Bulls 4, Bears 0. Will Earnings and Full Moon Help Bears?

Discussion in 'Trading' started by shortie, Mar 26, 2010.

SPY Next Week

  1. Bullish

    16 vote(s)
  2. Flat

    7 vote(s)
  3. Bearish

    21 vote(s)
  4. I prefer to keep my opinion to myself

    13 vote(s)
  1. We have advanced for 4th week in a row and a red week is overdue. This week was a battle and the confidence of the bulls must be shaken. But i know they will not give up until a major drop takes place.

    May the market sink like the South Korean battleship with a torpedo in its side! Amen!

    We have the Full Moon this weekend and it may coincide with a market turning point. Also, we are moving into April and closer to the earnings season. The volatility/anxiety should pick up and hopefully will result in a few market drops.

    p.s. I am thinking of cutting/pasting a few posts by various ETers from previous week discussions into this thread to facilitate market discussion about the coming week.

    Suggestion to Barron:

    have a market discussion thread with a linked poll. the thread could restart fresh ~once a month and the poll could be restarted every week over the weekend.
  2. Thursday was key
    Commentary: Thursday's session amounted to a 'key reversal day'

    By Mark Hulbert, MarketWatch

    ANNANDALE, Va. (MarketWatch) -- The stock market's dramatic pullback from its intraday highs Thursday constitutes a textbook illustration of a "key reversal day," which has bearish consequences for at least the stock market's short-term prospects.

    According to the standard definition, of course, a key reversal day occurs when the market hits a new intraday high and then closes down. And that, the stock market did on Thursday.
    Dramatic as Thursday's reversal was, though, its bearishness -- in and of itself -- is probably of just short-term significance.

    That, at least, is the argument made in the latest edition of Technical Analysis of Stock Trends, the classic textbook on technical chart formations. Written originally many decades ago by Robert Edwards and John Magee, this textbook was updated as part of the latest (ninth) edition by W. H. C. Bassetti, who is an adjunct professor of finance and economics at Golden Gate University.

    What could very well make the difference for whether weakness in coming sessions turns into something more major is sentiment. If the mood quickly turns sour in the wake of that weakness, then the bull market might very well secure another lease on life.

    But if, instead, investors and advisers still refuse to build up their cash positions in the face of any such weakness, then contrarian analysis at least will conclude that bigger losses are in store.

    It's too early to tell how sentiment trends will unfold in coming sessions, of course. But it's worth noting that Thursday's key reversal day comes at a time when bullish sentiment is at high enough levels to be a source of concern. ( Read my Mar. 22 column.)

    In addition, Ned Davis, of Ned Davis Research, reported on Wednesday of this week that his firm's so-called "Crowd Sentiment Poll," which is a composite of a number of separate sentiment indicators, had just risen into the "Extreme Optimism" zone.

    As recently as this past February, in contrast, Davis' "Crowd Sentiment Poll" had been in the "Extreme Pessimism" zone. So there's been a huge swing in sentiment in a very short period of time.

    Unless there is an equally big movement to jump back off of the bullish bandwagon in coming days, Thursday's key reversal could very well turn into a decline that is of more than just short-term significance. "
  3. Another sentiment study suggests a possibility of a MAJOR TOP in sight:

    I found that, more than two-thirds of the time, sentiment hits its peak well before the market's top -- 70% of the time, in fact. On no occasion, for example, did the HSNSI reach its peak after the market did; on the contrary, it on average peaked out 55 calendar days prior -- or about two months. Similar statistics for the other sentiment indices are provided in the accompanying table.
    Sentiment index Days since bullishness hit its peak (as of March 22) Historical average Longest past lead time between peak in bullishness and market top


    On the one hand, as you can see from the table, the length of time that has transpired since the peak of bullishness earlier this year is moderately longer than the historical average. As this length of time increases, of course, it then becomes less and less likely that the market is in the process of topping out.

    On the other hand, as is also clear from the table, we still have a long ways to go before we exceed the confines of the historical precedents.

    The bottom line? It is mildly good news that bullishness is not at the very high levels seen a couple of months ago. But that good news may end up being nothing more than the silver lining in a very dark cloud"
  4. *fixed: the sentiment table from the above article
  5. This isn't even a whispy fart in how long the PPT can bully the bears. Any armchair chart watcher knows that a good rally often comes in three waves. First wave was March to June, second wave was July to Jan, third wave will be Feb through mid term elections in November.

    Then the Democrats win big in Congress, PPT eases up, market crashes, and well.. I'm not sure what happens after that.

    I love making precise predictions so here goes: stay long for at least the next 6 months. There might be a tumble in October (as is sometimes the tradition) to liven up election debates. Regardless, a very disappointing Black Friday for retail that sends the whole market into a tailspin.
  6. Dear SomeYoungGuy & Shortie

    I hate making markets predictions. You learn that after being humbled by the markets over the years. Then you stay with the markets until they prove you wrong.

    I have yet to hear any convincing evidence in these recent bear threads from time tested methods that the primary trend will not keep going up. These could either be technical or fundamental. Take look at fundamentals - earnings and interest rates. These both say we are headed higher. Technically a simple device like higher highs and high lows in this market has not broken the pattern. So if you have primary evidence this trend is over I would like to see you present it.

    Then there is loads of secondary evidence we all can present that the trend may be over. Some of these are:
    - Bull Sentiment as a contrary secondary indicator.
    - Key reversal bars at new highs.
    - Bubble Bens buy back of a 1 trillion plus is stopping.
    - Treasury is jamming big bucks in Freddie and Frannie.
    - Unemployment is not going down fast enough (weak economy).
    - Treasury auctions are failing and interest rates are going back up (sell stocks buy bonds?)
    - Foreclosures are still a big problem (banks won’t lend).
    - Many states will be bankrupt when BO’s Washington money stops.
    - Earnings will be sacked by Bo’s healthcare.

    There are lots more bullets. But these items by themselves do not IMO change trends.

    P.S. I would love to be short this market – but I’m not.
  7. The ultimate indicator: When Shortie's nom de plume changes to Longie :D
  8. Well summarized...thanks

  9. The Presidential Election Cycle and is this a Secular or Cyclical Bull Market?




    OK so the pres. cycle is intact after getting clobbered in 07 and 08. This detachment was expected as Bush was at the end of a 2 term presidency, riding extremely low in approval, and the credit markets unhinged. Obama rides into town on his Socialist horse and Voila bull market!!! Of course, after the "Great Recession" of 2008. The FED blows a big bubble and WOW look the market rallied---go figure, huh!?!

    So where are we and what do we do? Ned Davis says Cyclical Bull not Secular Bull for the reasons cited in the link. So what does all this mean?

    It means we are inflating a bubble after a crash but that it is cyclical in nature and not a new secular bull. I believe the evidence to support that notion is intact. So if we are in a cyclical bull market and the Pres. Election Cycle is game on, well then we should rally the last 2 years of the Pres. Election cycle, but wait. That would mean that we rally all the way until the end of 2012. That would also mean that the the first 2 years of the election cycle should have been down.

    What is my point in all this blather? Well I say the cyclical nature of this correction is displaced due to the credit market crash, Bush's 2nd term unpopular admin., Obama taking over in the midst of crisis, and the FED's early term Quantitative Easing.

    The President is gonna be all out of ammo when the elections roll around. His approval ratings suck, the FED is a separate entity from the Executive Suite and that's why I maintain a 4 year cycle with the cycle low March 09, top, March 11, and next low March 2013.

    What does that mean tomorrow?

    The cycles suggest a small correction mid-april, low June 30th or July 5th, back up into March 2011. Fall 2010 I gotta study the cycles more.
  10. hehehe, not there yet. but i am seriously considering fading my own calls. :)

    i wish the earnings season were closer. in Jan we started crashing right after AA reported earnings.
    #10     Mar 27, 2010