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Raz
08-31-15, 09:58 PM
Today was an important day as we determined the close of the August monthly price bar on charts of the various indexes.
September will be just as important to determine the odds of being at an VERY important trend change.

Chart work and commentary are attached as a PDF.

jk
09-01-15, 02:11 PM
thanks, raz. interesting.

santafe2
09-01-15, 09:35 PM
thanks, raz. interesting.

This looks like some downward churning in an overbought market jk. How is it interesting? I find this market unsurprising. I've been wrong before but this market looks like about 20% down and then a return to the upside. If that happens, it's pretty much what everyone is expecting. Do you see something different?

jk
09-01-15, 10:51 PM
This looks like some downward churning in an overbought market jk. How is it interesting? I find this market unsurprising. I've been wrong before but this market looks like about 20% down and then a return to the upside. If that happens, it's pretty much what everyone is expecting. Do you see something different?
what was interesting to me was the technical analysis. you very well might be right re the 20% down and then return to the upside, but we don't know. in early august i started feeling increasingly uncomfortable with what was happening in the financial markets. on monday 8/10 i moved to cash about half the money i had with any normal stock or bond exposure. this was about a week before the big downdraft. i'm thinking about what to do next and happy to get any new information or perspective whatsoever.

santafe2
09-02-15, 12:07 AM
what was interesting to me was the technical analysis. you very well might be right re the 20% down and then return to the upside, but we don't know. in early august i started feeling increasingly uncomfortable with what was happening in the financial markets. on monday 8/10 i moved to cash about half the money i had with any normal stock or bond exposure. this was about a week before the big downdraft. i'm thinking about what to do next and happy to get any new information or perspective whatsoever.

I disagree with EJ in some areas jk but not with regard to TA. It's nothing more than a Ouija board; humans attempting to mathematically understand a mostly emotional construct. TA is not information, it's noise constructed to appear as signal. If we move up from here, TA will have a proof. If we move down, TA will have a proof.

charliebrown
09-02-15, 07:38 AM
I have noticed that if markets are overvalued, use a shiller p.e., price to sales, etc. to measure this, and the 10 month moving average is decreasing, then it is time to sell. That happened Monday 8/31. I'm only at 9% stock allocation and mostly value stocks. I took some off the table.

jk
09-02-15, 10:29 AM
I disagree with EJ in some areas jk but not with regard to TA. It's nothing more than a Ouija board; humans attempting to mathematically understand a mostly emotional construct. TA is not information, it's noise constructed to appear as signal. If we move up from here, TA will have a proof. If we move down, TA will have a proof.
i don't think the piece that raz posted was predictive. it said if the next month's closing was above a trendline it would imply less downside risk, if it were again below the trendline it would imply great downside risk. i think it's a way to measure current [not future] market sentiment. it's like following a fever in a patient with pneumonia. the fever doesn't predict the future course of the illness, but it tells you something about its current state. and if the fever is moving in the wrong direction, you know you've got a problem and increased risk of a bad outcome.

this also leaves aside the self-fulfilling prophecy aspect in ta. whether this piece is significant depends to a great extent on the context of stop-loss orders, dynamic hedging and so on. in 1987 all the portfolio insurance algorithms got triggered by prices breaking levels that were set based on t.a. we know how that worked out.

Ellen Z
09-02-15, 04:02 PM
i think it's a way to measure current [not future] market sentiment. it's like following a fever in a patient with pneumonia. the fever doesn't predict the future course of the illness, but it tells you something about its current state. and if the fever is moving in the wrong direction, you know you've got a problem and increased risk of a bad outcome.



That's a great analogy... a useful way to think about it. Thank you.

lektrode
09-02-15, 08:21 PM
That's a great analogy... a useful way to think about it. Thank you.

+1
mahalo for that one doc.

santafe2
09-04-15, 02:42 AM
i don't think the piece that raz posted was predictive. it said if the next month's closing was above a trendline it would imply less downside risk, if it were again below the trendline it would imply great downside risk. i think it's a way to measure current [not future] market sentiment. it's like following a fever in a patient with pneumonia. the fever doesn't predict the future course of the illness, but it tells you something about its current state. and if the fever is moving in the wrong direction, you know you've got a problem and increased risk of a bad outcome.

this also leaves aside the self-fulfilling prophecy aspect in ta. whether this piece is significant depends to a great extent on the context of stop-loss orders, dynamic hedging and so on. in 1987 all the portfolio insurance algorithms got triggered by prices breaking levels that were set based on t.a. we know how that worked out.

Let me start by saying I've great respect for your ideas jk but we disagree on this issue. All TA is predictive and none of it is based in science. It changes over time based on how many true believers a TA concept collects. If the crowd loves a TA concept, that concept is coded into buy and sell algorithms until it stops working. TA is not comparable to the fever of a patient with pneumonia, it must be compared to medicine and conform to those standards. It does not. It conforms to the standards of Voodoo or Pentecostal healing. As long as the believers believe, it works. When they turn on the system of belief, watch out.

jk
09-04-15, 08:49 AM
vodoo and faith healing may have some effects through the physiological reactions of believers, much as hypnosis may provide very effective pain control for the right subjects. i have no great belief in, nor interest in, ta but i am nonetheless interested in seeing a "technical analysis," especially at times of great stress in the markets. it may well become a self-fulfilling prophecy. never underestimate the power of the irrational.

Raz
09-04-15, 03:03 PM
Technical analysis is not irrational. EJ is an exceptionally intelligent man, but the example he used to make his statement that TA is worthless was NOT TA in any classic sense whatsoever. It was a pile of silly crap and I told him so.

Technical analysis is a windsock - not a crystal ball.

Polish_Silver
09-04-15, 03:56 PM
Technical analysis is not irrational. EJ is an exceptionally intelligent man, but the example he used to make his statement that TA is worthless was NOT TA in any classic sense whatsoever. It was a pile of silly crap and I told him so.

Technical analysis is a windsock - not a crystal ball.


Could you write, or provide a link to an explanation of the basis of technical analysis? I think part of the problem, is that people use the term
for a variety of methods, with various degrees of rationality behind them.

One of the most far fetched I heard was based on Fibonacci sequences.

santafe2
09-04-15, 11:00 PM
One of the most far fetched I heard was based on Fibonacci sequences.

Love that one. Lay your hands on the afflicted market and drive the devil away! Fibonacci has nothing on Gann Square of 9. That one is some serious Voodoo. Now you can buy an Excel spreadsheet so even the lazy can Gann their way to poverty.

jk
09-04-15, 11:05 PM
Love that one. Lay your hands on the afflicted market and drive the devil away! Fibonacci has nothing on Gann Square of 9. That one is some serious Voodoo. Now you can buy an Excel spreadsheet so even the lazy can Gann their way to poverty.
i'd rather watch skirt lengths.

Polish_Silver
09-06-15, 05:31 PM
I have noticed that if markets are overvalued, use a shiller p.e., price to sales, etc. to measure this, and the 10 month moving average is decreasing, then it is time to sell. That happened Monday 8/31. I'm only at 9% stock allocation and mostly value stocks. I took some off the table.

That makes sense to me. Use a fundamental yardstick, and include psychological factors: market over valued, investors getting scared, time to liquidate!

Raz
09-29-15, 10:24 PM
Here's the Monthly chart of the SPX as of today's close. It will take a HUGE rally to close it above the 20-month SMA tomorrow at 1,996.69. IF IT DOESN'T then we'll have another warning of a potential Long-Term trend change. And if it doesn't climb and close well above the 20-month SMA on October 30th the odds of a Bear Market will become highly likely.

Watch the close tomorrow.

jk
09-30-15, 11:14 AM
thanks for the updates, raz. s&p's up about 1.5% at the moment, only needs to rise another 3.5% before the close.

Raz
09-30-15, 09:47 PM
thanks for the updates, raz. s&p's up about 1.5% at the moment, only needs to rise another 3.5% before the close.

Well I knew it wouldn't make it after looking at the volume, OCO only A/D line, etc. This is another warning.
But we won't have real confirmation until we see the monthly price range and monthly close for October.

We'll have to wait until Friday, October 30th for that info.

The final chart through September with comments is attached.

jk
10-01-15, 12:52 PM
Well I knew it wouldn't make it after looking at the volume, OCO only A/D line, etc. This is another warning.
But we won't have real confirmation until we see the monthly price range and monthly close for October.

We'll have to wait until Friday, October 30th for that info.

The final chart through September with comments is attached.



i'm mostly in cash with the plan of MAYBE re-entering equities at the end of oct. maybe i'll wait til early nov to decide.

Raz
10-31-15, 05:05 PM
I intended to post this last night but the site was down.
Once again "Fedspeak" sent the bulls into an orgasmic frenzy.

And why not? The suppression of the money markets by the Fed has everyone chasing yield; after all - "where else are you going to put your money?" :(

Two charts with commentary are attached.