Its not 1999, its Sept 2006.

Discussion in 'Trading' started by michaelscott, Apr 26, 2007.

  1. If you look at the charts, you can see an obvious cup over the summer and then when the index prices broke through that cup around september then the real party began. Now the indexes have broken through another cup and so it will probably be a few months more of fun before another chop-chop index.

    My belief is its now time to follow the stocks that are moving with the market. While you can throw your feet into the homebuilders or play bounces from some of the losers, I think its best to go with the ones that move with the market.

    I WOULD NOT focus on market tops, market bubbles, market crashes, etc. Instead, I would focus on the *current trend* and make some cash off of it. Of course, the market will go down eventually, but if you focus on the future rather then the here and now then you miss out on a great trend.

    In this market, your opinion does not count. How you feel about the economy or if the market is in a bubble does not matter...

    The trend is your friend. When the trend does turn down, we will deal with it then. Until then, trade the trend.

    Happy trading and a lucrative day to all.
  2. If we see an 8% one day drop, what would the trend be in your opinion?
    It doesn't matter when the market corrects.
    Everyone recognizes the market is overvalued now, the reason people still buy is because the momentum is there. If you believe that the bubble will not reach 99-00 proportions, then it doesn't really matter when the correction occurs, all that matters is that 25% on the dow in 9 months is bubblish and will revert back to the 7% historical average at some point.
    The reason we got to this point in the first place is 99-like mentality of trend following rather than thinking about what you are actually buying.
    The argument that the market isn't up that much because the dollar is down isn't really true. To japanese investors the dow is up 35% in those 9 months, but that too is irrelevant. What matters most is US inflation and GDP, not the dollar.
    Rule of thumb: Market is cheap -> insiders buy. don't really see it.. (did see it in may/june)
  3. This is sound advice for any time, any market, anywhere.

    Of course,a lot of folks will fight the trend up, eventually give up fighting it then buy it all the way down and be pissed off saying "I'm doing the right thing by buying and losing money, WTF ?!?!"
  4. Use common sense.

    Do indexes ever just suddenly drop? What you will see before any big drop is the indexes chopping and churning. Before February, there was obviously lots of chop and churn. You could feel it in the air.

    Right now we are in the uptrend, there wont be any chop at least for another 2 (or more months). There are many indicators that might indicate a market top, but all indicators are telling me that its full speed ahead right now.

    Actually, here is a simple method to finding when the market corrects. Measure the height of the cup on the Wilshire 5000 and then add that height to the right peak. Thats when you should be cautious.

    Valuation is a matter of opinion. Sometimes stocks trade at 5 times earnings, sometimes they trade at 20 times earnings. Its all in your head of what a stock should be valued at.
  5. S2007S


    come on, you make it sound like Feb 27th was easy to predict. Too funny.

  6. Your spot on mate!
  7. The exact date was not so easy to predict, but you could just feel it in the air. The indexes were chopping around, the ISEE index was starting to slant down, etc.

    Its like you hear that squeak on your car that keeps getting worse and your not sure when it will give, but eventually it does.

    Actually, there was a triple top in the QQQQs. After a long trending up formation, your going to get a formation of some type where the price has to make a decision. On the triple top, the third top is the worst because your not sure if it will break through the top or go for the bottom and break through that.

    The savy Qs chartist would have spotted it and you could see the puts ticking up slowly in the IWM. There were quite a few who spotted it.

    For those who were not savy, there was still a sense and feel of it in the air. It was like the quiet before the storm.

    The people who got hurt most were the ones who continued to trade after January 1st. At some point, you have to trust your gut and get away from the keyboard. For those who took a vacation and came back after the drop, they made a killing. While everyone else did not or even took losses.

    Now there are either one of two options. Measure the height of the most recent cup on the wilshire 5000 and add that to the right peak. Thats when you have your early warning sign. Thats the first potential price where it might get rough. Look for formations on the index charts, i.e. Qs, that might indicate a top. So on a chart you either have a diagonal line going up-down or some type of other formation that indicates a change is about to occur. You want to look for the early warning formation.

    Im betting that the average trader will feel it in the air and see the indexes chop. Its up to each trader to know when its time to not steer his ship through a storm and simply through his cash in the bank. Unfortunately, most traders feel the need to trade everyday and this is a very costly habit.

    15800 on the Wilshire 5000 index is the first point where you should look for chart toppers.

  8. So your telling me that you could not predict what would happen next on the attached chart? You have the price hitting one peak, then a second peak and then sweeping up to the third peak. Each time it hit one peak, then it came down. Not just a staircase walkdown, but one big red candlestick.

    You knew that on the third peak it would get wild.

    This chart looks just like a classic head-shoulders. If the gurus, hedge fund managers and critics on ET couldnt see this formation coming then I really wonder if they should be trading real money.

    If you went to and read the lesson about head-shoulders, then you know the following:

    45.40 (height of middle formation)- 43.29(neckline)= 2.11

    43.29(neckline)-2.11= 41.18 target (42.06 actual)

    Was that so hard now? I went to a state college, I sit behind a desk all day long performing boring meaningless tasks and I was able to figure that out.

    Now the target price for the QQQS before the next formation is

    45.55+3.49(depth of cup)= 49.04

    Go buy yourself some ultrashares QQQS and you are guaranteed to have 12% in 2 months.
  9. It's statements such as this that really will destroy one's credibility.

    There are no guarantees in financial markets, and if there were, they would not exist.

    You would not be able to purchase QQQQs if you're statement above was true.
  10. been saying time 2 buy for almost a year

    glad people are finally catching on

    dont fight the trend
    #10     Apr 26, 2007