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Erik McCurdy

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  • Will Stocks Rally on Bad News This Week? [View article]
    "the big head and shoulders top that you are following is where the real direction is coming from and that directionn is down."

    I believe I have stressed that point in all of my recent commentaries. The point of this article is that there are trends within trends and cycles within cycles. There will always be an ebb and flow to price action, and just because a given economic data point is bad, that doesn't necessarily mean the market will head lower upon its release. The poor housing report and GDP revision report were both already priced into the market over the past two weeks, and the imminent STCL aligned perfectly with the bad news release, setting us up for a bounce from both a fundamental and technical perspective.

    However this developing reaction proceeds, it should simply have the net effect of removing the short-term oversold condition and preparing stocks for a possible breakdown to new long-term lows. The next two to three weeks should show us the way.
    Aug 29, 2010. 12:24 PM | 15 Likes Like |Link to Comment
  • A Stock Market on the Edge [View article]
    The August ISM PMI data will be reported on Wednesday, and regional data thus far suggests there is a good chance it will drop below 54:

    Given the trend, it will almost certainly continue to fall in September as well.
    Aug 29, 2010. 11:19 AM | 14 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    I would submit that aligning oneself with the most likely scenarios will enable one to be "lucky" most of the time. As for cycle analysis, a great place to start is the Foundation for the Study of Cycles:

    Aug 28, 2010. 07:55 PM | 14 Likes Like |Link to Comment
  • Technical Analysis Discussion Blog for August 2010 [View instapost]
    Mattcoll, yes, a $10k gold world will not be a pleasant place in which to live, but we are currently on that path. Bernanke seems intent on driving the US dollar much lower. He thinks that he will be able to magically remove all of this liquidity from the financial system at precisely the right moment in order to prevent monetary inflation from driving price inflation through the proverbial roof, but he's kidding himself. That's what happens when you put a career academic in charge of the Federal Reserve.

    Mark, yes, that's why I'm not a big fan of the GLD ETF. I personally use SGOL as every share corresponds to an amount of physical gold in a vault in Switzerland.
    Aug 28, 2010. 04:58 PM | 9 Likes Like |Link to Comment
  • A Potential Dow Theory Sell Signal Approaches [View article]
    My computer models continue to suggest that a long-term breakdown is likely in September. The primary scenario I am tracking at the moment would have the S&P 500 move sideways, perhaps with a slight upside bias, for the next two weeks or so before abruptly heading lower and taking out the July low near 1,022. It is finally "make or break" time across multiple time frames. September is definitely shaping up to be an important month with respect to the long-term trend.
    Aug 28, 2010. 04:47 PM | 3 Likes Like |Link to Comment
  • Regional Manufacturing Surveys Project a Decline in August PMI [View instapost]
    Well, it's also important to keep in mind that a short-term cycle low was imminent, so we had the classic setup for a "sell the rumor, buy the news" rally, which is exactly what we got. And there are tons of conventional thinkers out there who continue to believe stocks are grossly undervalued, so the other side of the trade is still "bargain hunting." However, that massive topping formation is right on the brink of a major breakdown. I'm still watching for a weekly close well below 1,060 to trigger the next wave of downward momentum.
    Aug 28, 2010. 04:41 PM | 1 Like Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    They tried to rally off of the bad housing numbers on Tuesday, but were only able to move sideways for the remainder of the session. Today's "buy the news" rally held, closing up near the highs. Market behavior over the past two sessions has increased the odds that the next STCL will develop in conjunction with the GDP report on Friday (unless we have already seen the low).
    Aug 25, 2010. 06:11 PM | 16 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    "Interesting analysis but inconclusive."

    I would argue that all forecasts will always be "inconclusive" to a certain extent. Given the complexity of the financial markets, and their marriage of the rational (fundamentals) and the irrational (psychology), there is no way to know with absolute certainty what will happen next. The best we can do is identify the most likely possibilities and their associated probabilities. Granted, there are times when the odds for a given scenario get up in the vicinity of 80%, but rarely do they get much higher (IMO), except on very special occasions such as the March 2009 low:

    Any prognosticators who claim to know exactly what is going to happen and when it is going to happen are either kidding you or themselves. All JMO, of course.
    Aug 23, 2010. 12:14 PM | 16 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    Thanks, I don't pay much attention to the thumbs, but I suspect if too many people started agreeing with me I might be a bit concerned that my thought is becoming too conventional. Hopefully it is simply a matter of my articles attracting unconventional thinkers.

    As for dear old Mom, I would never subject her to stock market discussions such as these. They would probably make her eyes bleed. :)
    Aug 23, 2010. 11:44 AM | 12 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    No argument here, vulture. I like to post potentially "controversial" forecasts as they often spark spirited, engaging discussions. However, I agree that the short-term oscillations with which this article are concerned matter very little to the development of that long-term topping formation.
    Aug 22, 2010. 03:23 PM | 19 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    That's why I believe cycle analysis (CA) makes an excellent complement to pure TA. While TA is focused primarily on price, CA is concerned mostly with time and rhythm. When considered together, they provide a more comprehensive view and enable the development of more reliable forecasts (IMO).

    I also find it valuable to carefully consider the outlooks of others when they differ materially from my own, so I hope you will post alternative forecasts whenever you have them. In general, we tend to learn the most from each other when our views disagree. Your work is very good and I value your analysis.
    Aug 22, 2010. 03:15 PM | 20 Likes Like |Link to Comment
  • Best Monthly Gains in a Year for Stocks: So What? [View article]
    Hi Todd,

    The long-term topping process continues to develop as anticipated, and the recent breakdown of the rising wedge was a textbook example of how that formation typically ends:

    The top formation is now testing its first critical support level in the 1,060 area:

    A weekly close well below the 1,060 level would be a major bearish development, and a subsequent close below the June low near 1,022 would confirm the start of a new cyclical downtrend from late April. The next few weeks could provide important signals with respect to the long-term trend, so it is time to pay close attention.
    Aug 22, 2010. 02:31 PM | 2 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    Thanks, AR, our views are pretty closely aligned. My computer model simply sees two to three more weeks of consolidation before the bulls finally throw in the towel and we take out those lows near 1,022 on the S&P 500. But a second weekly close below the 1,060 congestion zone would be nearly as bearish as a subsequent break to new long-term lows, as that development would virtually confirm that the high of the current intermediate-term cycle occurred two weeks ago, signaling a resumption of the primary downtrend.
    Aug 22, 2010. 01:00 PM | 22 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    I agree, Roger. If the GDP revision is much worse than even the most pessimistic street expectation, we will likely move down to test the recent long-term low at 1,022 right away, and that next STCL bounce probably won't occur until the following week or even the first week of September.
    Aug 22, 2010. 11:08 AM | 21 Likes Like |Link to Comment
  • Will Stocks Rally on Bad News This Week? [View article]
    "Anyone who looks at charts like these for 15 years could not possibly know what the stock market is up to."

    I admit you could be right. As a proponent of the scientific method, I must concede that anything is possible, including the possibility that I am completely wrong in everything I believe. However, if that is the case, then I have been incredibly lucky over the past decade, as my technically-based forecasts have been extremely reliable, well beyond what the laws of coincidence would allow. A brief outline of my track record is provided at the following link, including a summary of the audited results of every forecast I have ever made:

    If this is the best I can do not knowing anything about what the stock market is up to, I suppose I'd rather be lucky than good. :)

    "... the trend is up because wall street is of the opinion that it can't get any worse."

    I would disagree with that. The massive topping formation that has been developing since late 2009 suggests (to me) that a cyclical turn is likely in progress:

    If the S&P 500 index breaks below the recent low near 1,022, a new cyclical downtrend will be confirmed and a relatively quick trip down to at least 950 would be forecast. We'll see.
    Aug 22, 2010. 11:02 AM | 25 Likes Like |Link to Comment