I also agree with you. I have asked on several occasions just what divergences Manolo has been talking about . . . yet, he is unable to share this with us. Manolo talks about the fact that the Dow and the XMI ( which basically have the same correlation ) made their highs of the week last week "early" and then traded lower throught the week, but this is not a divergence. He obviously has no idea what he is talking about.
Waggie: I was not defending the aforementioned aliases. Instead, I was commenting on how emotional your posting has become and how "hell bent" you have been on criticizing and/or belittling anyone with a difference of opinion. Regarding not posting for three weeks. There isn't much worthwhile discussion to get involved with on this place anymore.
It has nothing to do with a difference in opinion. It has to do with people that are running around ET with twelve different aliases and they make Yahoo Message Board statements that are not backed up by any analysis or evidence whatsoever! Take a look at this thread for example: Manolo talks about the VIX making a double-bottom at 14.0 Yet, if I point out that the VIX has had numerous "double-bottoms" as the NAZ rallied 50% since last Spring, you accuse me of "flaming"? The only other basis for Manolo's position is his reference to "divergences" with the Dow and XMI. Now which index is he telling us has diverged? Last time I checked, the XMI is a price weighted index of 20-blue chip stocks that has roughly a 98% correlation with the Dow Jones. So if Manolo is speaking of a "divergence" he certainly hasn't made it very clear what index has diverged. Am I wrong to ask specific questions about a trader's "methodology" or would you have no problem with ET going the way of a Yahoo Message Board? Again, this has nothing to do with a difference of opinion. It has to do with sharing one's trading methodology in order to constructively offer a basis for one's opinion. And by the way, I am not the only one on ET that feels this way.
I am not "fighting" with you, my friend. I am simply trying to understand your methodology. Is it somehow impolite to ask questions? In any event, your understanding of the concept of a "divergence" escapes me because I have always been taught that it is far easier for a narrow index such as the Dow which is comprised of 30 stocks, or the XMI which is comprised of 20 stocks to outperform a broader market index like that of the S&P 500. Furthermore, these divergences can last weeks, if not months. The year 1987 is a prime example of the Dow having outperformed the broader market averages for many many months. Of course the COMPX and the Dow have been diverging. This is nothing new. They have been diverging for almost 2 months now!~ How can this help one short the S&P? Moreover, had one been trying to short the S&P based on this "divergence" you would have been wrong as most recently as last Friday, even though the COMPX had already fallen 7.5%
Like i've said, and I know we can BOTH agree with this, is that reading charts is very subjective. What I saw last friday was the S&P making a new high, as well as the Russell, while the Dow and XMI didn't. I also saw (and still see) a potential head and shoulders pattern in both the Dow and XMI. This is what I see. And again, these are only part of the components of why I became bearish over the weekend. The double bottom on the vix was another. I also anaylze specific stocks, and many looked prone to a selloff. When I added up everything, I became bearish despite the S&P hitting a new high.
I forgot to mention a key ingredient that helped me reach my conclusion that a correction is upon us. The high price of oil. Now before waggie tells me that the price of oil has been high for a while, I say that this combined with the other factors mentioned are the straws that will break the markets back.
Simple trendline analysis shows that the S&P should fall to 1120-1125, and hover around there, before busting through. Isn't trading fun?!! Does anyone agree that the lower band of 1120 will be hit? And does anyone agree that it will eventually bust through it?
+======================== SPY could hit $ 112 ?; still looks like a sideways trend [aka range] rather than a breakdown. DIA, QQQ also looks like a sideways trend [aka range ] in a bull market;agree with mr DOW, its an uptrend until proven otherwise. Certain airlines tend to be bearish by any measure; but dont plan on any new shorts on that one at 25 year lows.
Very, very simple trendline analysis. I drew a trendline at the top of the range, it's very slightly upward sloping using the three high points in 2004. I then put a parallel line at the bottom of the range and placed it where the S&P bottomed end of January around 1120. Like I said, simple trendlines.