bull market has resumed

Discussion in 'Technical Analysis' started by gharghur2, Oct 1, 2005.

  1. Nick ...

    True! Let's do that ... position trading club

    tony
     
    #51     Oct 2, 2005
  2. Hi Seth,

    Actually it is kind of unusual, but I think the lack of interest in stocks, and Greenie racheting up rates at every opportunity has something to do with it.

    Still the market has managed to consolidate at upper levels, making successively higher highs, much like the early 1990's.

    In 1990's blowoff, the market subdivided into 10 lesser degrees of waves. It was amazing and unprecedented! We are only dealing with a third lesser degree here.

    tony
     
    #52     Oct 2, 2005
  3. nitro

    nitro

    Ah, I see. I am curious, if you have the time, would you expand on where he has deviated from "classical" EW theory. I thought all EW theory was to some extent subjective?

    nitro
     
    #53     Oct 2, 2005
  4. Sorry, I was not clear.
    Bob has not deviated whatsoever from classic EW. I have!

    Bob and I had this discussion 20 years ago, I was publishing a competitive newsletter then: Long-Term Trends. I sent him an analysis of the DJIA in mid 1987 explaining my findings. It called for a crash! And, the analysis was published in Barron's mid June 1987. After the market crashed we got to know each other very well. There's a long history here. We have kept in contact on and off through the years.

    My research in the early 80's led me to a more definitive approach to EW. Far less subjectivity in identifying the actual waves. I wanted to share my findings with him. But Bob told me up front, he had no intention of deviating from the original works of Elliott. I still respect him for that. I have been applying my approach to EW ever since, and it has worked incredibly well. If you go to my blog ... the very first entry details my background.

    Hope this clears things a bit...tony

    http://spaces.msn.com/members/caldaroEW/
     
    #54     Oct 2, 2005

  5. As I read this I am thinking just the opposite, time and price are leveling / momentum is decreasing. The market is running out of gas. I also realize that the trend has been up but last week was not convincing.

    When the indexes are strong I look at stocks. What I am seeing in many stocks is not looking good. I just do not see the patterns in them to convince me. Wait and see time.
     
    #55     Oct 2, 2005
  6. Hi!
    Understand...the markets have been kind of flat (trading range).
    The next meaningful push should grab everyone's attention.
     
    #56     Oct 2, 2005
  7. nitro

    nitro

    Or the next meaningful drop.

    nitro
     
    #57     Oct 2, 2005
  8. that would get my attention

    tony
     
    #58     Oct 2, 2005
  9. Volume 8 Issue 4

    October 1 , 2005

    THE WEEK AHEAD REPORT

    As this week started, we were looking for a corrective rally to take us up to mid-term highs where we would move short. I discussed a range of common formations that we would be looking for. However, when the week started I had to admit the market chose the 'others' category. As the week progressed, we were long but the days were filled with corrective patterns. We watched the indexes jump from red to green to finish most days in the green. The SPX closed green 5 out of 5 days this week with a total of six higher closes straight through Friday.

    As the week progressed, we saw our corrective formation give way to a more bullish wave count that we will outline later in this report. We closed the week in a very bullish set up for next week and are likely to enjoy the longs we carried into the weekend.

    In today’s report, we will talk about our wave count and how we morphed to a 3 from a C. We are also going to look at what may be taking place in not just our markets but also around the world. Our trillion dollar Brain Food question-and-answer will be why markets confront bad news with rallies. First, lets look at some charts, shall we?



    Ewave and The Chartist

    Before we go to the charts, I want to talk about the fractal nature of wave formations and how they can create confusion. When you look at the first three charts, you are going to see our Ewave count in three degrees of trend, sub-micro, micro and major degree. The count has been posted on each chart showing how they count the same but different at the same time. That’s because wave one and two in the major degree have their own waves 1 though 5 in the minor degree and minor degree waves have their own counts in micro and sub-micro. Fractals are wave patterns that appear in ever decreasing degrees of trend.

    It has been clear in some conversations in the Chat Room and on occasion in Emails I receive, that moving from one degree to another is difficult to follow. What I plan to do moving forward is to post, either at 3:00 PM or AMC, current wave count charts. For ease of use, I will keep the minor degree chart running however will change the index on a regular cycle from NDX to Dow to SPX. I hope this new feature will be useful in the days and weeks ahead and help with the visualization of current wave patterns. I will make every effort in my commentary when I discus different degrees of trend to start with the minor degree wave so it will be clear that I'm discussing a sub-count of that degree.


    [​IMG]


    We start by looking at the sub-micro on the NDX. As you can see by the labels, we spent Friday in a flat second wave. This can be verified by the stochastic indicator relieving overbought conditions through the course of the flat. As we neared the close, wave 3 up appears to have started and this tells us we will start next week on a strong up move.




    THE CRYSTAL BALL

    The charts are sending us a clear message and that message is that we have more rally to come at least in the short term. So, long remains the play into next week. We will be watching our triangles as we move higher to test resistance of the formations. It will be at these levels that we will find out just how bullish or bearish the market is. Once these formations hold or break we will have a good idea of the longer term trends and how to trade them.

    Since we are entering 33 Monday we need to watch for a very strong push higher. Working and Lunch have cash idle because the day I planned to take them long, our web server crashed and we were offline, To augment our calls, I plan to buy stock and increase our options position on the open Monday. Rydex traders need to hold longs until we see a resolution to the triangles we are tracking. Good luck and enjoy the rest of your weekend.

    Now, It's Time for BrainFood

    Today I want to ask the trillion dollar question, that being how do you create 1 trillion dollars in fresh new assets with out destroying your currency by printing them? It’s an important question because in finding the answer you find the reason the world markets have been on a tear to the upside.

    To understand the answer, you must first understand that all that is precious to us are assets- your home, stocks and even art and cars. They are assets and have no real value except that perceived value assigned to them by the buyer. Money is the same way. It replaced gold as the foundation of our monetary system, however unlike gold it is a piece of paper with no value except that which you place on it.

    If you print too many dollars, the value placed on them are diminished because you have too many dollars chasing to few goods. Inflation is caused by this. As the number of buyers increases, so too do the prices. If you print too few, the reverse occurs with a strong dollar and no one who has very many. Print just the right amount and you hit the sweet spot where inflation is contained and growth is perpetual.

    To keep an asset based system alive you need appreciation of assets to create what is called the wealth effect. People see their home value increase by 50 thousand dollars, so they borrow against the equity to buy a pool. Someone else sees the balance sheet moving up on their stock holdings and they go buy a new refrigerator. In any paper system, assets grow or the economy dies.

    The housing bubble has reached its final inning and a new bubble must arise to take its place. The housing bubble was born out of the burst in market value after the 2000 crash. Since then, the markets have been largely ignored by smaller investors who were burned and unhappy with the result of the crash. Money has increasingly moved to homes as an investment. As the housing bubble starts to pop, we will be looking for a new way to create a trillion dollars without printing them. Hence the question- How do you create a trillion dollars? And do this without destroying the value of your currency. The answer is simple. Push up the financial markets and the value of stocks and money is created out of thin air. A stock certificate is valueless, but the owner perceives it to be ownership of a corporation. He feels the wealth of owning 1/1000 of 1% of IBM. It is becoming more and more clear that a manipulation of assets has and will continue to unfold as we see the value of homes ease in the coming years. The money lost will be shifted to another asset class, that being stocks.

    The dangers of such a sudden shift in assets with a population drowning in debt will become evident in time, but that time is not here yet and we sit at the threshold of amazing returns in the markets as we see trillions shift from the value of the home to a worthless class of paper we call stocks. In the end, the imbalances in global spending and purchasing habits will reek havoc on our current monetary system and gold will be the keeper of wealth. Until that day arrives, we need to buy stocks and hold them so we can share in the trillion dollar lotto that is about to take place.
     
    #59     Oct 3, 2005
  10. garbage
     
    #60     Oct 3, 2005