# How TA can help long term investors:



## Pluto (Sep 12, 2013)

There should be a pgn with this post. If not I'll fix it later. Its a 10 year chart of S&P 500 with RSI and MFI indicators on the bottom. 

Note 1.) as marked on the PGN, Prices were rising in 2007, but MFI indicator showed money was actually leaving the market. This indicator is anticipatory. Gives early signals. 

Note 2. The red bars are volume per quarter. The red signifies prices were lower in the quarter. Volume was rising as prices declined showing more money leaving stocks. 

Note 3. Green bars are volume when prices rose in the quarter. Bear market over. 

Note 4. In recent times prices rose while MFI indicator dropping. Index prices rising fool people who don't pay attention. 

Note 5. RSI on 10 year chart indicated oversold meaning bottom near, and bear probably over. Buy big. 

Note 6. Currently RSI on 10 year nowhere near oversold. Teh bull can not resume while MFI is dropping.

Using free Yahoo charts, you too can be a market wizard.


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## godblsmnymkr (Jul 15, 2015)

nice post
would have preferred you use candlesticks to show trendlines (huge part of TA) 
hopefully this helps some people understand TA. its extremely simple.


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## Pluto (Sep 12, 2013)

Thank you. I use charts like this to be in stocks during bull markets, start taking some profits and raise cash as it tops out, so I have cash when prices are more reasonable. 

Buy wholesale, sell at exploitative prices. lol.


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## humble_pie (Jun 7, 2009)

interesting, valuable, thankx

i'll start looking at MFI, i'd always considered RSI alone & looked at crude volume figs separately.

your graphic is somewhat on the small & faint side, though. Perhaps you could post it up as a bigger image that could be seen by public viewers who are not logged-in ...


Edit: i haven't checked yet to see whether the brokers' advanced chart settings include MFI. I see you're using plain old yahoo, though, so i'm imagining that MFI must be commonly available.

such a nice illustration of Note 4 plus Note 5!


2nd Edit: speaking of Yahoo, they have a free streaming portfolio that i think is pretty good. It can accommodate dozens of symbols, all basic critical data, each entry links easily to charts & options, plus i think all the quotes are real time. It's easy & simple to use, ie perfect for a dumb crumb like me


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## james4beach (Nov 15, 2012)

I get a lot of value from looking at volume as well as the plain old 200 day moving average. I interpret strong upward movements on heavy volume to be lots of buying enthusiasm and institutional support. Ditto on the reverse: high volume on selling means big owners are dumping.

The 200 day moving average also helps. For instance we're now well below the $SPX's 200 day moving average. To me it's a quick & dirty check of whether we're in bull or bear mode. If we can stay back above the average, it's likely the uptrend continues. If we stay below the 200 day average on $SPX you can be assured it's a bear market.


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## godblsmnymkr (Jul 15, 2015)

ya, being under a declining 200 day line is a big problem right now. it looks like a typical bear pennant that has formed. rarely are markets that easy though. i would say the chances of breaking down lower here are greater then the upside but thats about all you can predict. on average it takes 27 days to resolve a correction so we might be waiting for awhile to see what the next play is.


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## Pluto (Sep 12, 2013)

godblsmnymkr said:


> nice post
> would have preferred you use candlesticks to show trendlines (huge part of TA)
> hopefully this helps some people understand TA. its extremely simple.


Well feel free to add a chart of your own, but try to keep it with a long term perspective: IE to help see when a bull ends, and when a bear is ending.


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## Pluto (Sep 12, 2013)

humble_pie said:


> interesting, valuable, thankx
> 
> such a nice illustration of Note 4 plus Note 5!


Thank you. Just remember this is a 10 year chart which is required to get the big picture. Short term charts offer only short term implications.


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## Pluto (Sep 12, 2013)

james4beach said:


> I get a lot of value from looking at volume as well as the plain old 200 day moving average. I interpret strong upward movements on heavy volume to be lots of buying enthusiasm and institutional support. Ditto on the reverse: high volume on selling means big owners are dumping.
> 
> The 200 day moving average also helps. For instance we're now well below the $SPX's 200 day moving average. To me it's a quick & dirty check of whether we're in bull or bear mode. If we can stay back above the average, it's likely the uptrend continues. If we stay below the 200 day average on $SPX you can be assured it's a bear market.


Good point. I use moving averages too but left them off the chart in order to keep it as simple as possible. Put up a chart in the thread with moving averages.


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## mrPPincer (Nov 21, 2011)

Nice intro to TA Pluto, thanks!

Had to google the terms MFI and RSI (I look at volume a little, but have never really been into TA yet).

Thought I'd add the following link to this thread for any other technical analysis newbs like myself..



> What are the main differences and similarities between the Money Flow Index (MFI) & Relative Strength Index (RSI)?
> By Investopedia
> 
> Read more: What are the main differences and similarities between the Money Flow Index (MFI) & Relative Strength Index (RSI)? http://www.investopedia.com/ask/ans...relative-strength-index-rsi.asp#ixzz3lNPAMHl9


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## GoldStone (Mar 6, 2011)

I'm not a TA expert. But based on what little I know, RSI is an indicator of short-term momentum. The default time frame for RSI is 14 days. I have never ever seen it applied to multi-year time frames. 10 year RSI sounds wrong to me. Momentum effect doesn't last that long.

Aside from that, thread title is misleading. A better title would be:

How TA may or may not help long term investors.

Why? Because one pretty picture is not proof. The picture shows one crash. That's a sample of one. A sample of one does not prove anything. Any TA expert will tell you that you need to run a robust back test to prove that your strategy works.

A robust back test requires that you formulate a set of buy and sell rules. They should be strict enough to program into computer. I don't see any strict trading rules in Pluto's post.

Pluto, if you are interested in back testing your strategy, here's a good list of back testing software:

http://quantpedia.com/Links/Backtesters


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## Pluto (Sep 12, 2013)

Goldstone,

I know you are not a TA expert. 
One may use any period in the formula. It can be days, weeks, months, quarters, whatever. I don't care very much about the daily configuration because I don't care about short term fluctuations. 
It isn't 10 year RSI. Its a 10 year chart. The RSI in that chart uses the default 14 period setting. Nobody said momentum lasted 10 years, so what are you talking about? RSI is relative strength to itself. you can adjust the time period to make it less or more sensitive by adjusting the number of periods. I just use the default 14. 

I have used back testing software, and have back tested countless indicators. 
Previously I have invited you to start your own thread on your strategy that you have back tested.


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## GoldStone (Mar 6, 2011)

RSI is an indicator of momentum. Any intro article on RSI will tell you that. Momentum effect rarely extends beyond a year. Never mind 10 years.

You are free to pursue any strategy you wish. It's your money. I wave a yellow warning flag to protect the newbies. Who knows, they might take your unproven ideas seriously.

Over and out.


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## Pluto (Sep 12, 2013)

GoldStone said:


> RSI is an indicator of momentum. Any intro article on RSI will tell you that. Momentum effect rarely extends beyond a year. Never mind 10 years.
> 
> You are free to pursue any strategy you wish. It's your money. I wave a yellow warning flag to protect the newbies. Who knows, they might take your unproven ideas seriously.
> 
> Over and out.




Nobody said momentum extends 10 years. No one said the chart shows momentum over 10 years. In fact the chart does not show momentum over 10 years. It is a 10 year chart that shows the ebb and flow over 10 years. 

There is something bugging you Goldstone, and it has nothing to do with me. 

Previously I have invited you to start a thread on your strategy, and to the best of my knowledge you have declined. I again invite you to start a thread and describe your strategy. Why are you holding back on sharing your proven true strategy?


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## GoldStone (Mar 6, 2011)

10 year chart is fine. Without RSI. To enable RSI on a 10 year chart is wrong in my opinion. Time frame does matter. RSI is not an abstract number. RSI reflects short-term sentiment/momentum. 

The default RSI time frame is 14 days. RSI over 70 shows buying pressure. The herd stampedes to buy something. RSI under 30 shows selling pressure. The herd stampedes to sell something.

Does RSI have the same meaning on a 10 year chart? I'm very skeptical. This is the first time I see anyone use RSI on a multi-year chart.




> There is something bugging you Goldstone, and it has nothing to do with me.


What's bugging me is how you present your ideas. You post them as proven recipes. There is not an iota of doubt in what you write. "How TA can help long term investors". Follow my strategy and you will make MOAR money. And when I offer some critique, you become defensive and irritated, instead of thanking me for constructive feedback.

Here's a friendly suggestion. Post the same ideas, but use a slightly different tone. Something along the lines: 

_"Hey guys, what do you think about this strategy? Please tell me what you like or don't like. Can you poke some holes in my logic?"_

What's the point of posting your ideas on a public forum if you don't welcome the feedback?


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## GoldStone (Mar 6, 2011)

Missed this gem:



> Using free Yahoo charts, you too can be a market wizard.


^ this is what's bugging me, Pluto. That claim is an utter BS.


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## Moneytoo (Mar 26, 2014)

Warning: I'm not good at charts, so please don't shoot  

So I've been watching Canadian Tire since it was ~$126 (its current MA) in March. Didn't buy it under $130, didn't buy it over $130, and when it came down under $125 after a so-so quarter results - thought it was a good buy (almost wrote good-bye... ) But of course it slid lower, so I have a limit order at $120 - and for the life of me can't "decipher" its chart:

View attachment 5793


To me, it looks like 50/50 that it will go either up or down, and the only question I usually have: should I up my order now or wait for it to come down to "my" price? And if it does come down - will it keep going down? Is it safer to wait for it to get back to its MA or EMA(200) and then buy? Or am I asking all the wrong questions?


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## godblsmnymkr (Jul 15, 2015)

Moneytoo said:


> Warning: I'm not good at charts, so please don't shoot
> 
> So I've been watching Canadian Tire since it was ~$126 (its current MA) in March. Didn't buy it under $130, didn't buy it over $130, and when it came down under $125 after a so-so quarter results - thought it was a good buy (almost wrote good-bye... ) But of course it slid lower, so I have a limit order at $120 - and for the life of me can't "decipher" its chart:
> 
> ...


first and foremost you have to ask yourself: what is the overall market direction. right now its chopping and sideways so i would wait for some clarification first. according to fast graphs its above its growth rate and its average PE meaning its probably over valued. 

previous support at 125 has become resistance (once price gets below support it can act as resistance.) its kind of a tough spot because its probably slightly overvalued yet im not sure i would want to buy until it clears that point. 
all my buying is off until mr.market gets back on his meds and figures out what he wants. i'm waiting till after fed meeting to make any moves.


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## Moneytoo (Mar 26, 2014)

godblsmnymkr said:


> all my buying is off until mr.market gets back on his meds and figures out what he wants. i'm waiting till after fed meeting to make any moves.


Well I don't need TA for this - almost all "talking heads" are saying it: "wait for more concrete evidence of a stock market bottom. Waiting for the upcoming Fed rate decision and the Canadian election results will likely be part of a bottoming process. Longer-term, I would look for a strong buying opportunity sometime in October."  

Yet the only TA who's been on BNN lately said this:

«*This year, the summer correction in equity markets came in late August instead of September.* Equity indices are following an historic pattern of moving lower prior to the first increase in the Fed Fund rate. The pattern has happened on 14 consecutive times since 1945. Average decline by the S&P 500 Index was 10 percent per period including the 12.5 percent decline this year from mid-July to the low set on August 25. Timing of the correction always has occurred in the six month period prior to the first increase in the Fed Fund rate. After the first increase, North American equity markets rally.»

(Which coincides with my permabull belief - maybe some more volatility in the short term, and then up we go again  And since it's also the beginning of a period of seasonal strength for Canadian Tire, I would love it if TA could help )


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## dogcom (May 23, 2009)

I like RSI to show me oversold conditions so I am not entering at a top. I find using broad ETF's like XIU, you wait for the oversold condition and then wait for the MACD to turn up and then buy. Some say wait for the MACD to cross but a lot of times you miss a lot of the move that way.

http://web.tmxmoney.com/charting.php?qm_page=13957&qm_symbol=XIU


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## james4beach (Nov 15, 2012)

Here's an illustration of how I use the 200 day moving average to interpret bull vs bear periods.

This shows 1998-today. I've drawn a red line every time the S&P 500 crossed above or below its 200 day average for a significant duration. The green shading highlights periods in which the index is _above_ its 200 day average. You can see that this classification does a good job separating the bear and bull periods, except for those narrow white periods which were just corrections and not actually significant.

*The criteria is even more accurately stated as: if the index crosses above/below its 200 day average and is still there 6 months later, you've flipped between bull/bear phase*

Applied to today... if the S&P 500 is still below its 200 day moving average in February, then we can be pretty sure we're in a bear market


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## james4beach (Nov 15, 2012)

I want to add, the above method cannot be used to predict the index or trade in and out of bear periods. It just identifies bull and bear periods, about 6 months into them. You're going to ask why that's useful. Check out this article (Bear Markets Are Dangerous)

That explains the rationale behind identifying, and then being wary, of bear markets. Note in particular the table of "largest bankruptcies in world history". Quote,



> These bankruptcies wiped out billions of dollars of investor money. The publicly traded stocks crashed to zero. 79% of these collapses happened during bear markets.
> 
> Counting by dollar values, the companies which collapsed during bear markets account for an incredible 94% of the total!
> 
> This shows how nearly all the investor money was lost during the bear markets, after the date that our simple criteria can detect the bear market in progress.


So the point here is that, though you can't trade the index by using this criteria to identify bull and bear cycles, it's still critical to understand when a bear market happens. It's when the big blow-ups happen.


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## lonewolf (Jun 12, 2012)

6 months into a bear market is a long time when a bubble is broken. A fib 55 days from the high is often when the crash is seen


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## Pluto (Sep 12, 2013)

Moneytoo said:


> Warning: I'm not good at charts, so please don't shoot
> 
> So I've been watching Canadian Tire since it was ~$126 (its current MA) in March. Didn't buy it under $130, didn't buy it over $130, and when it came down under $125 after a so-so quarter results - thought it was a good buy (almost wrote good-bye... ) But of course it slid lower, so I have a limit order at $120 - and for the life of me can't "decipher" its chart:
> 
> ...


Well I think you need to do fundamental analysis first. You need to know what is a good to excellent price based on the fundamentals. Then you know the maximum you are willing to pay. The maximum would be the good price. One simple way to do that is find the PEG. A PEG of 2 is good, and a PEG of 1 is excellent. So find the historical earning growth rate over the last 5-10 years. Divide it into the P/E to get the PEG. 

So your questions aren't bad, but you are ahead of yourself. You need to know how close or how far you are from a good price first.


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## james4beach (Nov 15, 2012)

lonewolf said:


> 6 months into a bear market is a long time when a bubble is broken. A fib 55 days from the high is often when the crash is seen


That's true, 6 months is a long time to wait for a 'confirmation'. But check out that table I linked to, it's pretty amazing... those things like bankruptcies and stock collapses almost all happen in bears even despite the T+6

But yeah, that indicator is not something you can trade the index on. If you have a way to identify bear markets earlier that would be preferable


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## Pluto (Sep 12, 2013)

GoldStone said:


> you become defensive and irritated, instead of thanking me for constructive feedback.


 I think you are funny.


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## Pluto (Sep 12, 2013)

Just to recap and clarify the reason for the post. I think it is valuable to look at the forest from time to time hence a 10 year chart. The 10 year chart is in the context of an apparently high CAPE, China's economy unwinding, Fed fear, and numerous other nagging issues. A recently reported nagging issue is, according to Merrill Lynch, 46 billion left equities in the last week.

http://www.marketwatch.com/story/rest-up-because-this-market-is-in-the-eye-of-the-storm-2015-09-11

Buyers want falling prices. Sellers want rising prices. I'm hoping to be a buyer before the year is out. Just seems too early right now.


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## humble_pie (Jun 7, 2009)

MFI is surprising

i'm getting some wild readings
of course i'm looking shorter term than 10 years
maybe that's heresy, though

_"and I in dreams beheld the Hebrides"

_


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## godblsmnymkr (Jul 15, 2015)

Pluto said:


> Just to recap and clarify the reason for the post. I think it is valuable to look at the forest from time to time hence a 10 year chart. The 10 year chart is in the context of an apparently high CAPE, China's economy unwinding, Fed fear, and numerous other nagging issues. A recently reported nagging issue is, according to Merrill Lynch, 46 billion left equities in the last week.


its debatable whether CAPE is a valid metric. it would have kept out of most of this bull market.


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## Pluto (Sep 12, 2013)

godblsmnymkr said:


> its debatable whether CAPE is a valid metric. it would have kept out of most of this bull market.


I don't know of anyone who uses it all by itself to be in or out of the market. Historically when valuations are high, and the market rolls over, it drops more than people expect or would hope. I keep an eye on CAPE but only along with other things.


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## Pluto (Sep 12, 2013)

humble_pie said:


> MFI is surprising
> 
> i'm getting some wild readings
> of course i'm looking shorter term than 10 years
> ...


Nope, not heresy. Can use any time frame one wants.


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## Pluto (Sep 12, 2013)

james4beach said:


> But yeah, that indicator is not something you can trade the index on. If you have a way to identify bear markets earlier that would be preferable


As far as I know, can't be done with precision.


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## mrPPincer (Nov 21, 2011)

Pluto said:


> I keep an eye on CAPE but only along with other things.


ditto
Also, I use very strict parameters to determine my shifting allocation to equity, and stick to those parameters for years on end, but I do like to try to keep my ear to the ground, so to speak, in order to have a sense of when to make an adjustment to those parameters (doesn't happen very often, but a 2008/09-type event would definitely trigger an adjustment, as would a subsequent perceived top).


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## Moneytoo (Mar 26, 2014)

Pluto said:


> Well I think you need to do fundamental analysis first. You need to know what is a good to excellent price based on the fundamentals. Then you know the maximum you are willing to pay. The maximum would be the good price. One simple way to do that is find the PEG. A PEG of 2 is good, and a PEG of 1 is excellent. So find the historical earning growth rate over the last 5-10 years. Divide it into the P/E to get the PEG.


Sorry, getting even more confused... As per globe investor (my only paid subscription), current PEG is 2.25, future one is 2.57. I couldn't find earnings growth rate over the last 5-10 years, only "Over the last three years, earnings growth has averaged 9.96% annually.":

View attachment 5809


So if I calculate the PEG myself using these numbers, it's below 2: 15.87 / 9.96 = 1.59. Future one is 15.69 / 8.56 = 1.83.

Is it a wishful thinking to think that the price is at least ok right now? 

(My definition of a good price is the lowest realistically achievable... 'cause if I calculate that the good price is $110, but the stock goes straight up to its target price of 146 because others are willing to pay more - my price wasn't good enough....)


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## Pluto (Sep 12, 2013)

Moneytoo said:


> Sorry, getting even more confused... As per globe investor (my only paid subscription), current PEG is 2.25, future one is 2.57. I couldn't find earnings growth rate over the last 5-10 years, only "Over the last three years, earnings growth has averaged 9.96% annually.":
> 
> View attachment 5809
> 
> ...


ValueLine, at your local library, should have 10 year growth rate. In my opinion 3 years is not good enough as there could be upward bias. Going back 10 years includes some rough economic times which helps keep it realistic. Personally I wouldn't assume 3 years is good enough. 

So Globe is using a G of 6.97 which is probably a longer average, hopefully 10 years. Quite frankly I'd go with the Globe figure of 2.25. From there you can calculate a good price: at a price of 107 PEG is 2. 

Also I'd look at a 10 year CTC chart to see how it reacted in the last recession. You want an idea of how low it can go in a really bad scenario. It dropped about 50%, then it went from about 40 in the last recession, to 120 recently. It is in a down trend right now - whic is good for people looking to buy - and my best suggestion is let it consolidate and look for a basing (bottoming) then see if it gets in the good to excellent price range.


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## Moneytoo (Mar 26, 2014)

Pluto said:


> ValueLine, at your local library, should have 10 year growth rate.


Times have changed, Pluto  My local [mid-Toronto, not in the middle of nowhere] library doesn't have it, and just provides a link to the valueline.com website which I can access without a library card and get the same info - and 10 years info is not available (maybe it is with a paid subscription, but not for free...):

View attachment 5817




> In my opinion 3 years is not good enough as there could be upward bias.


Past 5 years growth with projected 3-5 years give a rate of 6:

View attachment 5825


Which would mean PE of 12 @PEG = 2 - and price so low, that unless we have a crash, I don't see it happening... So I'll leave my limit order for 40 shares @$120 intact, and if it gets executed and the stock goes down - will buy some more 

Note that it's not just a random stock that I'm dead set on buying for no particular reason. My husband and I are trying to build a diversified portfolio with stocks from different sectors. Last year, when oil prices went down, consumer stocks went up. So I wished we had some before it happened, went through a lot of stocks and picked ATB.B for myself from Consumer Staples and my husband picked CTC.A from Consumer Discretionary. The other contenders were Cineplex and Dollarama, and the hope was that when oil goes up - consumer stocks will go down (as the money would flow back to energy) But it didnt really happen when oil went up to 60, and some stocks seem to keep going up, defying gravity, no matter what happens, so buying Canadian Tire at the same price as it was half a year ago does seem like a good deal... Even if its price is not good based on formulas 

(And believe me, I love your posts, and tried my best to learn from the best - so sorry for second-guessing your advices, I really appreciate them... even if I decide no to follow them, I still learn a lot! )

PS Forwarded your post to my husband, the order is in his account, so if he decides to lower the price - I will...


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## lonewolf (Jun 12, 2012)

If a historical top is not already in it will be with in a year or 2. The technical indicators that have worked in the bull run from 1974 will have to be adjusted or thrown out in the mother bear market. The surprises will be to the downside. 2002 & 2009 lows were not value lows where dividend yield & PE were near the same as in other important lows technical readings that worked @ those lows will give more extreme readings when the market puts in important bottoms, If you have not taken the technical indicators your using back @ least a hundred years you might want to exit the market before you lose it all.


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## Pluto (Sep 12, 2013)

mrPPincer said:


> ditto
> doesn't happen very often, but a 2008/09-type event would definitely trigger an adjustment, as would a subsequent perceived top).


Well I'm perceiving a top. But I am having a hard time perceiving a 50% drop - then again, who knows? Market looks tired. Not much upside conviction.


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## Pluto (Sep 12, 2013)

Moneytoo said:


> Times have changed, Pluto  My local [mid-Toronto, not in the middle of nowhere] library doesn't have it, and just provides a link to the valueline.com website which I can access without a library card and get the same info - and 10 years info is not available (maybe it is with a paid subscription, but not for free...):
> 
> View attachment 5817
> 
> ...


ValueLine might be in the main library, but the Globe PEG's look realistic. 
I'm just presenting a perspective: one perspective among many. Not trying to control what people do with their money. It's important for people to make their own decisions, and if it doesn't work out, to have some framework to interpret what went wrong. 
Anyway, as you can see from the 10 year history of CTC, it came back after the 08-09 drubbing. That's important.


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## Moneytoo (Mar 26, 2014)

Pluto said:


> I'm just presenting a perspective: one perspective among many. Not trying to control what people do with their money. It's important for people to make their own decisions, and if it doesn't work out, to have some framework to interpret what went wrong.


My husband found your numbers more convincing than my "realistic" ones, so I changed the limit price to $110 as a compromise - will give it a month  And if we miss this chance, maybe Dollarama will come down - although its PEG is 1.57 now, maybe it is a better value despite being gone up so much... Don't really like other "candidates" for this position:

View attachment 5841


Thanks again! =)


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## Moneytoo (Mar 26, 2014)

«The major indexes moved higher over the past week, as of Thursday’s close, with many of them experiencing bullish crossovers of the MACD indicator.»

Read more: ChartAdvisor for September 11, 2015 (SPY,DIA,IWM,QQQ) http://www.investopedia.com/stock-a...er-11-2015-spy-dia-iwm-qqq.aspx#ixzz3lesTDsFe 
Follow us: Investopedia on Facebook

Sigh...


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## Pluto (Sep 12, 2013)

Moneytoo said:


> «The major indexes moved higher over the past week, as of Thursday’s close, with many of them experiencing bullish crossovers of the MACD indicator.»
> 
> Read more: ChartAdvisor for September 11, 2015 (SPY,DIA,IWM,QQQ) http://www.investopedia.com/stock-a...er-11-2015-spy-dia-iwm-qqq.aspx#ixzz3lesTDsFe
> Follow us: Investopedia on Facebook
> ...


I think the MACD thing cited is meaningless to long term investors. Its a little blip. The MACD on a 10 year chart shows the trend down. There is no meaningful upside conviction presently. The volume last week is significantly lower than the previous week, which was a losing week.


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## Pluto (Sep 12, 2013)

Moneytoo, I think the MACD you are looking at is too short term for LT investors.








The attached chart includes MACD on a long term basis and MACD is down. The blips up on a short term chart are only meaningful for short traders.

And to make things more confusing: -

http://www.marketwatch.com/story/no...d=MW_story_recommended_default&Link=obnetwork


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## Moneytoo (Mar 26, 2014)

Thank you, Pluto! =) It's just, personally, I find it so hard to wait for a crash or bear market that may never come... And then I regret buying higher instead of waiting


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## Moneytoo (Mar 26, 2014)

Pluto said:


> Moneytoo, I think the MACD you are looking at is too short term for LT investors.


Yeah maybe it's time to unsubscribe - I've been looking at those charts and their analysis for almost a year, the results are 50/50 at best even for short term (when they say the indexes look bearish - they go up in the next few days, and vice versa for bullish - might as well flip a coin )

Watching how low CTC will go, have a bunch of other limit orders below current market prices, good time to learn now..


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## Pluto (Sep 12, 2013)

Moneytoo said:


> Yeah maybe it's time to unsubscribe - I've been looking at those charts and their analysis for almost a year, the results are 50/50 at best even for short term (when they say the indexes look bearish - they go up in the next few days, and vice versa for bullish - might as well flip a coin )
> 
> Watching how low CTC will go, have a bunch of other limit orders below current market prices, good time to learn now..


I'm not sure what subscription you are referring to. But when the opposite happens short term traders take a contrarian approach: When indicator says it is bearish, they buy, when it says bullish, they sell. That can work in a sideways market, but I don't bother. I prefer being in stocks for the duration of a bull market, then lighten up and wait for a buying opportunity. Seems too early to buy now, unless it is a oil stock, like HSE. 

The long term technicals make things look poised for another leg down after this pause we are in - no guarantee, just has that appearance. I don't see compelling reasons for significant upside. Some talking heads say the US economy is fine - they always say that before a fall. Often the indexes head down before any clear evidence of a bad economy, so I watch the indexes more closely than the economic forecasts.
For me to change my mind I'd need to see very high volume up days, and it just doesn't look like that is in the cards.


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## Moneytoo (Mar 26, 2014)

Pluto said:


> I'm not sure what subscription you are referring to. But when the opposite happens short term traders take a contrarian approach: When indicator says it is bearish, they buy, when it says bullish, they sell.


It's Investopedia Chart Advisor free subscription - they send one letter per week with suggested direction of major U.S. Indexes and an occasional letter with a few stocks and the suggested trade based on their charts. I paper-traded for a while, but gave up when realized that at least half of my trades would exit on stop-loss orders, so it's a completely different game that I don't have the time to play 



> I prefer being in stocks for the duration of a bull market, then lighten up and wait for a buying opportunity. Seems too early to buy now, unless it is a oil stock, like HSE.


Unfortunately, I bought 100 shares of HSE last summer for ~$33. Wanted to buy 100 more in June for ~$24, glad I bought CCO instead (losing less on that one... ) But keeping and DRIP-ing, along with CPG and other stocks that I bought too high... sigh


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## Moneytoo (Mar 26, 2014)

Pluto said:


> The long term technicals make things look poised for another leg down after this pause we are in - no guarantee, just has that appearance. I don't see compelling reasons for significant upside. Some talking heads say the US economy is fine - they always say that before a fall. Often the indexes head down before any clear evidence of a bad economy, so I watch the indexes more closely than the economic forecasts.
> For me to change my mind I'd need to see very high volume up days, and it just doesn't look like that is in the cards.


Tonight's talking head agrees with you :

«Assuming this was a correction in an ongoing bull market, there are typically two ways the bull market can resume. The first is the natural resumption past the Aug. 24 lows. If this occurs, we do not expect it to occur in a straight line as the volatility is here to stay in the short-term due to the damage done to investor sentiment. In other words, more rollercoaster trading days with net higher closes. The other way a bull market has resumed in the past after a fast correction is to retest the lows. This has happened six times in the past 40 years – in 1978, 1979, 1987, 1998 and more recently 2011 & 2012. In these cases, the retest usually occurs within two to eight weeks. As this correction occurred in August, an expected retest (if it does happen) would likely occur in the first week of October. The focus short-term is on the FED and whether they raise rates on Thursday. If so, we think that would be a trigger for markets to rebound (albeit after a possible negative immediate reaction). Not clear cut so be ready but have some cash to be ready to spend.»

http://www.bnn.ca/News/2015/09/14/T...BBT-Concordia-Healthcare-and-Walt-Disney.aspx

I like the indexing approach because it removes the emotion and the guessing game. But at the same time, I like the excitement of "getting it right" - and looks like finally enjoying the watching and waiting without wanting to jump in the moment it's turning green. That was my biggest problem before - once the stock would go up a bit, I'd think that's it, need to buy now! And then it would turn and go further down... So deciding on the price and putting limit orders in advance worked the best so far. But sometimes the limits are not getting reached, so need to come up with a better strategy - or fine-tune the limits...


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## LBCfan (Jan 13, 2011)

My opinion of TA kinda follows Peter Lynch:


> Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.


I've yet to hear Warren Buffet mention TA terms in his letters to shareholders. I wonder why?


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## Pluto (Sep 12, 2013)

LBCfan said:


> My opinion of TA kinda follows Peter Lynch:
> 
> 
> I've yet to hear Warren Buffet mention TA terms in his letters to shareholders. I wonder why?


Apparently both Buffett and Munger have said they are greedy when others are fearful, and fearful when others are greedy. So they do see something in sentiment. The older Templeton, also a student of Graham, said buy at the time of maximum pessimism. So he too, did not shun sentiment as a sign. But all three said they were value investors. So what gives? And is everybody fearful? is everybody pessimistic? 

It is true that Lynch didn't put much faith in it, but he had access to management: He was on the road talking directly to highly placed management before he committed much money to a stock. Part of his perspective is that an individual only needs one or two fabulous growth stocks in a lifetime. After he quit the mutual fund management he was on Barron's round table. His pick was the Body Shop - yes a great growth story at the time, but greatly overvalued. It tanked. He later explained that he thought the growth rate would make up for the over valuation, but it didn't. So much for the fundamental analysis crystal ball. If he was still running the fund at that time, I suspect he would have the resources to average down on the Body Shop. Most people don't have that luxury. 

What I am trying to do in this thread is nothing different that what Buffett and Munger try to tell people: be greedy when others are fearful. 

You see individual investors acquire some money, then they wisely want to put it to work to achieve their personal goals right now. They have a personal template that they want to superimpose on the market, and they invest according to the superimposed template, instead of what the market actually offers at the time. The market actually cares less about anyones personal goals, so we have to take the market on its terms. 

The present terms of the market are 1. its overvalued (except for some select areas), so like Lynch's pick, the Body Shop, what ever anyone buys is likely to tank. PEG's of just normal companies are too high. 2. Along with being too high it is in a dropping phase. Those too eager to spend their hard earned nest egg are taking too much risk. When everyone is fearful the risk will be greatly reduced. 


This over valued market could care less about anyone's personal template, your subjective view of the future. Yet there are professional money managers who will feed into peoples subjective wants in order to encourage them to throw it all in anytime. Are they mixed up too? or are they just manipulative?


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## Pluto (Sep 12, 2013)

Moneytoo said:


> http://www.bnn.ca/News/2015/09/14/T...BBT-Concordia-Healthcare-and-Walt-Disney.aspx
> 
> I like the indexing approach because it removes the emotion and the guessing game. But at the same time, I like the excitement of "getting it right" - and looks like finally enjoying the watching and waiting without wanting to jump in the moment it's turning green. That was my biggest problem before - once the stock would go up a bit, I'd think that's it, need to buy now! And then it would turn and go further down... So deciding on the price and putting limit orders in advance worked the best so far. But sometimes the limits are not getting reached, so need to come up with a better strategy - or fine-tune the limits...


1. Forget the mid town library, try the central library. They should have valueline, (and the very good Investment Reporter.) Photo copy the Vaueline report on CTC. Then calculate what its PEG would was back in 2009 in order to get a range - its low PEG vs its high PEG. My opinion is you want to buy ctc when PEG is more in the middle or lower, not at the high end of the range. At least below 2. 

If you buy a stock at or near its all time highs in a mature bull market, with a PEG > 2, it is a recipe for depression. 

If I have my story straight, Buffett and Munger wanted lots of stock in Wells Fargo, but the valuation was too high. 
Then the Savings Loan crisis came. The good got dragged down with the bad. Wells Fargo stock got hammered and they bought and bought and bought. They didn't time the market, they just waited for the opportunity and pounced. 

What I suggest is essentially what they did. Figure out a good to excellent value and wait.


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## lonewolf (Jun 12, 2012)

There always has to be timing for there is always time.


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## Moneytoo (Mar 26, 2014)

Pluto said:


> 1. Forget the mid town library, try the central library. They should have valueline, (and the very good Investment Reporter.) Photo copy the Vaueline report on CTC. Then calculate what its PEG would was back in 2009 in order to get a range - its low PEG vs its high PEG. My opinion is you want to buy ctc when PEG is more in the middle or lower, not at the high end of the range. At least below 2.
> 
> If you buy a stock at or near its all time highs in a mature bull market, with a PEG > 2, it is a recipe for depression.


Thank you, *pluto*, for helping me not to make yet another mistake! I didn't believe at the time that I'll ever see CTC under $107 (that was its "fair value" 4 months ago) - and today it's < $106... so I'm surely glad that I didn't buy it for $120-ish :biggrin:


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## cn_habs (Oct 27, 2015)

Timing the market is always hard in the long run so for the next year or two maybe buying some bond ETF or simply sitting in cash would be a better strategy.


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## godblsmnymkr (Jul 15, 2015)

cn_habs said:


> Timing the market is always hard in the long run so for the next year or two maybe buying some bond ETF or simply sitting in cash would be a better strategy.


bonds go down in market crashes. TLT or cash.


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