You can make all the predictions that you want, based on anything. There are a number of reasons to expect the Naz to take a bounce now, or even make an intermediate trend reversal. There are a number of reasons to expect further downside as well. The risk/reward for making a grandstanding prediction is very favorable. If you are right, you receive adulation, and a following, and that can be lucrative. If you are wrong, well, you just remain in the same place. Lundy says the weekly trend has changed, but when I look at a 6 month chart of the Naz, the left side is higher than the right side, the right edge is the lowest of the 6 month period.
i'd be surprised if we saw a rally (flat right now just for the record). Once in a blue moon the market is very, very vulnerable and presents an inflection point that can cause an extreme reaction if pushed over the edge. This could be one of those times. If I were Bacon or Jones or Soros, I might put on a 25,000 contract S&P short Sunday night just for giggles.
Perhaps your homegrown indicator will prove correct but I did note the VIX doesn't confirm your findings. Its not even close to the Sept. level yet. http://stockcharts.com/def/servlet/SC.web?c=$VIX,uu[w,a]daclyyay[pb50!b200][vc60][iUb14!La12,26,9]&pref=G I suppose you could explain that the 911 disaster made this fact an extreme exception but just the same, by the numbers, I think the trend is still down. I've read a lot of articles calling for NAZ COMP at 500 as the likely "bottom" of this bear market. JMO. Time will tell us all.
Verrrrry heavy volume today, but no super neg TICK. The guys that watch 'em say the ARMS and the CBOE P/C Ratio look better. Anyone know if we've had a Lowry's 90% day yet? I guess the volume is a the triple ex thing.
i think sentiment indicators that worked in the past probably have 50/50 accuracy at best (i.e. coinflip) because we don't know what happens to those readings when there is a dramatic shift in the environment. the problem with a general correlation is that if you don't understand all the hidden factors that made the correlation predictable, you don't know when that correlation will stop working. Take just one variable, for example: the money supply. It's theoretically possible that if the money supply contracts enough, sentiment readings become meaningless. Who cares if everyone smart would buy here, if they haven't got the cash? Bulls without money might as well be neutral. And who cares what the general sentiment on this message board is? Is this a realistic cross section of money managers and market movers? Do we have folks here representing foreign assets, fixed income, retirees, institutionals etc. etc. etc.? I think it's bogus to imagine a census of your immediate neighbors can provide real predictive value. p.s. i also think the contingent of self styled contrarian bounce seekers is MUCH higher than it seems. many traders and investors who learned in the bull have been imprinted like baby ducks, and thus are more inclined to favor that play whether they realize it consciously or not imho. too many weak hands = more fakie rallies and more shakeouts. p.p.s. i love Fleckenstein's comment, how is anyone supposed to buy the dips and stay fully invested at the same time? what happens if there's another dip AFTER you're loaded up? And another...and another...and another....
Some great posts Darkhorse. TA is worthless in the long-term or if big news comes out and value in the short-term often has little correlation to the stock price. ps. Cool song u quoted. I always wondered what some of those lyrics really where, I thought it was earth bound distant, but that made no sense.
One last observation and then off to the gym: A 500 point rally in the nasdaq composite would be a gain of roughly 35%. Comparable gains in S&P/Dow would mean S&P 1330 and Dow 12,500. Not even Abby Joe is that bullish.