Carl Spackler

ETF Market Trends: Bears Emerge from Hibernation in Oversold Market

Fair enough Mr Hill! I just believe that the action of the last few days hardly constitutes a major oversold condition. We have only corrected 5% from the recent highs - not exactly a thorough correction by any measure. If we were talking at least 10%, I would say we finally are seeing a meaningful minor correction. After a 60% up move, 5% is nothing but a random movement. A major up move like we have had should eventually see a 15% to 20% correction at a minimum. I am just saying that to say we are oversold might be right if we are trading with a horizon of two weeks, but on a longer term basis than that we are not really oversold.


On Oct 28 06:58 PM J Clinton Hill wrote:

> <img class="authors_reply" src="static.seekingalpha.co...">
>
>
> carl,
>
> no where in this post do i quantify the market being down "5 out
> of 6" days and/or associate or imply the market being oversold for
> this reason.
>
> it is true, after today's close, the market is down 5 out of 6 days.
>
>
> i state that the market is "approaching the boundaries of extremely
> oversold territory" which implies that this is not yet its current
> condition. however, it is moving towards "extremely oversold" based
> upon percentage qualifiers and historically tested models.
>
> nothing is infallible, but if it makes you feel good to give yourself
> a pat on the back by saying "gotcha" to an analyst/writer, then god
> bless you...
>
> my determination for the market being overbought or oversold is derived
> from proprietary technical indicators. during the extended rally,
> i have labeled the market overbought on several occasions.
>
> when the facts change, i change my opinion. my investment bias is
> dictated by the trend tables that i have organized and if the trend
> is down for a short, intermediate, or long term basis then my bias
> corresponds appropriately with the market trends. you only need refer
> to the trend tables to learn my investment bias.
>
> if you have followed any of my writings on technical analysis over
> the years, i continually caution readers that markets can stay overbought
> or oversold for extended periods of time.
>
> statistically, a disproprotionate percentage of stocks are displaying
> oversold signals vs. overbought based upon proprietary oscillators
> and price-volume indicators.
>
> 1020 to 1040 is key support zone. if we break 1020, the odds favor
> us testing 990 levels. until the market arrives at this testing area,
> it is premature to call things one way or another. the only thing
> i know is that the short-term trend is down. after i conduct my analysis
> this evening, my conclusions may be better or worse... let's wait
> and see...
>
> what i am trying to do is alert people to a potential anomaly and
> the vulnerability of getting bitch slapped by following the herds
> of sheeple. i find it quite unusual and disturbing for the market
> to advance for such a long period of time and flash oversold signals
> so early after only 5 trailing days of relatively small negative
> performance.
>
> in terms of overbought or oversold, indicators can be applied to
> different time frames. Short-term the market is oversold. Intermediate
> term, the market still remains overbought.
>
> also, if you read my reports regularly, then you should know that
> i am fundamentally bearish on the market while acknowledging that
> the technicals have been bullish...
>
> in terms of logic, i am not always linear in my thinking or interpretation
> of the environments in which i interact...
>
> hopefully this clarifies my investment bias for you and other readers...
>
>
> thanks...

ETF Market Trends: Bears Emerge from Hibernation in Oversold Market

I am curious. You mention that after 5 out of the last 6 days were down the market is extremely oversold, however, in the last six months there were countless times the market was up 5 out of 6 days. Was the market then overbought? History says no. Movements can continue like this (and like the during the move up) for quite sometime.

Right now, we just find ourselves on the support levels of 1035-1040. If we break this, we could see another 5 out of 6 days down. If we hold, we could see more up days. Markets tend to sit on critical levels and wait for news to move them one way or another. If we see bad news over the next few days, you will know that aa new trend has emerged.

What is very apparent is your bullish bias. If a few bad days means a market is oversold, what does 6 months and 60% up mean - overbought? How can we be both?

Is It Time to Buy? What History Shows

All of these signals - high VIX, the gurus buying stocks, market rising on bad news, etc... have been flashing for 5 months. What has that gotten investors - losses. I am always amazed at how many people will try to find the bottom of a market only to get hammered further. To me, it is the surest sign that there is more room to go down.

Too many people still have the psychology that this is another in the line of shallow recessions. Wake up folks! This is a one in a hundred year event. This is a deep recession. This is a deep bear market. Periods such as this when researched show that the bottom is in place when we have at least 6 months of trading within a narrow range. We hit a new low just last month, so I have not seen 6 months of sideways action yet.

Keep on trying to find that bottom. If somehow on your ninth try you actually hit it - yipee!!! The smarter money however will hold off establishing longs until the market shows signs of stabilizing (at any price) for 6 months. Big drops like this take a long time to stabilize and do not do it in a month or two, so you have plenty of time to get on the bus when it actually gets here, mso what's the hurry?