will touch 1,600, LOL. Despite all the hullabaloo, it's been a mere recovery, although it's been a huge one, but it took 6 years, or over a decade if you prefer to recall the indices of 1996 for comparison purposes. With the latter in mind, there is still room to go up this year IMO, but also always room for the reverse to take place at any time, ie: wipe the 13% gains made in 2012 alone.

*S&P 500: *
Dec/*1996:* 726.04
Oct/*2007:* 1,565.15 
March/2*009:* 676.53 [-49.51 lower than 12 yrs. earlier] 
April 10th/*2013:* 1,579.41 [a.m. session]

*Dow:*
Dec/*1996:* 6268.35
Oct/*2007:* 14,164.53
March/*2009:* 6,547.05 [just 278.70 higher than 12 yrs. earlier]
April 10th/*2013:* 14,755.82 [a.m. session]

I wonder what returns investors who bought/held since 1997, would have made [excluding dividends] & how happy are they feeling 2day. OMG, another record has been set. :rolleyes2:
http://www.reuters.com/article/2013/04/10/us-markets-stocks-idUSBRE93006T20130410 

*2.* I'll just predict lumber will go down. :biggrin: The star of 2012, which hit an 8 year high nearing $400 [compare that to the $130 it hit in 2009]. Pretty incredible year thanks to the growing demand/US housing recovery & other factors.

I predict also, following today's news, that gold will retest it's 2011 high. :hopelessness: The puzzle of the year so far.


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## Hawkdog (Oct 26, 2012)

Curious as to what your reasons are for predicting lumber will go down? The big thing driving the lumber market in my area is China. So if the housing bubble in China bursts you will most definitely be right!! 

Have you followed the Mountain Pine Beetle epidemic in BC at all?


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## Hawkdog (Oct 26, 2012)

this is interesting:

http://www.woodmarkets.com/Press Releases/12-12-07 WM 2013 - Press Release FINAL.pdf


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## Toronto.gal (Jan 8, 2010)

I thought I had given my reasoning for the potential dip in prices.

If your lumber stocks had doubled/tripled in about a year, would you think they will do the same without some sort of correction? To be clear, I'm not selling all my shares, but I won't be buying much either.

Take a look at the 52 week performance of any major & even small lumber company: WFT for example, and tell me if their price is attractive for you to enter at this time?

https://www.google.ca/finance?client=ob&q=TSE:WFT

I predict the beaten-up commodities will increase more, ie: coal/gas, etc.


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## fatcat (Nov 11, 2009)

Toronto.gal said:


> I predict also, following today's news, that gold will retest it's 2011 high. :hopelessness: The puzzle of the year so far.


what news ? and what will cause gold to retest it's highs ... how are you valuing gold ?


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## Toronto.gal (Jan 8, 2010)

Actually, I was being a bit sarcastic regarding gold; it had been in reaction to TN's last post under the gold thread.

I'm no gold bug btw [except when it comes to jewellery as I don't like silver that much].


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## fatcat (Nov 11, 2009)

abx is making me dizzy ... you have to think about the old phrase of catching a falling knife
their dividend yield is well into the 3's
and they are testing their 2003 low


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## Hawkdog (Oct 26, 2012)

I was just talking the price of lumber. A correction is definitely a possibility with individual stocks, but the overall lumber price shouldn't see a big correction, due to factors like 3 mills burning down in BC last year, china, and dwindling timber supply in BC.

FYI
There are 2 WFT mills and one CANFOR mill within 75km of where I live, one across the street from my office. The Canfor mill is one of the biggest in the world. The bulk of their lumber gets put on a train and sent to Prince Rupert where it is sent to China. Along with huge ships full of raw logs.

I do not own any lumber related stocks. I missed the boat there. 









Toronto.gal said:


> I thought I had given my reasoning for the potential dip in prices.
> 
> If your lumber stocks had doubled/tripled in about a year, would you think they will do the same without some sort of correction? To be clear, I'm not selling all my shares, but I won't be buying much either.
> 
> ...


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## Toronto.gal (Jan 8, 2010)

Hawkdog said:


> I was just talking the price of lumber. A correction is definitely a possibility with individual stocks, but the overall lumber price shouldn't see a big correction, due to factors like 3 mills burning down in BC last year, china, and dwindling timber supply in BC.


I was talking about the incredible rise of both commodity & stocks. 

Sure, there are many catalysts for prices to increase further, such as a continued US housing recovery, China as you mentioned, etc., and so it's still the 2013 commodity fav. for many, but others are expecting a crash, so probably it will be somewhere in the middle.

I read the WoodMarkets article you posted.

Also, an interesting 'FYI', and so I'm somewhat surprised that you missed the boat, but there are always opportunities if you look hard enough.


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## Hawkdog (Oct 26, 2012)

Toronto.gal said:


> I was talking about the incredible rise of both commodity & stocks.
> 
> Sure, there are many catalysts for prices to increase further, such as a continued US housing recovery, China as you mentioned, etc., and so it's still the 2013 commodity fav. for many, but others are expecting a crash, so probably it will be somewhere in the middle.
> 
> ...


Ya I am still taking heat for missing the boat! my wife works for CFP and told me to buy at 8 bucks!


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## Toronto.gal (Jan 8, 2010)

You're lucky your wife didn't divorce you, LOL. Think also of all the other related industries for potential opportunities.

*fatcat:* is your golden dizziness a lil better today?


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## fatcat (Nov 11, 2009)

Toronto.gal said:


> *fatcat:* is your golden dizziness a lil better today?


well, i'm sitting down so that is helping ... abx up a bit but below $25 ... i thought this was an interesting take on barrick: http://seekingalpha.com/article/1326621-the-case-for-shorting-barrick-gold?source=google_news

he paints a poor picture of barricks management but a somewhat strong case for their size and their asset base ... who knows ? ... it's tempting at less than $25 and 3.29 yield 

though i could never admit to buying it as it would ruin my reputation as perma-gold-bear :biggrin:


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