LONG TERM: BULLISH After some serious analysis of a potential completed long term diagonal triangle, that I am certain many of the bears will embrace, EW and the like. I've concluded that the MMI just does not support that potential scenario. And, as noted by our recent "wedges/triangle" report, neither does the wave patterns. Thus, I'm remaining long term bullish and expecting only a correction to complete minor wave 2. Looking for the bull market to resume in a few weeks, or sooner. Posted new 'bullmkt' charts. http://spaces.msn.com/members/caldaroEW/
Tony, I'm not a fan of EW but I'm bullish in the long-term due to the fact that most of the time it has payed to be bullish on stocks. The historical positive bias of the stock market makes foolish to be negative in the long-term. I'm also bullish due to the bearish sentiment that can be perceived everywhere. Now even socialistic radio stations like NPR are talking about the inverted yield curve and an imminent recession. I'm more of the idea that this inverted yield curve is a signal for the Fed to cut short-term rates. Event that is more likely to happen now that Osama Bin Greenspan, the most dangerous terrorist alive, is just to retire. Did you see the poll here in ET about best expected returns in 2006? 73 votes so far and only 5 for the S&P. Maybe is time to load the truck with SPY.
Hi! No, I didn't see the poll Let me guess, Crude and Gold got the most votes... I'll see if I can find it. Agree with your observations. tony
Thought you might appreciate this, from my Economics guru: "Hot sectors happen when a policy or technology event materially raises after-tax returns on capital there relative to other assets. Investors move money from low to high return assets which creates capital gains for the guy who got there first. This is precisely the same thermodynamic process as a storm system (a gap between high and low pressures or temperatures) in physics. People can best understand it by looking at a weather map of these storms. (See the weather map on my website for several of these storms.) The reason I like the weather map metaphor is everyone already understands it, and everyone also knows that a storm is TEMPORARY. The same is true for hot investments, i.e. you also have to know when to SELL them when the party is over. Last year's storms were: 1. Oil and commodity prices, both implications of China strong growth; 2. Small cap U.S. stocks caused by the gusher of liquidity for small companies that happened when the banks opened their doors to business loans again 18 months ago; and 3. The turnaround of Japan caused by the end of their 13 year deflation. In 2006, the most interesting storms will be: 1. Communications technology. Congress will pass a new telecom law next year that will dramatically increase capital spending on new high-speed networks. At the same time, China, Korea, India and others are making massive investments in IT as a strategy for growing their economies without using more oil and gas. This is great for capital owners altogether, but it's especially great for telecom equipment makers and software writers. Best way to play that is EWY,the Korean ETF. (Korea is an important R&D provider for China.) Another is IWZ (the US technology sector). 2. The inflation monster will pull its scary head back into its cave next year and the Fed will back away from tightening (especially if we have a bad event at GM or Ford to prod them into providing liquidity). Investors will realize that inflation and interest rates will stay low so it is safe to buy the companies whose profits are growing more than 10% per year. The market will boom, especially for the small companies who rely on bank liquidity for working capital. Best way to play this is the Microcap stocks (IWC; the Russell microcap ETF) or the small cap ETFs (IWM and IJR). 3. We will get an extension on the dividend and cap gains tax cuts in January. Great for the overall market, but especially great for companies paying dividends (you can use DVY for this), or companies with big cash positions and huge free cash flow (maturing tech stocks like MSFT who can initiate dividends or pay special dividends.) 4. I also have sizable bets still in place on the China Growth stom system (EWY (Korea), EPP (Australia, New Zealand, Singapore, Hong Kong), on coal (BTU), and on Japan (EWJ). As always, I own all of the stocks I mentioned above. (How could I tell readers I like a stock if I don't put my own money into it?)" JR http://www.rutledgecapital.com/
As Victor Niederhoffer says, there's no doubt that some of the best lessons about the markets can be found on diverse fields of knowledge like chemistry, physics, thermodynamics or sports. Baseball in my particular case has provided valuable lessons that I've applied to my trading. I've also found invaluable quotes from Butch Harmon that not also apply on Golf, but also on trading. I fear that the storm in energy has not ended, is only taking a break. If energy keeps moving higher will eventually take a serious toll on the economy. Now the average American is spending a lot of more money in energy bills, bills that will be paid by none-essentials things for living. What are those things that Americans will sacrifice to meet their energy bills? Food? no! clothing? maybe. Electronics? I can't imagine Americans not buying more IPods, but eventually they will have to. Keep an eye tomorrow on natural gas now that the Russkies have stopped selling NG to Ukraine and how that mite affect the markets. Good night and good luck!
WILD MARKET! The SPX make an intermediate term trend reversal today, after just two days of advance. Quite a show! In order to get an upward reversal in the NAZ/NDX, to confirm wave 3 is indeed underway, we need a close above 2274 and 1710 respectively. Short term the NDX broke through 1690, vacillated around it most of the day, and then rallied above it to close at 1696. Very positive! The NAZ was even more impressive. It rallied above 2251 early, stayed above it all day, and closed at 2263. The cash coming into the Nasdaq for the past two days, is an excellent sign that this bull market is heading higher.
Just posted this, there's a lot more too: Another impressive day for the NAZ/NDX! While the SPX/DOW meandered most of the day, after the SPX made a new intraday high for the bull market, the NAZ/NDX just kept on rising, gaining another 1/2 %. Our leading indicator, the cash NAZ, closed at a new high for the bull market, quickly reversing the intermediate term downtrend it created just last week. It now confirms that this is indeed wave 3, of iii, of 3. http://spaces.msn.com/members/caldaroEW/
All four indices are now in another solid uptrend. We posted some fibonacci relationships the other day, relating this waves potential to the previous wave of similar degree: wave 1. I repeat them here: FIBONACCI NAZ NDX SPX DOW 0.618 x 1 2345 1759 1310 11,144 1.0 x 1 2442 1836 1349 11,429 1.618 x 1 2598 1961 1413 11,889 These levels are the potential target for our current rally. Lets approach them one level at a time and see where we are at as the wave unfolds. The first level of targets are only 2% away from where we closed on friday. This will be easily obtainable since we are only in the first wave of our current uptrend.
Based upon the completed patterns I believe the markets can now rally back to the B wave top around the end of January. This would send the NDX to the 1717 EW pivot, the SPX to the 1288 EW pivot, and the NAZ to 2314. Lets observe how this advance unfolds, it might be more of a significant bottom than it currently appears. The reason I state this is the action thus far in the DOW/TRAN. The DOW specifically looks like it did 5 waves up while the other indices were doing a 3 wave B, and it barely corrected on this recent decline, supporting the observation that it was indeed a 5 wave advance. If the DOW starts making new highs during this short term advance, it will take the rest of the market with it, into a major extension. It's still possible! http://spaces.msn.com/caldaroEW/