Registered User
Joined: 7/1/2008
Posts: 889
|
Believe it or not...we are in a bull market. One could be excused for being skeptical up to this point, but staying on the wrong side of the market much longer might be expensive.
As John Templeton once said: 'Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.'
So let's review the case for the new bull market:
- Market is now sitting above the 200 day / 40 week / and 12 month moving average. Every single new bull market begins like this. it also happens to be sitting above the 50 and 20. A few more days and we'll have the monthly close above the 12 month SMA. If one used a simple market timing approach like this, historically you'd have avoided most of the major bears, and been long most of the major bulls.
- Cyclical market leadership is EXACTLY what you want to lead. Tech and Financials have lead the bull market. The strongest fundamental names are leading the market.
- Interest rates are near zero, and the money supply is expansive. Bullish.
- Despite the constant drumming about the low volume rally, there is more accumulation than distribution. This is all it takes to drive prices higher. Price is the most important indicator as a technician, everything else is secondary, but even still, there is net accumulation driving the market higher. The market bottom and rally in 2003 did not have expanding volume. Pull up a monthly chart of the SPX and see for yourself.
- Skepticism still abounds. Too many money managers missed the rally and want to be in. They're praying for a pullback to buy, but they may not get one. Eventually they will capitulate and buy, and the market will melt up. There is a ton of cash on the sidelines.
- Credit conditions are improving and normalizing. CIT was able to get money from the private market. Corporate bond spreads have narrowed tremendously over the past few months.
- Risk correlated assets are also improving - commodities, risk currencies, interest rates
- Earnings and GDP are bottoming. The market usually looks ahead 3-6 months. Most economists predict economic recovery by 3rd / 4th quarter, which means the bottom should be behind us. 2nd quarter earnings have been surprisingly better than expected / guided.
The trend is up and the preponderence of the evidence is that we are in a bull market. (until it ends). We are still in a secular bear market, which means this is just a cyclical bull, which could last just a year, or more, or less...no one knows. There's still a lot of bad stuff out there economically, but if you try to time the market using your own opinion of what should happen, then this is not technical analysis. This is the other kind.
This is my opinion. Would love for all of you to weigh in.
Cheers
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Here is my "weigh in...
The only reason that price is currently above the 12 month ma is because of the October November price action that was so drastic and sudden that it pulled the moving average down with it. If you look at history (this is what defines markets) you will see that when said "12 month ma" crosses over the 40 month ma then we might consider that a Bullish trend has been established. Look at early 2003 and other previous revoveries.
Lastly. Economic shifts were well in place and over-all sentiment was on the mend in previouse shifts from Bear market to Bull market. We do not have that here. Much more bad times are expected and sentiment is anything but Bullish.
Of cours no one knows right now for sure but (IMO) the Bears will control this market for a while longer.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,181
|
"Believe it or not...we are in a bull market." I choose Not.
I would just suggest the following factors be considered; I use an anecdote to illustrate: an acquaintance from some years ago was always eager to make himself appear to be something. He started a small business and always wanted people to see him as a "business owner". He was not content to be someone who owned a business; he needed to be a "business owner" with all of the pomp and ceremony that he imagined went with it (which demonstrated just how little he understood about "owning" one's own business...it's always interesting to try to figure out who own's who...but I digress).
Anyway, the point is this, one day he told me his business was "up 230% this year". "That's wonderful!" was my reply. It was only later, after a busy day, when I had time to stop and think about his comment. "Hmmm, wonder what his revenues were the previous year." I came to find out he had produced under $5,000.00 gross revenues the year before. The 230% increase had to be seen in context to realize it was a meaningless number.
Similarly, I submit that we take the 40ma, et al with a grain of salt. We've had the nastiest declines in decades accompanied by unprecedented global economic anomalies. Making it over the 40ma after skidding along close to the bottom may not be as momentous as it sounds.
I mean no offense to ben2k9's commentary. I'm just suggesting that one might want to move forward with continued caution.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,181
|
Pardon the stray apostrophe in "own's". Not quite sure how that got there.
Well, that's not correct either; we all know full well how it got there, now don't we? I'm just not sure why.
|
|
Registered User
Joined: 2/5/2006
Posts: 1,148
|
how bout a cyclical bull market, within a secular bear market.
|
|
Registered User
Joined: 1/12/2009
Posts: 235
|
Time will tell. Ben2k9 has some good points. Techs and financials do normally lead the market higher. Most economists are predicting growth by the third or fourth quarter. Albeit, sickly growth at best. I do have a problem with this market moving higher on lower volume. Plus most of the great earnings are a result of cost cutting and not so much revenue. But at the same time there are some bullish signs out there. Even Roubini a.k.a. Dr. Doom has come out and said the worst is behind us. So no offense anyone, but there are people out there a helluva lot smarter than most of us here when it comes to economics. Roubini's predictions have thus far been proven. He nailed the meltdown that was immenent. His current view isn't all roses, he basically explains we will have very subpar growth for the next year or so with the possibility of a double dip recession. But there are some investors who are shorting the market and loosing their asses off now. So you can analyze and assume all you want to about the market, but the bottom line is, right now its going up. I think part of the problem is there is so much uncertaintanty out there. Especially with this new administration and government spending. Like I said time will tell. It doesn't pay to fight the trend.
|
|
Registered User
Joined: 12/31/2005
Posts: 266
|
QUOTE (ben2k9) Believe it or not...we are in a bull market. One could be excused for being skeptical up to this point, but staying on the wrong side of the market much longer might be expensive.
As John Templeton once said: 'Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.'
So let's review the case for the new bull market:
- Market is now sitting above the 200 day / 40 week / and 12 month moving average. Every single new bull market begins like this. it also happens to be sitting above the 50 and 20. A few more days and we'll have the monthly close above the 12 month SMA. If one used a simple market timing approach like this, historically you'd have avoided most of the major bears, and been long most of the major bulls.
- Cyclical market leadership is EXACTLY what you want to lead. Tech and Financials have lead the bull market. The strongest fundamental names are leading the market.
- Interest rates are near zero, and the money supply is expansive. Bullish.
- Despite the constant drumming about the low volume rally, there is more accumulation than distribution. This is all it takes to drive prices higher. Price is the most important indicator as a technician, everything else is secondary, but even still, there is net accumulation driving the market higher. The market bottom and rally in 2003 did not have expanding volume. Pull up a monthly chart of the SPX and see for yourself.
- Skepticism still abounds. Too many money managers missed the rally and want to be in. They're praying for a pullback to buy, but they may not get one. Eventually they will capitulate and buy, and the market will melt up. There is a ton of cash on the sidelines.
- Credit conditions are improving and normalizing. CIT was able to get money from the private market. Corporate bond spreads have narrowed tremendously over the past few months.
- Risk correlated assets are also improving - commodities, risk currencies, interest rates
- Earnings and GDP are bottoming. The market usually looks ahead 3-6 months. Most economists predict economic recovery by 3rd / 4th quarter, which means the bottom should be behind us. 2nd quarter earnings have been surprisingly better than expected / guided.
The trend is up and the preponderence of the evidence is that we are in a bull market. (until it ends). We are still in a secular bear market, which means this is just a cyclical bull, which could last just a year, or more, or less...no one knows. There's still a lot of bad stuff out there economically, but if you try to time the market using your own opinion of what should happen, then this is not technical analysis. This is the other kind.
This is my opinion. Would love for all of you to weigh in.
Cheers
True, stocks are going up. Otherwise, it sounds like someone's watching to much cnbc. You left out "green shoots." Top line earnings are dismal, except of course if your a bank, on the government welfare program.
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Hi Apsll,
I've never heard about anyone using a 12 month / 40 month MA crossover, so I pulled up 100 years of Dow data to take a look, as well as all available SPX data. My first oberservation is that it is a very slow signal, generally missing the first year of a new bull market. Most bull markets experience their strongest moves during the first year. There are also quite a few shorter duration cyclical bulls that got the crossover signal just as the rally was peaking out.
It worked well during the secular bull of 1982-2000, but terribly during the secular bear of 65-82.
Do you use this signal? if so, how?
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Hi Ben,
No I do not use these two moving averages at all. I only took a passing glance at them while looking at recent market recoveries. I was trying to be polite. I guess that if I let myself spin my opinions unchecked then I might sound a bit like our old friend....
Like Tobydad said in another thread "the old Apsll is back". I have only been trading one other Bear Market other than this one. I have lived through a few others. I just do not think that this one is over. It is difficult to give you technical or fundimental reasons why. The fact is that a Bull Market is not a Bull Market until it is a Bull Market. Yes by the time you realize it then we are well into it. "Welcome to the realities of trading". I do not think that we are there yet. Time will bear out the truth of it all.
The first Bear market almost ate up my portfolio. I have made more money in this Bear market than the last one. Not only are the markets in a critical juncture right now but so too am I. There are other things that need my attention that will become future sources of income for me and I must make sure that a proper foundation for those enterprise's is layed down. I will mostly be posting at night and on the week ends when I have time. I will be trading but only on a limited bases and I will no longer be day trading. If I make any picks it will be for swing trading or possition.
Good luck to you and all the fine traders here...
PS: Never assume anything, trade what you see and not what you want to see.
Apsll.
|
|
Registered User
Joined: 2/29/2008
Posts: 17
|
QUOTE (ben2k9) Believe it or not...we are in a bull market. One could be excused for being skeptical up to this point, but staying on the wrong side of the market much longer might be expensive.
Hmmmm, could this be the ben2k9 indicator?
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
How are you jjames? I remember your support durring the BigBlock wars. I assume (and I hope correctly) that since you came to my defense on more than one occasion that you are not my enemy.
Ben is a good man. He reminds me of myself when I first discovered Telechart. It was about a year before that when I was subscribing to a (Take your trading to the next level) kind of training program. I had already had success in my trading but this training program helped me to step it up a notch. They used Telechart as as their analysis software so I gave it a try and of course never looked back.
Like Ben now, about four years ago I started to really devote myself to Telechart and poked and prodded. Tinkered and experimented. It is gentlemen like him that make it as traders because they are not sheep. They find their own way and design their own trading systems. He will make contributions to this forum as I did and Many others that have that same inner drive.
I do not know if you trade James, but The war is over and the good guys won. It brought out the worst side of me and I am still fighting to gain what I lost durring those times. If my arch enemy returns then we will need you again to help put him in his place. But for now why don't you give the free 30 day trial a chance and see if we can all help you to make some money.
Good luck James...
Apsll.
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
So how does this bull/bear stuff relate to ones trading?
Are the bears just watching this rally?
(you cant go long in a bear)
How much does the market correct before the bulls reassess?
How much more does the market rally before a bear concedes?
By the way. To anyone who follows "smart money", "accumulation".
Let me congratulate you.
You must not only be long but long on margin.
(I am assuming the smart money has been long since march/9th
wouldn't sound too smart if they weren't)
A bull within a bear? Well yes longer-term prospects aren't too
bright. After all in a matter of decades we'll all be dead and
eventually the sun burns out.
What about the inflation?
(folks keep this to yourself only the really smart players understand this)
I was one of the lucky ones. I heard about the devastating crushing impact
of rampant inflation from Howard Ruff in the 1970's. Well let me
tell you. I've had my ear to the ground the last 4 decades.
Any moment it can appear.
As for myself. Well I'm gonna wait for the good times.
The times of truth honesty. (where the little guy is #1)
No Enron's in this world.
I'm gonna wait for honest government.
(where politicians bust their butt for the little guy)
Winning, power are secondary. The voter is #1.
I'm also not going to put the burden of this on the USA only.
I'm gonna wait for the thugs, butchers, dictators of the world
to let go of their power. To give their people wealth and
freedom. There will be no more wars and compassion for all.
Poverty and starvation will disappear.
Honest governments.
Honest companies.
Honest folks.
(yes even Apsll and BigBlock will be best buds)
Back-up the truck, I'm going long.
Thanks
diceman
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Diceman - I like your style!
Here's a few more thoughts on the subject...
This picture says a lot to me...
- We have a Dow Theory bullish confirmation. Both the Dow and Transports have breached their previous highs, indicating that the primary trend is bullish.
- According to Martin Pring "on momentum", one of the first signs of a new bull market occurs when a short term oscillator moves to an extreme overbought position not seen since the beginning of the previous bear market.
Observe this happening now - this is a new high RSI reading since the bear began..
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Ben, one should understand the inner workings of an indicator before one rushes to judge.
Bellow is the formula for Wilders RSI:
100
RSI = 100 - --------
1 + RS
RS = Average Gain / Average Loss
Average Gain = [(previous Average Gain) x 13 + current Gain] / 14
First Average Gain = Total of Gains during past 14 periods / 14
Average Loss = [(previous Average Loss) x 13 + current Loss] / 14
First Average Loss = Total of Losses during past 14 periods / 14
Note: "Losses" are reported as positive values.
------------------------------------------------------------------------------------------------
There is no indicator that is going to tell you when a new Bull market has started. I do not know if you have interpreted "Martin Pring's" words accurately, but it is blanket statments such as these that will mislead traders.
The Market does not care if we percieve it as over-bought or over-sold. It is going to do what it wants and every market is unique and different. There is still plenty of resistance levels in close proximity that can turn this market on a dime. The only thing that RSI is telling us by making a new high is that for the last 14 days price has averaged more up days than down days. There is more to it than that but you are falling into the trap of wich came first the price action or the indicator. Remember all indicators are derivitives and only reflect the current conditions. They should be used to uncover details within price, trend and volume that might not be easily seen by the untrained eye. They are also a good tool to use when sorting a large list of stocks for certain criteria and/or conditions.
As always just my opinion...
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Apsll,
Just piling on additional technical evidence that supports the bullish case.
Interpret however you like.
|
|
Registered User
Joined: 6/8/2007
Posts: 31
|
Bear Market vs Sustainable Bull market
Stocks go up despite of poor performance---- Gambling and Flash trading to kill Short siders
Unemployment is getting worse in most of the states
Health care is another cancer to Capitalism
Dollar will fall in future will make foreigners are buying commodities to keep their future value intact
Our country tax base is diminshing because of 6 million uneployed
We use more products made by foreigners than we export to others, where others can produce cheaper and better than us
Financials institutions are clebrating by trading profits with cheap borrowed money from FED???
How can market can go up???????
Wondering????
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Check this one out...4 worst bear markets in US history with the bear-market rallies annotated...showing how once overcome, the bear market has ended...
2000-2003
1973-1974
1929 - 1933
And of course....Now
|
|
Registered User
Joined: 1/12/2009
Posts: 235
|
Ben excellent post! While I like your analysis especially the last part about the Bear rallies. I'm not sure if this proves anything or not as to whether this bear is over. I have never looked at a chart of past bear markets like this before. You are what Don Worden calls a sir knight who thinks for himself.
You do offer in your analysis something to chew on. I don't know man, just something about these two posts just tickled me. Keep up the good work man! I admit you may be on to something with these four charts.
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Traderm30,
Of course you can't PROVE anything when it comes to market analysis. But thanks for the feedback. here's one more chart to chew on: the venerable 12 month moving average - the ultimate decider of bulls & bears. Whats important here is the monthly close...above or below the average.
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
QUOTE (ben2k9) Apsll,
Just piling on additional technical evidence that supports the bullish case.
Interpret however you like.
You can pile to the heavens and it means very little. My interpretation also means very little. Your charts ar nothing more than counting waves and using moving averages. These things mean nothing. Now what does mean somthing are market internals and economic projections and how the market movers interpret these things. I can promise you that they are not counting waves and care very little for the 12 month moving average.
We are not there yet....
All in the spirit of healthy debate....
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
Here's another interesting nugget: the NASDAQ actually bottomed weeks ago, with the completion of a double-bottom formation.
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
QUOTE (Apsll)
We are not there yet....
All in the spirit of healthy debate....
A "healthy debate" would be nice. In fact, that is the only reason why I'm posting all this. I'm not here to convince everyone I'm right...I'm here to flush out my arguments and have you wizards shoot holes in them so I can strengthen my analysis.
I'm still waiting for a "healthy debate" though. Just saying "you're wrong, because my gut tells me so" is not an argument that advances this thread.
|
|
Registered User
Joined: 2/5/2006
Posts: 1,148
|
QUOTE (ben2k9) QUOTE (Apsll)
We are not there yet....
All in the spirit of healthy debate....
A "healthy debate" would be nice. In fact, that is the only reason why I'm posting all this. I'm not here to convince everyone I'm right...I'm here to flush out my arguments and have you wizards shoot holes in them so I can strengthen my analysis.
I'm still waiting for a "healthy debate" though. Just saying "you're wrong, because my gut tells me so" is not an argument that advances this thread.
A secular bear market is a long period in which stocks and the economy overall make little progress. There can be small bull runs within secular bear markets which are called cyclical bull markets. But they don’t run for great durations nor do they make significant new highs.
secular bears:
1901-1920
1966-1982
2000-?
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
On this I am in agreement with Funnymony. I have already eluded to the reasons why I believe that we are not on the fringe of a Bull market "Market internals and economic currents".
I am not an expert myself on these matters but my friends make good arguments as to why there are more bad times ahead of us. Just so you know Ben; I do not trade hunches. I thought that if you knew anything of me that you would at least know that.
Anyway keep studying your charts. I can see no bad coming from that. Just do not put all your eggs in the same basket.
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
I'm in agreement on the secular bear point, in fact I said exactly that in the last paragraph of the initial post...so I'm not sure what funnymony's point is.
Within a secular bear can be multi-year and strong bulls where in the right stocks, one can make a killing. Of course one needs a trading mentality to keep those profits. Just look at all the money to be made during 2003-2007, a cyclical bull in a secular bear.
So to be clear, I am not saying this is the beginning of a secular bull...the generational type. I'm talking about the more regular garden-variety bull. I don't know how long it will last, but one can make a killing in it if done right.
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Well now you are making more sense to me. Just like the May 2006 market correction was a Bear within a bull then I will give you this one. Yes we are in a Bull within a Bear. Meaning in my opinion that the Bear Market is still intact.
According to some of my friends they say that "Earnings ratios" are just not Bear Bottom Low enough right now. Also that the credit system is still imploding on itself and although there might be light at the end of the tunnel that there is still debrie on the tracks. Not to mention other factors that make it very clear that we are right in the middle of a recision. That is just not when Bull markets are born.
Ben, I never intend to come off sounding like I know better than you, I mean you asked for opinions and I like to share. Maybe it is because I have been busy with other things but I find the technicals to be a bit amiqueus right now. That is one of the reasons why I am very causious.
I hope that you took no offense. Just remember that I am a man of strong opinions as are you. I think that make for great threads..
Happy trading.
Apsll.
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
"look at all the money to be made during 2003-2007"
---------------------------------------------------------------
Exactly.
Thanks
diceman
|
|
Registered User
Joined: 2/5/2006
Posts: 1,148
|
QUOTE (ben2k9) I'm in agreement on the secular bear point, in fact I said exactly that in the last paragraph of the initial post...so I'm not sure what funnymony's point is.
sorry, i guess i didn't make it through all that propaganda.
i guess i assumed, after a 40% rally, everyone knew the market was in a cyclical bull.
sounds like the "late to the party" bunch is beginning to show up.
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
QUOTE (Apsll)
Ben, I never intend to come off sounding like I know better than you, I mean you asked for opinions and I like to share. Maybe it is because I have been busy with other things but I find the technicals to be a bit amiqueus right now. That is one of the reasons why I am very causious.
I hope that you took no offense. Just remember that I am a man of strong opinions as are you. I think that make for great threads..
Happy trading.
Apsll.
I don't take offense to anything here...this is just a forum of ideas. No need to walk on eggshells in your posts, Apsll. BB isn't here anymore, so I think you can drop your defenses.
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Lastly, if it is Technical reasons that you are looking for that dispell your notion of an emerging Bull Market than here you go...
In my chart bellow you will see that the CCI and the VPCI are showing negative divergencies right now. There you go; technical reasons why this rally (like Funnymony has stated) is over bought.
|
|
Registered User
Joined: 8/15/2006
Posts: 132
|
Hi Aspll,
Is the VPCI indicator and average of the close * the volume? Is there any other formula information you would be willing ot share with me on it? Thanks as always,
ScottyB
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
Scott here is the formula for the 10 period VPCI -
((C * V + C1 * V1 + C2 * V2 + C3 * V3 + C4 * V4 + C5 * V5 + C6 * V6 + C7 * V7 + C8 * V8 + C9 * V9) / (AVGV10 * 10) - AVGC10) * ((C * V + C1 * V1 + C2 * V2 + C3 * V3 + C4 * V4) / (AVGV5 * 5) / AVGC5) * (AVGV5 / AVGV10)
|
|
Registered User
Joined: 8/15/2006
Posts: 132
|
Thank you Aspll
|
|
Registered User
Joined: 3/21/2006
Posts: 4,308
|
You are welcome Scott.. VPCI is a good indicator but like all indicators they are not fool proof. Let me know if I can be of any more help.
PS: I must give credit where it is due. Diceman helped me out and constructed the indicator based on an article that I read in "Stocks and Comodities" magazine.
|
|
Registered User
Joined: 8/15/2006
Posts: 132
|
QUOTE (Apsll) You are welcome Scott.. VPCI is a good indicator but like all indicators they are not fool proof. Let me know if I can be of any more help.
PS: I must give credit where it is due. Diceman helped me out and constructed the indicator based on an article that I read in "Stocks and Comodities" magazine.
Then please let me extend my thanks to Diceman as well. Thanks for all your help Aspll.
ScottyB
|
|
Registered User
Joined: 1/28/2005
Posts: 6,049
|
Thanks mmscottyb.
My search function is acting up but this has some more VPCI
information:
|
|
Registered User
Joined: 7/1/2008
Posts: 889
|
this market has had every excuse to sell off this week, but every day it opened weak and closed higher.
And now we have today's action...looks bullish to me.
|
|
Registered User
Joined: 2/29/2008
Posts: 17
|
the trend is your friend. nice flag breakout, although the breadth indicators i use are not confirming the breakout.
|
|
Registered User
Joined: 1/12/2009
Posts: 235
|
QUOTE (jjames) the trend is your friend. nice flag breakout, although the breadth indicators i use are not confirming the breakout.
What type of breadth indicators do you use? Also, are the required PCF formulas?
|
|
Registered User
Joined: 2/29/2008
Posts: 17
|
no pcf required. i'm just using tick and trin charts.
|
|
|
Guest-1 |