Consumer Metrics Institute: Canary in Economic Coal Mine? [View article]
Nice analysis, Doug. The CMI data is very far upstream, so we should begin to feel the impact of the observed consumption contraction in coincident data during the next few months. If their growth index is an accurate reflection of things to come, stocks are significantly overvalued at these levels.
Technical Analysis Discussion Blog for September 2010 [View instapost]
Thanks, Mark, that is interesting. I wasn't aware that sort of thing happened here at SA, but I suppose it happens pretty much everywhere on the net. I'm just not sure why someone would take an interest in attacking my score since I'm not even in the top 100.
Technical Analysis Discussion Blog for September 2010 [View instapost]
OT: Thumbs down attack
Hi all, I noticed today that somebody went through my commenting history and gave the "thumbs down" to about my last 70 comments. I assume it was done by somebody who cares passionately about his or her comment ranking and is attempting to remain in the top 100 or 50 or whatever. Does this type of thing happen often? I'm still relatively new to SA and was just wondering. People are funny...
Stocks Enter Another Make or Break Window [View instapost]
Hi Dan,
That is the hyperinflation scenario that many folks (e.g. Jim Sinclair and John Williams of Shadowstats.com) believe is imminent. A currency event of that magnitude would definitely cause the stock market to rocket higher like the Weimar Republic in the 1920s. Is it possible? Yes, but it is definitely an extremist view. I tend to be a bit more balanced in my analysis and I don't think it is a likely scenario at the moment.
Of course, as chartists, we have the luxury of not having to try and figure out exactly what is going to happen long-term. As long as we continue to diligently monitor and correctly interpret market behavior, we will be prepared to profit from whatever scenario ultimately unfolds. I believe the Gold Currency Index will remain very sensitive to inflationary pressures and I'll be keeping a close eye on it for the foreseeable future. Interesting times, to say the least...
Yes, the third quarter window dressing process is in full swing, and with the S&P 500 up about 13% from the early July low, funds will want to have plenty of stock exposure on those quarterly statements that are about to go out. Of course, most market players are aware of this process, and that awareness impacts the timing of the next potential reversal. All things being equal, equities will likely have buying support until the end of the month, and then the next downtrend will probably develop soon after and should be as violent as all of the recent corrections.
Manipulation occurs across most markets and takes place in many different ways, but that generally only impacts short-term time frames. The target is usually the retail investor and the game is usually successful, mostly because the retail investor has no idea how the game works. Most analysts are nothing more than used car salesmen (and saleswomen) in expensive suits, but the average investor doesn't know any better and falls for their lines more often than not.
The Hindenburg Omen Blog - September, 2010 [View instapost]
Absolutely. If we were at the beginning of a strong economic recovery, gold would not be making new all-time highs every day. I love how that well-respected fund manager announced on CNBC this morning that stocks were a "no lose" proposition at the moment: if the economy gets better, they will go up, and if the Fed has to come in with QE2 because the economy is getting worse, they will also go up. The sheep are being fleeced once again. The game never changes.
The Hindenburg Omen Blog - September, 2010 [View instapost]
It is end of Q3 window dressing time. The S&P 500 is up nearly 13% from the July low and fund managers need to have that performance show up on the quarterly statements that are about to go out. Note that all rallies continue to be accompanied by below average volume, and the sell-off that occurred mid-week saw a volume increase. The correction that develops after October 1 will be an important indicator of market health.
Will Stocks Rally on Bad News This Week? [View article]
That was precisely my point. The sideways consolidation following the last STCL was not the only possible scenario. It was the most likely at the time (in late August), but certainly not the only one. Remember, even when a given scenario is 70% likely, something else will happen 3 times out of 10. Short-term forecasts are quite fluid and can change very quickly, especially in an environment as volatile as this one. Best of luck to you as well.
Will Stocks Rally on Bad News This Week? [View article]
Bearish, if you are "feeling pain" as a result of the rally from early September, I would respectfully submit that probably reflects a failing of your trading strategy and/or a lack of understanding of short-term market behavior. I'm not sure which outlook you are referencing, but this article is now a month old. Short-term market environments are fluid and can change materially on a daily basis, which is precisely why I provide new short-term forecasts on a daily basis at my newsletter.
The short-term low predicted by this article developed as anticipated, and, true, the rally following it moved higher than forecast in late August, but there is certainly nothing unusual or unexpected about that. There are always multiple scenarios at play, so the key to modeling short-term market behavior and developing reliable forecasts is identifying both bullish and bearish scenarios at any given point in time and then determining approximate probabilities for both.
I would recommend using this apparent trading failure as an opportunity to critically analyze your strategy and look for ways to improve. Risk management is a critical component of any trading strategy, and it sounds to me like you may need to adjust how you do so. Good luck!
Gold Hits Another High as Producer Prices Rise [View article]
"Gold has continually risen during the last decade (in dollar terms)..."
The intrinsic value of gold has also been in a secular uptrend since the bottom in 2001. Our Gold Currency Index--which tracks the international value of gold as a currency itself--has been in a sustained uptrend for the past nine years:
Leading Economic Indicators Continue to Suggest Return to Contraction Is Likely [View article]
"The stock market its self seems to be a good indicator."
I would point to the violent correction in May and June as a sign that the economic recovery was about to hit a rough patch. Further, the developing long-term topping formation continues to favor an eventual breakdown to new lows IMO:
I agree that we are currently only about halfway through the secular bear market from 2000. Our Secular Trend Score (STS) has not been in positive territory since 1991:
A move well above the 0 level would signal that the bear is moving into its latter stages, but we have yet to see any indications of such a development. It looks like we have at least 5 to 7 more years before the foundation for the next secular growth cycle will be in place. Time will tell.
The Hindenburg Omen Blog - September, 2010 [View instapost]
Hi All,
I didn't realize the HO blog was still alive and kicking. I have also noticed the multiple signals and they continue to be indicative of a market in turmoil. A move out of this trading range between 1,050 and 1,130 on the S&P 500 should provide near-term direction, but I would be suspicious of any breakout as the leading indicators that I track continue to suggest that a return to economic contraction is likely sometime during the next couple of quarters. At the very least, a close well above 1,130 would take the long-term breakdown scenario off of the table for September, but I'm still waiting for volume to return in order to get a better feel for underlying conviction. Interesting times, to say the least.
Gold Breakout May Signal Major Move Higher [View article]
Should this long-term breakout be confirmed, the minimum upside target would be $1,330. However, given the facts that 1) prices would be in uncharted territory devoid of resistance levels and 2) we are entering the strong seasonal period for gold, it is likely that the rally will move substantially higher than the minimum target by early next year.
Consumer Metrics Institute: Canary in Economic Coal Mine? [View article]
Technical Analysis Discussion Blog for September 2010 [View instapost]
Technical Analysis Discussion Blog for September 2010 [View instapost]
Hi all, I noticed today that somebody went through my commenting history and gave the "thumbs down" to about my last 70 comments. I assume it was done by somebody who cares passionately about his or her comment ranking and is attempting to remain in the top 100 or 50 or whatever. Does this type of thing happen often? I'm still relatively new to SA and was just wondering. People are funny...
Stocks Enter Another Make or Break Window [View instapost]
That is the hyperinflation scenario that many folks (e.g. Jim Sinclair and John Williams of Shadowstats.com) believe is imminent. A currency event of that magnitude would definitely cause the stock market to rocket higher like the Weimar Republic in the 1920s. Is it possible? Yes, but it is definitely an extremist view. I tend to be a bit more balanced in my analysis and I don't think it is a likely scenario at the moment.
Of course, as chartists, we have the luxury of not having to try and figure out exactly what is going to happen long-term. As long as we continue to diligently monitor and correctly interpret market behavior, we will be prepared to profit from whatever scenario ultimately unfolds. I believe the Gold Currency Index will remain very sensitive to inflationary pressures and I'll be keeping a close eye on it for the foreseeable future. Interesting times, to say the least...
Weekly Charts for September 24, 2010 [View instapost]
Yes, the third quarter window dressing process is in full swing, and with the S&P 500 up about 13% from the early July low, funds will want to have plenty of stock exposure on those quarterly statements that are about to go out. Of course, most market players are aware of this process, and that awareness impacts the timing of the next potential reversal. All things being equal, equities will likely have buying support until the end of the month, and then the next downtrend will probably develop soon after and should be as violent as all of the recent corrections.
Manipulation occurs across most markets and takes place in many different ways, but that generally only impacts short-term time frames. The target is usually the retail investor and the game is usually successful, mostly because the retail investor has no idea how the game works. Most analysts are nothing more than used car salesmen (and saleswomen) in expensive suits, but the average investor doesn't know any better and falls for their lines more often than not.
The Hindenburg Omen Blog - September, 2010 [View instapost]
The Hindenburg Omen Blog - September, 2010 [View instapost]
Will Stocks Rally on Bad News This Week? [View article]
Will Stocks Rally on Bad News This Week? [View article]
The short-term low predicted by this article developed as anticipated, and, true, the rally following it moved higher than forecast in late August, but there is certainly nothing unusual or unexpected about that. There are always multiple scenarios at play, so the key to modeling short-term market behavior and developing reliable forecasts is identifying both bullish and bearish scenarios at any given point in time and then determining approximate probabilities for both.
I would recommend using this apparent trading failure as an opportunity to critically analyze your strategy and look for ways to improve. Risk management is a critical component of any trading strategy, and it sounds to me like you may need to adjust how you do so. Good luck!
Gold Hits Another High as Producer Prices Rise [View article]
The intrinsic value of gold has also been in a secular uptrend since the bottom in 2001. Our Gold Currency Index--which tracks the international value of gold as a currency itself--has been in a sustained uptrend for the past nine years:
seekingalpha.com/artic...
Leading Economic Indicators Continue to Suggest Return to Contraction Is Likely [View article]
I would point to the violent correction in May and June as a sign that the economic recovery was about to hit a rough patch. Further, the developing long-term topping formation continues to favor an eventual breakdown to new lows IMO:
seekingalpha.com/artic...
"Inversion has preceded every period of economic contraction..."
I posted an article this weekend addressing the failings of the yield curve inversion indicator:
seekingalpha.com/artic...
As always, there are two sides to the story (and trade) and I respect your view. It is shaping up to be a very interesting final few months of 2010.
The Dark Side of Deficits [View article]
www.prometheusmi.com/p...
A move well above the 0 level would signal that the bear is moving into its latter stages, but we have yet to see any indications of such a development. It looks like we have at least 5 to 7 more years before the foundation for the next secular growth cycle will be in place. Time will tell.
The Hindenburg Omen Blog - September, 2010 [View instapost]
I didn't realize the HO blog was still alive and kicking. I have also noticed the multiple signals and they continue to be indicative of a market in turmoil. A move out of this trading range between 1,050 and 1,130 on the S&P 500 should provide near-term direction, but I would be suspicious of any breakout as the leading indicators that I track continue to suggest that a return to economic contraction is likely sometime during the next couple of quarters. At the very least, a close well above 1,130 would take the long-term breakdown scenario off of the table for September, but I'm still waiting for volume to return in order to get a better feel for underlying conviction. Interesting times, to say the least.
Gold Breakout May Signal Major Move Higher [View article]
Consumption Contraction Approaches 2008 Low [View article]