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Eric Coffin and his brother David Coffin (http://seekingalpha.com/author/david-coffin) are the co-editors of the HRA (Hard Rock Analyst) family of publications. Responsible for the “financial analysis” side of HRA, Eric has a degree in Corporate and Investment Finance. He has extensive... More
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  • Cycles 52 comments
    Oct 22, 2009 05:53 PM | about stocks: GLD, UUP, UDC, UDN, SPX, PGB
    From the October 2009 HRA Dispatch
    David Coffin & Eric Coffin, HRA Advisories
     
     
    Mayan Indian elder Apolinario Chile Pixtun has restated his belief that the world is not going to end in 2012. Or more precisely, that his beliefs don’t suggest the world should end despite it being the end of a major cycle in the Mayan calendar. According to China Daily, he is even more emphatic that he’s tired of being asked about it. 2012 is the end of a 5126 year cycle (end of the 13th of 13 Baktun). It also ends a 26800 year cycle that may relate to the Earth’s wobble, which is useful for gauging the drift of seasonal climate changes. China Daily also briefly mentions predictions by 16th century (Christian calendar) French herbalist Nostradamus that is being combined with the Mayan cycles to create buzz for a spate of movies and TV specials.
     
    The Nostradamus’ predictions appear to be linear rather than cyclical. It’s hard to say since, like most good prophesy, they’re in code. The cycles described in Mayan calendars still have the more universal appeal. It’s comforting to think things will come around again. Mesoamericans outlined complex calendars that, we’re told, are quite accurate. That does make them useful to time planting, and also to justify the timing of power shifts. We assume feeding people generated much of the early buzz around star gazing, but as usual the technical breakthrough brought hangers-on.
     
    Perhaps it will be 2012 when western economies at the centre of the debt/housing bubble hit that wall of resignation that creates a final bottom. That will partially depend on how the interest rate cycle plays out in each of them. Capital will continue to seek the safety of bonds for a while yet, assuming its not central banks doing all the buying. As long as yields stay low mortgage resets will keep some weaker players afloat. Bottoms are marked by capitulation, which for debt usually comes when rising interest rates submerge those still treading water. Yields would normally have to go a long way to generate this impact but this cycle features many overextended borrowers that need plenty of time to earn down debt loads.
     
    Right now there is much confusion about whether a “typical” market cycle even applies. Asian growth economies that function somewhat differently than western markets (and differently than each other) are clouding crystal balls. These effects are skewed even more by price shifts against currencies. We seem to be between cycles, and probably are. In our little bit of the galaxy this means coming up with a new gauge for the price vs. inventories equation for copper and some other metals.
     
    Most of the capital that flowed into copper earlier this year plans to use the stuff at some point, and sees potential for a supply squeeze. The question is whether taking a gain now will be rewarded with a lower buy-back price before the stocks are needed. Normally that would work but with metals being used as inflation hedges and pair trades against weak currencies prices (at least dollar prices) have gotten detached from the inventory cycle.      
     
    Notwithstanding last week’s new highs for gold, producer stocks move hesitantly, with plenty of traders waiting for “the other shoe to drop”, whatever that might be.   Metals in general are continuing their anti-dollar rally.   While we would still like to see falling inventories on the base metal side inventory levels have at least been flattening in the case of most metals and falling for zinc and aluminum.   There is fear of bubbles and a multiplying list of grumpy bears now that the Dow has added a digit the way gold already had.   Yes, a lot of this has to do with a flood of liquidity and speculation on what level profits (or the USD) might be at a year or two out. But, as we’ve noted several times recently its better to deal with the market that is than to try and tell it what to do.
     
    Even though it’s considered the height of irrationality by some, renewed strength in many asset classes can continue as long as central banks flood the markets with liquidity and drive down the returns on competing assets like government debt. 
     
    The day may come when that won’t work any longer and bond yields take off so taking profits regularly continues to be a good idea. The day may come sooner when other central banks, the ECB in particular, start trying to jawbone their own currencies lower which could give the greenback a bounce and metals a correction. We expect that would be a correction however, not a panic, and those central banks will still have to prove they can back up words with actions. Jawboning is only a stop gap measure and the Dollar Index has breached several important technical levels on the downside. There will be support for most markets as long as decent economic stats continue to be reported and there is belief that the recession is at least easing. While we agree this is mainly (but not wholly) a currency trade, the longs in commodities have reason to be skeptical that central banks will “get it right” or that some turn of events will create a new batch of Dollar bulls. Central banks do no have the best of track records when it comes to controlling liquidity flows.
     
    It would be nice to have some magic ratio that says “metal X is a buy when inventories equal Y and the US Dollar Index is at level Z”. We would like to say we that we already know, but we can’t. Unfortunately, we left our codebook in the other computer and, unlike Mayan calendars; we don’t think anything in this market is carved in stone. 
     
    Disclosure:  No positions
     
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    Themes: commodities, market cycles, apocalyptica Stocks: GLD, UUP, UDC, UDN, SPX, PGB
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This post has 52 comments:

  •  
    As someone who has spent well in excess of 12,000 hours writing a historical saga about the ancient Mayan civilization, spent months of my life in Central America, met true Mayan shamans, read a myriad of both text books as well as "spiritual" books, well in excess of 100; as one who knows on a first-named basis a great number of the foremost Mayan epigraphists, archeologists and anthropologists experts on the planet, I can state that the living Mayans categorically do not expect the world to end on December 21, 2012. It is just the end of a Great Cycle.

    We'll be on to the next cycle December 22, 2012. That's all, except for a huge celebration the night before, and I will be in Copan, Honduras to take part.
    Oct 22 06:36 PM | Link | Reply
  •  
    Wow, Maya, someone else with a MUCH deeper understanding of the whole thing than I have!

    Check out my website link, I have a lot of artwork that you may find of interest. The piece about the Ring of Brogar, for instance.

    I get frequent questions about the 2012 concept, and I totally agree, the Mayans did not see the end of the world, per se, but the end of the Cycle, just as you say. I have reassured nervous customers for years with this very same opinion, though of course NOT backed up with your degree of work and expertise!

    And tha party in Copan sounds amazing. I can only hope I'm still alive then. My wedding anniversary is Dec. 12, and with a little jockeying of schedules we could combine the 3 events into one whale of a blowout!

    Have you published your saga?


    On Oct 22 06:36 PM Mayascribe wrote:

    > As someone who has spent well in excess of 12,000 hours writing a
    > historical saga about the ancient Mayan civilization, spent months
    > of my life in Central America, met true Mayan shamans, read a myriad
    > of both text books as well as "spiritual" books, well in excess of
    > 100; as one who knows on a first-named basis a great number of the
    > foremost Mayan epigraphists, archeologists and anthropologists experts
    > on the planet, I can state that the living Mayans categorically do
    > not expect the world to end on December 21, 2012. It is just the
    > end of a Great Cycle.
    >
    > We'll be on to the next cycle December 22, 2012. That's all, except
    > for a huge celebration the night before, and I will be in Copan,
    > Honduras to take part.
    Oct 22 06:43 PM | Link | Reply
  •  
    Wow, the last time the beginning of a new cycle was celebrated was 5,126 years ago. That should be one hell of a party. Too bad the cycle length is not 5119, the nearest prime.
    Oct 22 06:49 PM | Link | Reply
  •  
    Well I'd like add that I suspect that banks in the year 2012 will indeed still be loaning money out of faith that people will be here to pay them back in 2013.

    Maya, if I can afford it at the time... can I go to Honduras with you?
    Oct 22 06:54 PM | Link | Reply
  •  
    On Oct 22 06:49 PM User 283977 wrote:

    > Wow, the last time the beginning of a new cycle was celebrated was
    > 5,126 years ago. That should be one hell of a party. Too bad the
    > cycle length is not 5119, the nearest prime.<

    LOL... always thinkin' outside the box. It's that kind of thinking that leads to discovery and innovation methinks.
    Oct 22 06:56 PM | Link | Reply
  •  
    Tripleblack: Will do, tomorrow. My bio explains where I'm at in my writing and includes a summation of the novel (though I now have a few less pages to write).

    Rocks: The more the merrier, that is if the political climate down there normalizes. You would be wildly impressed with the intellectual and cosmopolitan capacities of the folks who visit Copan. I must have over 200 business cards ranging from MIT profs, to Denmark soccer announcers, to Japanese archaeologists, to students studying bats, to plain ole folks who want to be notified when the book gets published.

    If you want some movie script-like inside scoop of why Honduras ousted President Zalenda, go into my Instablog threads and seek out, "Honduras: The Real Truth Of Why Honduras Ousted Pres. Zelaya." The evolving story needs to be updated, as elections are coming up soon. Pretty sure that the linked page though, has been either taken down, or the story from an actual Honduran removed. So you'll have to take my word. Sheepishly, I'll admit that was before I taught myself how copy and paste, something half the country's second graders knew how to do before me.

    That scoop put me on the map here on SA.
    Oct 22 07:42 PM | Link | Reply
  •  
    Maya, I am NOT going to read any summation or spoilers, but just add me (and I suspect most everyone on here) to the list to notify upon publication. If you are self-publishing, let me know and I will buy an advance copy.

    I just saw the previews of the new 2012 end of the world movie.

    Sigh. Sad what passes for science fiction these days, but at LEAST its not a movie from Al Gore!

    (Ulp, or am I giving him ideas?)
    Oct 22 07:52 PM | Link | Reply
  •  
    On Oct 22 07:42 PM Mayascribe wrote:


    > Rocks: The more the merrier, that is if the political climate down
    > there normalizes. You would be wildly impressed with the intellectual
    > and cosmopolitan capacities of the folks who visit Copan. I must
    > have over 200 business cards ranging from MIT profs, to Denmark soccer
    > announcers, to Japanese archaeologists, to students studying bats,
    > to plain ole folks who want to be notified when the book gets published.<

    Please add me to that list. You'll get my contact information before then I'm sure. As standard procedure, for an autographed copy I pay double and provide the contact info for a hooker I met in Mexico in 1973. Two months ago I did such a deal with Ravi Shankar and he said he had a great time.
    Oct 22 08:12 PM | Link | Reply
  •  
    Having seen the Non-science fiction Pics of the Freeze Dried Mammoth found by the Ruskies when I was a Lass, I can easily say I plan to be in Southern Texas for a prolonged stay in early Dec of 2012. It may have been a Hoax.

    There is a Movie called " The Day after Tommorow", there is a scene in it where they walk through a museum past that Mammoth. It was frozen in the Act of Eating. I believe it happened.

    The movie talks about a shift in the Ocean Currents. I, for one, believe that the Alignment of the Planets could infuence the Magnetic field of the Planet Earth. "Eureka" one of my favorite TV series had an episode of what could occur if that were to happen.

    I read about the Super Volcano sitting under Yellowstone and the measurements done over the last 100 years, how one end is noticibly bulging. That sucker erupts every 600,000 years or so (scientifically proven Fact), it been over 600k for some time now. Could the planetary magnetic field cause it to erupt? Got me. but I want to be able to be close to an Ocean and deep south.

    Screw Nostradamus, Edgar Cayce is my boy. He made a similar prediction:

    "Earth Changes: Cayce coined the term Earth Changes (later widely used in New Age writings), a reference to a series of cataclysm events which he prophesied would take place in future decades — notably including the Earth shifting on its axis, and most of California dropping into the Pacific Ocean following a catastrophic earthquake."

    Cayce also believed in Spiritual enlightenment. He wasn't cryptic. You didn't have to divine anything.

    You do what you believe in, we will watch from somewhere in a warmer climate. It will be a Christmas vacation.
    Oct 22 11:20 PM | Link | Reply
  •  
    Maya

    Do you have any idea what the Mayan thought the next Great Cycle would bring? Sounds like a big party

    We have a few options

    One all mankind will stop killing, stealing, lying, cheating, etc, etc. from one another a time of enlightenment.

    Two the planet will be torn in half by cataclysmic celestial forces.

    Three, Rocks and Maya will be waking up on the 22nd with a great cycle hangover.

    I am leaning towards option Three
    Oct 23 12:08 AM | Link | Reply
  •  
    Freya: The amount of bullshit information, the amount of what if human-ending, complete extermination scenarios, the amount of sensationalized doomsday TV shows, movies, books, as well as rip-off charlatans, the amount of human beings that dwell on every way we can kill ourselves, or will be exterminated, versus the amount of how we humans as a species that can and will control a destiny of glorious fruition, spellbounds me.

    Now let me digress about politicians....
    Oct 23 12:55 AM | Link | Reply
  •  
    SAS: Be there!
    Oct 23 12:56 AM | Link | Reply
  •  
    Maya, should I bring a few extra hammocks? Sounds like we might need them.

    I still dream of the day, to wake up, head swelled up like a mellon, bottles rolling around below, a cool breeze blowing through, sun peaking through and you blissfully snoring away, pen still in hand from all the book signing and glory of a job well done and well celebrated.

    If you say we are going, I'm in.
    Oct 23 01:19 AM | Link | Reply
  •  
    Pending, pal, pending.

    Only, if I attain my dream...
    we'll be enjoying the spray of wicked-assed afternoon weather,
    followed by womb-warm breeze,
    hamocks pushed about, as we drink another stout
    followed by a red moon rising, aglow upon the seas,
    of which we'll be so spent
    we will never see.
    how peaceful that would be.
    Oct 23 02:15 AM | Link | Reply
  •  
    Good transportation once you are there:

    Man pleads guilty to DWI in motorized La-Z-Boy
    AP

    *
    Buzz up!
    * Send
    o Email
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    * Share
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    o Yahoo! Bookmarks
    * Print

    A motorized La-Z-Boy chair driven by Dennis Anderson of Proctor was operating AP – A motorized La-Z-Boy chair driven by Dennis Anderson of Proctor was operating when he hit a parked vehicle …
    Thu Oct 22, 9:17 pm ET

    DULUTH, Minn. – A Minnesota man has pleaded guilty to driving his motorized La-Z-Boy chair while drunk. A criminal complaint says 62-year-old Dennis LeRoy Anderson told police he left a bar in the northern Minnesota town of Proctor on his chair after drinking eight or nine beers.

    Prosecutors say Anderson's blood alcohol content was 0.29, more than three times the legal limit, when he crashed into a parked vehicle in August 2008. He was not seriously injured.

    Police said the chair was powered by a converted lawnmower and had a stereo and cup holders.

    Sixth Judicial District Judge Heather Sweetland stayed 180 days of jail time Monday and ordered two years of probation for Anderson. His attorney, David Keegan, did not immediately return a call for comment.
    Oct 23 04:31 AM | Link | Reply
  •  
    Too bad he didn't crash into a Police Car.

    Soupy Sales died yesterday, age 83, too young by Far.

    I was involved with a Futurist group a few years ago. If I can live to 90, science will have advanced enough to increase my lifespan to 125. If I make it to 125, the advances will prolong my life to 200 And If I make it to 200, I will be around to greet the next Millenium.

    Is that Better, does that make you happier? Think about it.
    Oct 23 08:37 AM | Link | Reply
  •  
    I Like/love SciFi. Grok
    Oct 23 08:39 AM | Link | Reply
  •  
    Science fiction and fantasy literature...

    A way of life.
    Oct 23 09:54 AM | Link | Reply
  •  
    "...How come everytime I see F you see K." That joke got Soupy kicked off the air. Pure genius.
    Oct 23 10:20 AM | Link | Reply
  •  
    Maya, it kind of look like GWM is going to make that visit to .26 or thereabouts afterall.
    Oct 23 10:27 AM | Link | Reply
  •  
    Yeah, but trading is *so* thin, it's really hard to have much confidence in the charts I look at.

    HardToLove


    On Oct 23 10:27 AM Albertarocks wrote:

    > Maya, it kind of look like GWM is going to make that visit to .26
    > or thereabouts afterall.
    Oct 23 10:31 AM | Link | Reply
  •  
    "With all the advances in modern science and my high level of income, I see no reason why I shouldn't live to 120 or 130 years of age."

    ---Ricky Bobby
    Oct 23 10:32 AM | Link | Reply
  •  
    On Oct 23 10:32 AM yellowhoard wrote:

    > "With all the advances in modern science and my high level of income,
    > I see no reason why I shouldn't live to 120 or 130 years of age."
    >
    >
    > ---Ricky Bobby<

    If I'd known I was gonna live this long, I would have taken better care of myself.
    Oct 23 10:37 AM | Link | Reply
  •  
    I believe that was Mickey Mantle.
    Oct 23 10:44 AM | Link | Reply
  •  
    "Only invest in stocks if they're gonna go up. If they don't go up, don't buy 'em."

    Will Rogers
    Oct 23 10:51 AM | Link | Reply
  •  
    "I may not be the best dancer in the world, but I've got a heart of gold and I love onion rings".

    My grandfather
    Oct 23 10:55 AM | Link | Reply
  •  
    If you look at this instablog I put together "What Time is it Anyway": 2009 is about 5:50 PM on the daytime cycle. In 2010, we hit dusk, wherein Darkness and Light are at equal strength. If we overlay traditional Western astrology on the chart, dusk is Libra, governed by Venus -- the Love Goddess...love which disrupts practical reality, the Dark and the Light merging -- from 2010 to 2013, which transforms into Scorpio, governed by Mars, the god of War, 2013-2016. What does this mean or suggest? The Dark Night of the Night Cycle is in 2019, at which time the seed of light is reborn, contraction reaches its apex, and expansion slowly begins, becoming victorious again (for good and evil) in 2028. The Golden Age of Spring (material successes) runs from 2028 - 2037.

    seekingalpha.com/insta...

    This is a relatively small cycle I'm working with (36 years). Not to be confused with the Mayan cycle, but perhaps illuminating something by point of contact with the larger cycle.
    Oct 23 11:07 AM | Link | Reply
  •  
    Triple: Spent some time looking into your artwork. You are one talented cuss. I have great difficulty drawing the word game Hangman.

    (The summation of my novel is just one sentence.)

    Guns & Rocks: I will likely be down there in Copan for six weeks or so ahead of The Event. If the end of the world is going to happen, why not be where it ends first. Guaranteed to be a blast! X off your calendars for that date.
    Oct 23 11:09 AM | Link | Reply
  •  
    Since we are in October I thought this one might be pertinent.

    October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February...... Mark Twain
    Oct 23 11:57 AM | Link | Reply
  •  
    I don't know why that reminded me of the two brothers from Newfoundland, but it did. Maybe it's because we're in October and that made me think of harvest.

    Anyway these two brothers from Newfoundland decided to go into the business of marketing potatoes. They'd drive their truck out to all the farms and buy the potatoes for $2 a bushel and when their truck was full, they'd drive to the market in the town and sell 'em for $2 a bushel. At the end of the month they discovered that they'd lost money and decided to go to the pub to analyze their business and solve the problem.

    At the end of the night and 35 beers later they came to the conclusion that they needed to buy a bigger truck.

    Its that kid of logic that gets most people into trouble in the stock markets I think.
    Oct 23 12:15 PM | Link | Reply
  •  
    Just on a side note here gang, I thought I'd point out that the tranny's and the Russell 2000 have put in identical double tops and are headed lower. Nothin' critical, just something to remind us to pay attention.

    The tranny's in particular are waving an orange flag because it looks like they'll be testing a support level today or Monday. And at this moment, they're sitting right on top of a major uptrend line. The pattern set-up is identical to what happened with the trannys in May and June that resulted in the July correction.

    And $RUT has a way to fall before it even "finds" support. It too is sitting right on top of the same trendline. Again, nothin' critical... but definitely something to remind us to keep our eyes on the ball.
    Oct 23 12:37 PM | Link | Reply
  •  
    Congress must think they are potatoe farmers.Cash for housing is at $8000 and they want to keep it from expiring as well as increase it to $15,000 and offer it to more people. How much faster can we get ripped off here and lose more money.


    On Oct 23 12:15 PM Albertarocks wrote:

    > I don't know why that reminded me of the two brothers from Newfoundland,
    > but it did. Maybe it's because we're in October and that made me
    > think of harvest.
    >
    > Anyway these two brothers from Newfoundland decided to go into the
    > business of marketing potatoes. They'd drive their truck out to all
    > the farms and buy the potatoes for $2 a bushel and when their truck
    > was full, they'd drive to the market in the town and sell 'em for
    > $2 a bushel. At the end of the month they discovered that they'd
    > lost money and decided to go to the pub to analyze their business
    > and solve the problem.
    >
    > At the end of the night and 35 beers later they came to the conclusion
    > that they needed to buy a bigger truck.
    >
    > Its that kid of logic that gets most people into trouble in the stock
    > markets I think.
    Oct 23 03:10 PM | Link | Reply
  •  
    On Oct 23 03:10 PM doubleguns wrote:

    > Congress must think they are potatoe farmers.Cash for housing is
    > at $8000 and they want to keep it from expiring as well as increase
    > it to $15,000 and offer it to more people. How much faster can we
    > get ripped off here and lose more money.<

    That program seems to be nothing more than a conduit. It's a pipeline that takes money from the taxpayer, loans (or gives?) it to people in the phony and planned concept that their real estate will recover. It won't and the bastard government know it. So no matter if they loan (or give, I don't know enough about it?) this money in this false pretext, they know damned well that when the property forecloses, that money will land in the pockets of the bankers who hold the mortgage. Sheer genius. Sheer evil.
    Oct 23 03:35 PM | Link | Reply
  •  
    Guns; You just made me do a Dan Quayle chortle: "potatoe."

    Rocks: I just posted somewhat the same idea about the double top in OG's chat. Used to call them "Batman's Ears." More confluence of collective consciousness.

    Then earlier today, Guns, I whacked a yellow jacket that was buzzing my mom. What will we do when there are no more newspapers and magazines with which to kill invading varmints?
    Oct 23 03:46 PM | Link | Reply
  •  
    Guns: Did you catch the Whopper Freakout, Uncut parady vid I put in the "More Infringements Upon Our Freedom" thread?
    Oct 23 03:50 PM | Link | Reply
  •  
    Smack with a monitor, silly!

    HardToLove


    On Oct 23 03:46 PM Mayascribe wrote:

    > Guns; You just made me do a Dan Quayle chortle: "potatoe."
    >
    > Rocks: I just posted somewhat the same idea about the double top
    > in OG's chat. Used to call them "Batman's Ears." More confluence
    > of collective consciousness.
    >
    > Then earlier today, Guns, I whacked a yellow jacket that was buzzing
    > my mom. What will we do when there are no more newspapers and magazines
    > with which to kill invading varmints?
    Oct 23 04:10 PM | Link | Reply
  •  
    Just a little update folks. I think we should pay attention to this.

    Above, I'd mentioned about the double tops and the trendlines being challenged.

    Now that the trading day and week are at and end, it's really important that we pay attention to something here. The trannies did indeed violate that trendline. Not only that, they finished not only at the low of the day, but also at the "low for the week".

    It's a great big fat red candle that's saying the Dow is fakin' it. I know nobody likes a pessimist, but I know you all like realists. I'm just a realist who's just putting out a "heads up". If I didn't care about you people, I wouldn't post it.
    Oct 23 04:20 PM | Link | Reply
  •  
    Rocks: I listened to what you said before, what I said earlier about Battman's ears, VIX, etc, and did a little selling during the last half hour. Somehow, today was a "brake" even day in my e-gamer account. Thanks to (AEMD) and (NXTH).

    Hard: Need an I-Phone Flyswatter App.
    Oct 23 04:32 PM | Link | Reply
  •  
    On Oct 23 04:32 PM Mayascribe wrote:

    > Rocks: I listened to what you said before, what I said earlier about
    > Battman's ears, VIX, etc, and did a little selling during the last
    > half hour. Somehow, today was a "brake" even day in my e-gamer account.
    > Thanks to (seekingalpha.com/symbo...) and (seekingalpha.com/symbo...;

    Excellent discipline Mr. Mayascribe. No matter what happens, you're gonna be a survivor with that kind of discipline. I admit that I myself don't even always listen to my own advice. Maybe I'm of more value to you folks than I am to myself. lol
    Oct 23 04:38 PM | Link | Reply
  •  
    On Oct 23 04:20 PM Albertarocks wrote here:
    seekingalpha.com/insta...

    ><snip>
    > Now that the trading day and week are at and end, it's really important
    > that we pay attention to something here. The trannies did indeed
    > violate that trendline.

    "Trannies" = $DJT? If so, yep. Broke 20 and 50 day SMA. But what's it mean when the weeklies are above 20/50 SMA and bumps down off the 100 SMA?

    These are honest Q's - I'm still in the early stages of my education here.

    > Not only that, they finished not only at
    > the low of the day, but also at the "low for the week".

    Current support looks to be 3660 and previous looked to be ~3775. Our close is still above that previous support. Meaningful?

    Previous day was a "hammer" candlestick, barely, so maybe a "doji". After a down day, we could look for a reverse in the next couple days. With today being Friday and the market often dipping as folks don't want to be long over the weekend, and dollar stronger, should we discount the trend break a little?

    I do see the double top. I just don't know how much weight to assign it given the other considerations.

    >
    > It's a great big fat red candle that's saying the Dow is fakin' it.
    > I know nobody likes a pessimist,

    Heh. Compared to what I was from end of June 'till a few weeks ago, you seem positively ebullient!

    > but I know you all like realists.
    > I'm just a realist who's just putting out a "heads up". If I didn't
    > care about you people, I wouldn't post it.

    That's what my dad used to tell me just before he laid the strop to my butt! ;-))

    Seriously, I've never looked at the "trannies" before but if it is $DJT I do know they are supposed to be a big indicator in Dow theory.

    *If* you have time and interest, some context re the questions I posed above would be gratefully received.

    If a "real life" prevents that, I certainly do understand.

    Thanks,
    HardToLove
    Oct 23 05:03 PM | Link | Reply
  •  
    Alberta, Since November should be Up, I would guess it will be down in the 5-10% just like July was and probably last just as long, 4 down weeks.

    Early Tax loss selling included. December Job numbers will be easy to manipulate. Good start for the Christmas Rally.

    An outside wrench could be the Swine Flu.

    Having made this speech, Anyone Live in/around Vegas? We are going to a wedding, 11/11 through 11/16, 6 nights, Flamingo. $50 bucks for all 6.

    Toss in a $100 cash voucher, a couple of Buffets and a cple of shows included...what we bring will be used "wisely" Hopefully, 10K will suffice.

    CQP closed rather nicely today.
    Oct 23 05:21 PM | Link | Reply
  •  
    Freya---Normally a slow time of the year for Vegas. But the WSOP reconvenes on 11/7, so there may be a pretty good crowd, as it seems to be very popular the past few years. Family members of mine have seen the Phantom of The Opera at the Venetian, which is a couple of buildings down from Flamingo, and thoroughly enjoyed it. I'm on the East Coast but I confess I love Vegas. As you know, Vegas is hurting, so there is today much bang for your buck. My guess is that you'll have a blast.
    Oct 23 05:50 PM | Link | Reply
  •  
    Maya I caught the whopper vid. got interrupted 3/4 way through. Enjoyed it very much. LOL
    Oct 23 06:26 PM | Link | Reply
  •  
    On Oct 23 05:03 PM H. T. Love wrote:

    > On Oct 23 04:20 PM Albertarocks wrote here:
    > seekingalpha.com/insta...;

    "Trannies" = $DJT? If so, yep. Broke 20 and 50 day SMA. But what's it mean when the weeklies are above 20/50 SMA and bumps down off the 100 SMA?

    >These are honest Q's - I'm still in the early stages of my education here.<

    No worries H.T.L, I know you're a sponge for knowledge and I'm more than happy to share what I'm talking about. Even if I'm wrong, it's valuable to at least be alert to the warnings.


    >Current support looks to be 3660 and previous looked to be ~3775. Our close is still above that previous support. Meaningful?<

    Yes, those are valid points. I'd agree with the level off 3660 as being important but 3600 as more critical. But what's "probably" even more important is the fact that the uptrend line was breached today. Technicians (certainly) and computer programs (possibly) would spot that. By far, the most critical part of the equation to pay attention to is "how" it got there (today's close)... with a determined, almost violent, 3 day drop straight down "on a MASSIVE spike in volume".


    >Previous day was a "hammer" candlestick, barely, so maybe a "doji". After a down day, we could look for a reverse in the next couple days. With today being Friday and the market often dipping as folks don't want to be long over the weekend, and dollar stronger, should we discount the trend break a little?<

    Thursday's candle gave the impression that it was a relatively positive day after all, since the doji was formed (meaning price closed relatively near the high for the day). All the more reason to view today's action as "bad news", because today's action completely negated Thursday's nice appearance. Thursday's nice looking action was on lighter volume. Wednesday's and today's action were both on much higher volume. In other words, up on light volume and down hard, on huge volume. Of course, on Thursday we weren't really able to see those facts as easily as we can see them now.

    No, we shouldn't discount the trendline, especially in light of the details, as described above. True enough, the trendline was barely breached and price "could" resume its climb on Monday. The fact that I doubt that, is irrelevant. Maybe I'm just being overly careful, and there may be nothing to it, but the odds are high that this is meaningful.


    >I do see the double top. I just don't know how much weight to assign it given the other considerations.<

    That's a great question, because if price turns higher, the double top disappears. The ironic part is that if price turns higher, the double top was meaningless. At this point in time, all the double top is saying is that there's resistance there... for now.


    >Seriously, I've never looked at the "trannies" before but if it is $DJT I do know they are supposed to be a big indicator in Dow theory.<

    On my charting service it's called $TRAN, but we're talking about the same index. Yes, the main reason this entire exercise is relatively important is because of Dow "Theory". The theory is that if the Dow makes a new high and the trannies don't confirm, it's only a warning. It's entirely possible that the Dow could continue higher for another week, while the trannies languish. It's not cast in stone. Yet the great big red flag I see is "how" the trannies got to today's close.


    >*If* you have time and interest, some context re the questions I posed above would be gratefully received.<

    My pleasure!

    As a final note to yourself and anybody else who cared to follow through on this excercise, I need to point out that as of tonight, this is only a warning from the trannies, not necessarily anything more than that. We'll have to see what Monday brings, but at least I feel better that you're all aware.

    If the market flinches on Monday, and you sell something, then the market continues upward, I might lose my credibility, but at least you won't lose money.
    Oct 23 06:28 PM | Link | Reply
  •  
    Maybe we should be buying Burger King...
    Oct 23 06:28 PM | Link | Reply
  •  
    On Oct 23 05:21 PM Freya wrote:

    > Alberta, Since November should be Up, I would guess it will be down
    > in the 5-10% just like July was and probably last just as long, 4
    > down weeks.<

    You could be right Freya, this trend has been relentless. If the bankers want this to continue to Dow 17,000, it will continue to Dow 17,000. One interesting and possibly important fact is that foreigners are participating in the American markets less and less every week according to articles on SA. I'd assume that means they just aren't willing to risk it any further.
    Oct 23 06:41 PM | Link | Reply
  •  
    I am smelling a Christmas Present rally too, but it could get bumpy between here and there. I was 100% in the market from Mar. 26 till last Thursday, now I'm 80% in cash, with some commodities, mines, oil, silver, gas, lithium, etc, with tight stops. I expect something "wicked this way comes" after Christmas, maybe just before. I will be watching what Washington does, since I figure they are VERY good at screwing things up. I will be looking to jump back in after they drive a spike into the market with their dumb moves, first HealthCare, then a new Stimulus (Porkzilla 3: "Pelossi Does Tokyo"), then Cap and Tax.

    After 2010, play the game with the assumption that there will be gridlock in Congress, and Obama will have trouble getting funding for his army of czars. Look for "hoarding" of stimulus, TARP and similar monies if 2010 looks to turn against Pelossi, Obama and Reid.


    On Oct 23 05:21 PM Freya wrote:

    > Alberta, Since November should be Up, I would guess it will be down
    > in the 5-10% just like July was and probably last just as long, 4
    > down weeks.
    >
    > Early Tax loss selling included. December Job numbers will be easy
    > to manipulate. Good start for the Christmas Rally.
    >
    > An outside wrench could be the Swine Flu.
    >
    > Having made this speech, Anyone Live in/around Vegas? We are going
    > to a wedding, 11/11 through 11/16, 6 nights, Flamingo. $50 bucks
    > for all 6.
    >
    > Toss in a $100 cash voucher, a couple of Buffets and a cple of shows
    > included...what we bring will be used "wisely" Hopefully, 10K will
    > suffice.
    >
    > CQP closed rather nicely today.
    Oct 23 06:47 PM | Link | Reply
  •  
    H.T.Love, after all that dialogue in the last post, I still hadn't answered all your questions. I neglected to give you my take on the meaning or importance of moving averages.

    I sat down to do that about an hour ago, and I'm still writing. It's become apparent to me that I have more understanding, experience and philosophy about technical analysis than I'd ever realized. I know you didn't ask for much, but I don't know how I could possibly cut down what I wanted to share with you, just on the topic of moving averages, to something less than a chapter in a book. I'll try to figure out this weekend how to condense it.

    For now, I'll give you a couple of charts to look at. The first one is a weekly chart of the Transportation Index with 3 moving averages, the 20, 50 and 100 day SIMPLE moving average.
    stockcharts.com/h-sc/u...

    The one below is the identical chart with the same moving averages, except that these ones are EXPONENTIAL moving averages.
    stockcharts.com/h-sc/u...

    If you open the two charts in a different browser or tab, you can toggle back and forth between them and see a remarkable difference in the moving averages. Yet all of these are moving averages that could be used. It depends on which one the technician wants to use. But if nothing else, this will show you that in reality, moving averages offer absolutely no real support or resistance.

    You're thinking "what's the difference between a simple moving average and an exponential moving average", aren't ya? It's the method in which they are calculated. I'm sure you know how a simple moving average is calculated. The exponential average on the other hand uses a mathematical factor that gives more focus or importance to the more recent dates. It applies a slightly extra percentage of weighting to the more recent data, but the impact as you can see is dramatic.

    As far as the theory, philosophy and 'use of moving averages for trading' is concerned... I really need to think about writing a book. I've thought in the past of doing that. I wonder if it would sell.

    Anyway, if nothing else I imagine you'll at least find the charts interesting.
    Oct 23 11:40 PM | Link | Reply
  •  
    Its really unusual. I haven't paid much attention to the DJTA, Since the 3,000 level was breached and everyone was focusing on and Naysaying the DOW.

    But did notice the stall above 4,000 as well. It could very well be a fake out. There is nothing to indicate that either the Program Traders, the Nyse membership, the Insiders are going to the Dark Side. However, there is far too much bullishness in the Sentiment index. The New weekly data will be available about 6 hrs from now.

    Will look and post in a New Insta, so you won't have to track it down.
    Oct 24 12:29 AM | Link | Reply
  •  
    Albertarocks kindly answered here seekingalpha.com/insta...

    Thanks for taking the time 'Rocks!

    I'm on alert, but I try to do the "devil's advocate" work as a matter of course - even with myself.

    "I'd agree with the level off 3660 as being important but 3600 as more critical. But what's "probably" even more important is the fact that the uptrend line was breached today"

    3600 - is that a convenient rounding? I do note a prior resistance in the 3575-3600 (I can never trust my eyes on those teeny squiggly lines :-)) and that it has also acted as good support twice now. I presume that it is also one of those "psychological levels because it is a nice round number"?

    On the big 3 day down on massive volume, any chance that's just some effect of the $ strengthening? I can't imagine, myself, why it might have that affect, but the timing has been coincidental.

    "Thursday's nice looking action was on lighter volume. Wednesday's and today's action were both on much higher volume. In other words, up on light volume and down hard, on huge volume. Of course, on Thursday we weren't really able to see those facts as easily as we can see them now."

    Recalling your excellent treatise discussing "dolts" and "know it alls", please keep in mind I'm not a teenager here. ;-)) So I might qualify as one of the other choices!

    Anyway, Wed-Thu was only a 10% reduced volume. Looking at volumes over a longer period for day-to-day, that doesn't visually seem at all unusual. Friday's volume was up 13.8% from Thursday and that's *is* a fairly good bump, although, in and of itself, not unusual.

    What catches my eye is that the three days are all much higher volume than the previous 19 days. And those days trended up, but for the last three. My ruminations are along the lines of:

    1. Trended up on tepid volume over the last three weeks - no real conviction but folks were sort of in a mood like "Well, maybe we ought to get a long this market now - eh?". ;-))

    2. When folks saw the bump up at the double top 5 straight days not able to penetrate and run up, they figured it's time to "sh#t-n-git".

    3. Should the fact that the down move stopped right about a previous support level make me think the above scenario more likely?

    4. When support was encountered on 8/17, 9/2 - both at ~3575, and 10/2 ~ 3660 the next day they turned up. And as now, the preceding down days had been on much bigger volume, sans the tapering reducing volume we could look for normally. It was just a plain old "flip a switch, computer starts, up day" routine.

    5. Each time run ups in # 4 began, volume grew *except* this last one as we headed towards the double top. So even though we had the "Maybe we should get long ..." in this last phase, did we have some longs overhang from the from the prior run-ups that saw double top and decided taking profit sounded pretty good right now?

    6. Being aware that fundamentals no longer matter much (for now) and it seems like every time we think "This is it! Here comes The Big One! Elizabeth, I'm coming to see you!" it turns back up. I realize this is (probably intentional) psychological conditioning and certainly don't want to become complacent. But combined with 1-5 above, is it likely that we're just doing another "correction" towards a more sane level?

    "If the market flinches on Monday, and you sell something, then the market continues upward, I might lose my credibility, but at least you won't lose money."

    I'm fairly sure *everyone* here knows even better that I that TA of charts is not as much science as "art". I don't expect anyone would give you demerits unless there was a wrinkle found in the sheets on your bunk!

    Thanks for the comeback. I would think no reply is needed on this one as you've already spent much time and I'm only really "thinking out loud" to give myself some context.

    Thanks again,
    HardToLove
    Oct 24 09:39 AM | Link | Reply
  •  
    On Oct 23 11:40 PM Albertarocks wrote here:
    seekingalpha.com/insta...

    > H.T.Love, after all that dialogue in the last post, I still hadn't
    > answered all your questions. I neglected to give you my take on
    > the meaning or importance of moving averages.

    I posted a Q long ago suggesting that breaks of averages were important only because people believed them to be so.

    I got a feeling that it was considered pretty much the case. So even though a "break" of one like the 200 day is only "psychologically" important, if it a widespread effect, I guess we need to factor it in.

    ><snip>
    > I'll try to figure out this weekend how to condense it.

    Why not do a series of instablogs on it? Over time, that would help lots of folks. And you could add to as thoughts occur or make a new chapter.

    >
    > For now, I'll give you a couple of charts to look at. <snip>

    > the 20, 50 and 100 day SIMPLE moving average.

    > stockcharts.com/h-sc/u...;p=W&amp;yr=3&...

    > The one below is the identical chart with the same moving averages,
    > except that these ones are EXPONENTIAL moving averages.
    > stockcharts.com/h-sc/u...;p=W&amp;yr=3&...

    >
    > If you open the two charts in a different browser or tab, you can
    ><snip>

    > You're thinking "what's the difference between a simple moving average
    > and an exponential moving average", aren't ya?

    By now you must be aware of how hard I work at things. You know that I know that you know ... OOPS. I mean I do know the difference.

    > <snip>

    > It applies a slightly extra percentage of
    > weighting to the more recent data, but the impact as you can see
    > is dramatic.

    Yes. That is something I've been agonizing over for a while - stick with SMA or convert to EMA.

    With EMA I should get earlier signals, which my "trader" side should like. He does worry though that some of that comes at the cost of more "false signals".

    The "investor" side of me is much less concerned with "early" and is more concerned with :more certain".

    >
    > As far as the theory, philosophy and 'use of moving averages for
    > trading' is concerned... I really need to think about writing a book.
    > I've thought in the past of doing that. I wonder if it would sell.

    I'd buy a copy.

    ><snip>

    Yes. I'd never bothered to look at a side-by-side and see how much more quickly an EMA reacts. I do know that I had been, especially recently' looking at other things to get an "earlier indication". Maybe I should make the switch.

    <*chuckle*> Then I'll have to look at other things to make sure I'm not seeing a "false signal".

    HardToLove
    Oct 24 10:21 AM | Link | Reply
  •  
    On Oct 24 09:39 AM H. T. Love wrote:

    > Albertarocks kindly answered here seekingalpha.com/insta...
    >
    >
    > Thanks for taking the time 'Rocks!<

    You're welcome, or as they say in Spain "de nada".


    > 3600 - is that a convenient rounding? I do note a prior resistance
    > in the 3575-3600 (I can never trust my eyes on those teeny squiggly
    > lines :-)) and that it has also acted as good support twice now.
    > I presume that it is also one of those "psychological levels because
    > it is a nice round number"?<

    No, I wasn't considering the "round number" aspect, just that the area of approximately 3575-3600 has acted as genuine support twice in the last 6 weeks. If we look further back, to May and June, we can also see that the level of 3450 was formerly resistance... so now that area could theoretically act as support as well.<

    > On the big 3 day down on massive volume, any chance that's just some effect of the $ strengthening? I can't imagine, myself, why it might have that affect, but the timing has been coincidental.<

    That's probably the most astute observation and "relationship" you could have noticed. The charts of the US dollar are showing that it's so oversold that it's stunning. And with sentiment at 96% bearish on the dollar, the table is set for a massive spike that will shock the world. When (if) that happens, every index in the USA will react negatively. Their charts would react like the trannies did on Friday.

    What could cause a resurgence in the USD? A tightening by the FED would set it off. A credit contraction that causes people to scramble for American dollars that are required to retire debt could set it off. And generally speaking, once the dollar starts to move up, the "mass psychology" is going to be "oh yeah, that makes sense... it was so oversold". Nonetheless, it's likely the dollar is gonna pop any day now and it's going to scare the hell out of the stock markets. It might be very short lived, if it happens at all. Who knows for sure, but that is the relationship at this point in time.


    > Recalling your excellent treatise discussing "dolts" and "know it
    > alls", please keep in mind I'm not a teenager here. ;-)) So I might
    > qualify as one of the other choices!<

    Don't sell yourself short. But be prepared to sell the market short! I'm not calling for doom and gloom, but things sure do appear to be extremely precarious.


    > What catches my eye is that the three days are all much higher volume
    > than the previous 19 days.<

    I think that's it in a nutshell. I think trying to analyse too much is kind of overdoing it. I tend to do that too. The fact that you and I can both see an impressive (massive) surge in volume on 3 days of heavy net losses is all we really need to notice.


    > I'm fairly sure *everyone* here knows even better that I that TA
    > of charts is not as much science as "art". I don't expect anyone
    > would give you demerits unless there was a wrinkle found in the sheets
    > on your bunk!<

    lol, I'm glad you see it that way. I hope anybody else reading will be as reasonable and understanding as you.


    Once again H.T.L, I can't emphasize enough that I'm not forecasting that the markets are going to tank. But what I am saying is that the table is set. The banksters have been relentless in driving the market up, and they have enough ammo to drive it to Dow 34,000. But that would be at the expense of a completely decimated dollar. That scenario "could" happen against all logic, but it could happen.

    Freya commented that she could envision the market repeating a pattern as seen in the summer. It could happen that way, but there is also a rule in Elliott Wave theory that correctly points out "alternation" occurs. It basically suggests that "next pattern will be different than the last pattern". But she could be right temporarily... in this way: the pattern could repeat just as Freya suggests and continue in an explosive extension of the rally. That wouldn't break any rules, so she could be right.

    At the very least, this discussion has you on your toes. That my friend "could" save you a lot of pain, and that's our goal here.
    Oct 24 12:54 PM | Link | Reply
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