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big rally today, with news expected on thursday which may in part be driving it. we've seen this kind of rally on several occasions in the last 2 months, most notably on the days prior to geithner talking about the stimulus deal. on every one of these recent occasions, a big rally has been followed by a crash.
if the market rises again tomorrow, and the S&P nudges up towards that 735ish resistance area, how aggressive will you be in going short? if recent history tell us anything, then it is that the market will crash on the day of the announcement on thursday. is that too simplistic an approach? or do you expect a prolonged rally this month?
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QUOTE (djdhrubs) big rally today, with news expected on thursday which may in part be driving it. we've seen this kind of rally on several occasions in the last 2 months, most notably on the days prior to geithner talking about the stimulus deal. on every one of these recent occasions, a big rally has been followed by a crash.
if the market rises again tomorrow, and the S&P nudges up towards that 735ish resistance area, how aggressive will you be in going short? if recent history tell us anything, then it is that the market will crash on the day of the announcement on thursday. is that too simplistic an approach? or do you expect a prolonged rally this month?
This rally does not seem to be the same character as the previous short covering rallies. However, it may turn out to be the same.
Ned Davis did some analysis a few years ago where up volume was at least 9 times greater than down volume and the market goes up about average 10% in the next 3 months. That occurrence has not been very accurate in the last 18 months, but this one comes from a lot lower level that previous signals and the market is more oversold. The next tell will be volume on the next rally, if it is greater then the market looks like it has put in an intermediate bottom. That is what has been lacking on the previous signals and rallies. There may or may not be some profit taking in the next few days and as long as the volume doesn't pick up on those days, I wouldn't short very much of anything.
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Well ...
I'm not looking for any big announcement out of the hearings on Thursday ...
Just a bunch of bitter people bitching about spilt milk ...
The SEC has already said that they're not even considering setting aside FASB 157 ...
10% in 3 months doesn't sound like much reward for the potential risk ...
When 6% of it happened today ...
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I myself won't short a rising market and I don't go long falling markets (it wasn't always this way). If the trend switches on my time frame ( which is currently 30 minute charts, 3-5 day trades) then I will make the switch from long to short.
One thing I am becoming more aware of lately is what in behavioral finance is called "recency bias". Simply put, we tend to focus on what has worked most recently without gathering enough data to determine an actual pattern.
The market crashing after a few similar situations is not enough data to get me to go short without confirmation. (no more sleepless nights for me)
David John Hall
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djh: i finally figured out what has been missing from your moniker. "WHAT"
"WHAT THE HE_ _ " is this market doing?
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lol like that johnlc!
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QUOTE (realitycheck)
....
10% in 3 months doesn't sound like much reward for the potential risk ...
When 6% of it happened today ...
Don't shoot the messenger, as I was just trying to point out the direction of the market might go against a short. Now as for the reward/risk statement, I do agree with your thoughts, however, as with all statistics one must put them into perspective.
Since Oct 1928 the DOW has had greater than 2% change (my definition of a large daily change) 1274 times. That calculates about a 6.3% of the time until yesterday 3/10/2009.
Since Oct 2009 the DOW has had a greater than 2% change 94 times. Now that calculates to be a whopping 26.3%. Ned's study was published in 2006, so the move he quantified was a larger move than what the market had been experiencing up to that date. Of course since that time we had been experiencing a greater percentage, so that makes the move seem less (and for the last 18 months it has been less).
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Well ....
I was looking for the Dow to fall into the mid to low 7000s ... and then rally to retest the second line on the supercycle chart as resistance ... at about the 8000 area ....
Perhaps this will be that retest ...
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I'm guessing this rally might even go as high as 1000 (SP500).
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on what basis/ chart analysis are you saying that? the S&P may not even be able to bust through the 740-750 resistance area. i'm planning on getting into some short etfs if it hits these, with a tightish stop loss of course...!
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I'm not sure if you're talking to me or bknight ...
But let me stake a stab ... for what little that it's worth ...
The market has been on a tear to downside ... and it's deviation from the moving averages is quite large ...
Take a look at a monthly DJ-30 ... and where it is relative to the 10ema ... and then scroll back and look at other bear markets ... even '29-'32 ... discount market "shocks" ... where it found it's low within several weeks of it's high ...
It seems like it's gotten a bit ahead of itself ...
The monthly S&P 500 chart shows that the 10ema and 200 ema are in the area of 1000 ... and this may be where bknight is getting his target ...
The market also seems to be losing momentum to the downside .... making smaller steps between consolidations ...
All of this money that the govt is pissing away ... may not eventually solve the problem ... but it's going to do "something" ... and that will begin on April 1 with the withholding changes ...
I suspect that there will be enough change in data to make a few folks hopeful again ...
Whether or not that hope turns out to be misplaced ...
We'll just have to see ...
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QUOTE (djdhrubs) on what basis/ chart analysis are you saying that? the S&P may not even be able to bust through the 740-750 resistance area. i'm planning on getting into some short etfs if it hits these, with a tightish stop loss of course...!
Everyone that looks at charts notices the area you speak. Since the market is so frustrating, it may fool a lot of people just like it did no the way down. This didn't provide much support on the way down, and I suspect it woun't provide much resistance and the way up. One of my purchases of SDS occurered on the 27th, when the averages broke the 750 level, note that I did not buy the couple of days before, as the price bounced up from that area. We shall see of course,
Yes realitycheck I was referring to the 200 dma, that is dropping into that area. This run may last a lot longer than people are giving it credit. Longer term the charts look like another leg down after this tradable bounce.
I suspect we may get a re-test maybe even tomorrow, my short term indicators favor a small pull back and start back up again.
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I agree with DJ. I think that you will be smart to have your shorting tools sharp and ready to go at 760 or so. Right now the SPX is having problems just filling the gap from 3/02/2009.
I have been reading Bigblocks Blog site (I do respect his opinion and this site is the best venue to read his insights into market analysis, he does not give one a chance to repond). The conditions that are at the center of the failing economy and in turn the markets have not been addressed just yet and although I believe that we will get some small Bull rallies on the way down; I believe that we are going to continue down after being rejected at 760...
Just my opinion. When we talk about stocks then there is no personal attacks.... 
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hi yeah sorry reality i meant bkinght's post. thanks for the insights all of you. reality would you mind explaining to me what you mean by 'withholding changes' on april 1st?
i just think its gonna be difficult not to have a go at shorting when the S&P reaches about 745, which hopefully it will in the next couple of days. i'm sitting in cash at the moment, patiently watching banking stocks rally. knowing when to pull the trigger is difficult though. i've noticed that the market makes a big move by about 11 o'clock in the morning, then has been trading the other way for the rest of the day but days like yesterday serve to confuse me further! so i'm gonna play off those resistance/ support levels, and only make a move in afternoon/ evening trading. don't have the time to day trade. as i speak the S&P is going up parabolic, and guess what its 10.50am.
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we're approaching the 10% retracement bknight spoke about earlier in this thread. seems a logical thing to do to enter a short now...just my opinion!
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QUOTE (djdhrubs) reality would you mind explaining to me what you mean by 'withholding changes' on april 1st?
Part of the stimulus bill was another tax rebate ... but instead of sending checks ... they are going to change the withholding tables ...
It is effective April 1 ... and is supposed to average $13/week per worker ...
That's essentially the same as giving the average worker a $0.33/hour raise ...
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Here's a bit more detail that came from a Intuit newsletter ... advising clients of the necessary changes ...
- Making Work Pay tax credits:
- Updated tax tables are now available for all Intuit QuickBooks Payroll customers! Click here for information about Payroll Update 20908.
- Disk Delivery customers, click here for more information about your next disk shipment.
- Available for tax years 2009 and 2010, the Making Work Pay credit is 6.2% of a taxpayer's earned income with a maximum credit of $800 for a married couple filing a joint return and $400 for other taxpayers, but it is phased out for higher income taxpayers.
- The new Making Work Pay tax credit is being issued through employer payroll taxes and requires a new IRS tax table that is to take effect no later than April 1, 2009.
- Intuit released new tax tables on 3/12/2009, to be effective immediately. You may process payroll with this new tax table prior to April 1, 2009.
- QuickBooks Online Payroll and Intuit Online Payroll products have a target release date of 3/14/09 for the new tax tables. The tax tables will be updated automatically when they are available, and you will be notified with an in-product message.
- COBRA premium subsidy:
- Intuit will be releasing the new Form 941 to support the COBRA premium subsidy in late March.
- Under the American Recovery and Reinvestment Act of 2009, certain individuals who are eligible for COBRA continuation health coverage, or similar coverage under State law, may receive a subsidy for 65 percent of the premium. These individuals are required to pay only 35 percent of the premium. The employer may recover the subsidy provided to assistance-eligible individuals by taking the subsidy amount as a credit on its quarterly employment tax return. The employer may provide the subsidy - and take the credit on its employment tax return - only after it has received the 35 percent premium payment from the individual.
- Employers should use the updated Form 941, Employer's Quarterly Federal Tax Return, to report their COBRA premium assistance payments. Intuit will be releasing the new Form 941 in late March.
Essentially ... it forgives them the 6.2% Social Security deduction equivalent ... as if SS wasn't already in a deep enough hole ...
Of course ... the employers still have to make their 6.2% contribution ... but who gives a damn about employers ... and whether or not they may be struggling ... they'll just have to lay off 6.2% of their workforce to get theirs ...
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QUOTE (djdhrubs) we're approaching the 10% retracement bknight spoke about earlier in this thread. seems a logical thing to do to enter a short now...just my opinion!
Whoa, I was passing along an analysis from Ned Davis. Although the market is overbought, moreso than it was yesterday, I don't feel it is time to short the market. The volume on the pull back should be the tell whether the rally has legs or not.
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