That's correct. However, six months is enough if you have significant peaks and troughs to compare current data to, in this case, December and March, though a one-year view will also include October. As for the MA, I apply a 10 and 30 SMA (all of this came from Justin Mamis, along with the New High/New Low stuff, speaking of which, the Nasdaq New Highs have begun to lag).
I think you can waste a lot of effort trying to overintellectualize this stuff. It is clear we are in a bull market for the intermediate and short terms. You can lose a lot of money if you lose sight of that fact. For the longer term, it is also clear we have been in a trading range since last summer. The SPX low of 775 on 7/24 and the highs of 965 only a month later on 8/22, have defined that range. We tested the lows twice and they held. We have tested the highs twice and failed, but we are now involved in a third test that seems to be based on more real buying and less shortcovering. Hence the optimism. One of the oldest trading adages is "third time through." But we are entering the weakest period of the year, and seem overbought in both time and price. Will the 935-965 resistance hold again? Will it be penetrated, only to fail in a massive bull trap? Will a new bull emerge?
How about using price as your primary indicator... forget about all the indicators and sentiments.... Right now we are stuck in an uptrending channel.... how about shorting when we break down out of the channel... and buying the dips on a pullback??? This will continue to work... until it doesnt work anymore.. check out the simple chart... --MIKE
I will say this over and over... you will never be a successful trader... predicting tops and bottoms.. Always go with the flow.. until it stops working... Instead of trying to pick the top.. just wait for the market to breakdown or rollover.. then start shorting and going with the new flow... worse case scenario.. you get whipsawed... best case scenario you will be late to a great party.... Do this consistently.. you will almost always be on the right side of the market... and will catch some huge moves.. One of those big moves.. will cover all losses from your whipsaws... Right now we are in rally mode... continue buying the high volume breakouts from bases.. and be quick to take profits if the market begins to turn... --MIKE
Is there a period of time or price when will you recognixe that you're "sell" call may be wrong? If the S&P rises to 1200 over the next few months, you won't still be saying "sell and patient" will you? I guess I'm just asking if you will be flexible enough to change your mind (ie .and become neutral) if the situation warrants. Thank you for your response.
There are three things which have caused me to seriously question my bearish stance: 1] The Coppock indicator's readings of a 'new bull market' 2] Carl Swenlin's PMO indicator 3] Lowry's Reports indicating that there is no increase in selling pressure and any pullback would be caused by a decrease in selling pressure. They are basically saying that there could be a pullback but this could have some legs. All three are pure TA and ignore the $, gold, inflation/deflation, terrorist attacks, the price of tea in china, etc.... So if as a trader, I am loyal to price action, I have to pay attention to them. The first two are long term indicators and by no means perfect ones. While the last one is an intermediate proprietary indicator from the annointed Lowry's organization. But at the same time, I see so many other logical and reputable indicators pointing the other way. I won't list them here as I've already mentioned them many times before. I still have conviction that the transports are way overbought here and are shorts. They have failed to keep up with the market indices (epecially $XAL) and have a high BP%. Look at BNI, R up with a tepid volume. Some have already cracked and are headed down like HTLD, CGO and EXPD. For the brave wanting to be SARS contrarians there is ZNH and CEA (as longs). But when it comes to the general market, it is obvious that I've been wrong, or early , but seriously, I'm confused and am opting to wait until there is a clearer picture. So I'm basically neutral (except for the deep OTM puts) but poised ready to lunge at the market with the agility of Anna Nicole-Smith attacking a buffet table.
http://www.elitetrader.com/vb/showthread.php?threadid=16711&perpage=6&pagenumber=2 my post is towards the bottom of this page. I said very early in this thread that the "sell" signal was premature, and that Babak would be changing his position at 950. Read my above post for exact language. We;;, Babak is neutral now, so I was right! And you know what? Squeezing out these wise guy bears is what a top is all about! That's why, I'm selling now that the S&P has topped at 950! JJ