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Manuel Blay

Manuel Blay
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  • Daily State Of The Markets: The Problem Are The Five Es [View article]
    By the way, I greatly appreciate your work. My hall of fame is very reduced (maximum 7-8 names), you and Schannep rank highest in my hall of fame. I have followed your work for the last 2 years and I find more value in the free area of your website than in many subscriber services (Schannep excluded, he also delivers value).

    If it is a failed signal (the Dow Theory has its small share of losers too), then it was a scare.

    If the signal is not failed then I fear it is something more grizzly as you rightly say.
    Oct 16, 2014. 10:27 AM | Likes Like |Link to Comment
  • Stocks finish well off intraday lows, but still ugly [View news story]
    Stocks are in a primary bear market since October 10, as explained here on SA:

    http://seekingalpha.co...
    Oct 15, 2014. 10:56 PM | 1 Like Like |Link to Comment
  • Daily State Of The Markets: The Problem Are The Five Es [View article]
    While the current decline not reaching (yet) the "magic" threshold of -20% doesn't strictly quality as a bear market, according to my interpretation of the Dow Theory (which is not anchored on a hard-and-fast number such as -20%, but rather technical patterns), stocks are in a primary bear market since October 10th.

    Primary bear markets (even though they have been signaled well before the -20% threshold has been reached), as spotted by the Dow Theory, tend to have long legs. While nobody knows the future, and it could be a failed signal (a ca. 30% probability), technically something ominous has happened as explained here in SA:


    http://seekingalpha.co...

    All in all, under a Dow Theory standpoint, the well-established Dow Theory record tells us that lower prices are a distinct possibility for the weeks and even months ahead.
    Oct 15, 2014. 10:53 PM | Likes Like |Link to Comment
  • What Is Happening Now Is Profound [View article]
    While the official decline for a bear market to be declared is -20%, according to my interpretation of the Dow Theory, stocks are in a primary bear market since October 10th.

    Primary bear markets (even though they have been signaled well before the -20% threshold has been reached), as spotted by the Dow Theory, tend to have long legs. While nobody knows the future, and it could be a failed signal (a ca. 30% probability), technically something ominous has happened as explained here in SA:


    http://seekingalpha.co...

    All in all, under a Dow Theory standpoint, we cannot know whether this is going to be a repeat of Japan, but the well-established Dow Theory record tells us that lower prices are a distinct possibility for the weeks and even months ahead.
    Oct 15, 2014. 10:48 PM | 2 Likes Like |Link to Comment
  • Buy Signals In Junior Miners Flashing “Strong Buy” [View instapost]
    Volume is particularly bullish for GDXJ. Not only OBV confirms the nascent trend, but:

    a) Bullish volume (expansion on rallies) greatly exceeded that of GDX. The last up leg witnessed monster volume.

    b) The ratio of the average volume of up days versus down days has been also remarkably bullish (more bullish than in GDX, which is bullish itself), and this situation has persisted during the current consolidation, as was explained on SA:

    http://seekingalpha.co...
    Sep 3, 2014. 10:57 PM | Likes Like |Link to Comment
  • Dow Theory Update For May 23: SPY Makes Higher Closing High And Confirms The Transports  [View instapost]
    Hi Sharpe_Spectator,

    You raise a valid point. One of the tenets of the Dow Theory is that the daily movements and even secondary trends may be manipulated. Most technical signals belong in this shorter term timeframe. However, the primary trend, like a powerful tide, cannot be manipulated. This is why Dow Theorists invest along the primary trend (which lasts on average 1-2 years) and dismiss the secondary trend for investment purposes (to avoid the manipulation you are mentioning). Of course, this is not a “dogma," and things may have changed, and maybe nowadays even the primary trend might be subject to some influence by the Fed. Nevertheless, I’d rather run this risk than blindly believing my own ego-filled fundamental assumptions about the economy, the health of stocks, etc. Nowadays it is often made the point that the Fed is manipulating upwards stocks. I tend to believe it. However, whatever the underlying reason, what I see (and if you follow my blog you will see that I have been bullish amidst a sea of bearishness) is that the primary trend is “up." Even if the Fed started to monetize all stocks (and this would be manipulation) the fact would remain that stocks would be going up. Here the time-tested adage “don’t fight the trend” comes in handy.
    May 28, 2014. 06:00 AM | Likes Like |Link to Comment
  • UBS: Gold upside breakout hopes dashed; platinum too [View news story]
    Gold and silver have rallied without conviction in the last few days. And we should not forget that the primary trend for both metals remains bearish. On the other hand, SIL and GDX, the gold and silver miners ETFs may be providing some tailwind to gold and silver, since today, Jan 17, their secondary trend turned bullish according to the Dow Theory, as explained here:

    http://seekingalpha.co...

    So long term both gold, silver and their miners are in bearish trend, but something is changing as far as the intermediate or secondary trend is concerned.
    Jan 17, 2014. 05:45 PM | Likes Like |Link to Comment
  • S&P 500 More Likely To Break 2000 Than Experience A Correction By Mid-2014 [View article]
    I agree with the author from a different perspective. The primary trend for stocks is bullish as defined by the Dow Theory. The average gain for each position taken according to primary bull markets as defined by the Dow Theory is 22.07% (here you have the details:

    http://seekingalpha.co... )

    If we consider that we are already in a secular bull market (I am agnostic as to whether we are in a "secular" bull or bear market), the average gain jumps to 53.37% ( http://seekingalpha.co... )

    The unrealized profit for the current position taken in July 2013 amounts to 9.37%, so it seems that the odds favor more profits and that the bullish run-up is not exhausted yet.

    Regards
    Dec 31, 2013. 06:18 PM | 1 Like Like |Link to Comment
  • Dow Theory Update For December 30: Timing The Next Primary Bear Market In Stocks [View instapost]
    Yes, I can explain.

    The link I provided merely tells us that one fundamentalist investor threw the towel and joined the bullish wagon. It was just a new, which I happened to read on ZH, as I could have found it in any other website. Thus, the link I provided makes no calls about market direction.

    Personally, I am fiercely independent with a strong Dow Theory bias. So I take ZH, and any other financial service for this matter with a grain of salt or two. It is easier to write about money than making it (which also applies to this blogger truly yours).

    Happy new year and good trading.
    Dec 31, 2013. 05:58 PM | Likes Like |Link to Comment
  • The Gold Floor Fallacy [View article]
    I agree with the author: prices can go lower in spite of producing costs. One shouldn't underestimate the power of bear markets. For one year now, gold has been under the grip of a vicious primary bear market as explained here on SA:

    http://seekingalpha.co...

    Bear markets don't die easily, in spite of the cost of production.
    Dec 24, 2013. 02:23 PM | Likes Like |Link to Comment
  • When You're Right, You're Still Wrong: GLD Hits 115 Bear Target [View article]
    Good market call and I agree with the bearish outlook. While nothing is carved in stone, the odds favor lower prices, as the primary bear market of GLD is bearish. Furthermore, the primary bear market grew one year old last December 20, as explained here on SA:

    http://seekingalpha.co...

    Primary bear markets don't die easily.
    Dec 24, 2013. 02:19 PM | 1 Like Like |Link to Comment
  • Dow Theory Special Issue: Visualising Drawdowns  [View instapost]
    Greeting NLO,

    This is what makes markets: diversity of opinions. Otherwise, we would be buying or selling or following the same investment technique at the same time.

    Readers should read all opinions and draw their own conclusions.

    Regards.
    Sep 23, 2013. 04:53 PM | Likes Like |Link to Comment
  • Dow Theory Special Issue: Visualising Drawdowns  [View instapost]
    Greeting NLO,

    With all due respect, I feel your comments are off the mark.

    First of all, as the title clearly shows, the object of the post is to compare drawdowns; not returns. The point I repeatedly try to make in my posts is that investors seem to focus blindly on returns while ignoring drawdowns. In other words, greed (returns) clouds judgment and gives way to fear (drawdowns), which eventually decimate financially and psychologically the average investor.

    Thus, the appeal to riches by focusing on “returns” is a dangerous proposal in real life. We must first focus on the likelihood of losing. First, we have to take care of losses.

    If we focus on drawdowns, even the use of the DJITR would not have avoided the severity of drawdowns that plague buy and hold. I studied the chart you have linked. And I could see that on October 12, 2007, the DJITR hit a high of 23191.36. On March 6, 2009, it made a low at 11375.39, which amounts to a drawdown of -50.94%. Thus, the total return index could not spare investors of a severe drawdown. It can be argued that over time, drawdowns pale by comparison with total returns, but in real life, a 50% loss is a 50% loss, and if you are a retiree being forced to withdraw on an annual basis 4% of your capital to live, you will be forced to withdraw 8% the very year of the drawdown, since your capital will be cut by half. Then after withdrawing 8% you will only have 42% of your initial equity (50+8). And if you are a buy and holder, pray that the US remains the blessed US, because in most countries of the world stock markets have gone to cero or very close to it. More about this “survivorship” bias here:

    http://bit.ly/17X5AH4

    Of course, one can argue that over time, the total return index makes more money than the plain non return index. This is true. But this was not the object of the post. The object of the post was showing the real dangers inherent in buy and hold (whatever index you hold) versus timing the markets.

    Now let’s take a look at returns. The benefits (extra returns) accruing to the investor when using the DJITR should also accrue to the market timer using the same index. Thus, the Dow Theory (of any flavor whatsoever) manages to be invested ca. 70% of the time. So the Dow Theory investor (and even those following moving averages) would have been invested a significant amount of time and would have harvested a relevant portion of the total return index (while avoiding the most devastating losses; a good trade-off in my opinion). This is why, I repeatedly insist in my blog that, even though my main focus is loss containment, as a side effect, the Dow Theory (be it Schannep’s or even the classical one) manages to outperform buy and hold as far as return is concerned.

    It is true that by using “total return” you’ll get a higher end figure; however, the ride to reach this final figure is going to be as bumpy and scary as with the DJI. A 50% decline will be a 50% decline, no matter which index we use.
    Sep 23, 2013. 11:35 AM | Likes Like |Link to Comment
  • Has Warren Buffett Nailed Another Market Top? [View article]
    Great piece. Even market timers have to acknowledge that Buffet is not the village idiot...
    Sep 20, 2013. 05:04 PM | Likes Like |Link to Comment
  • Update On The Negative GOFO: Gold Has Finally Bottomed [View article]
    Good link and compelling reasoning, especially the reference to Nassim Taleb.
    Aug 14, 2013. 09:45 PM | Likes Like |Link to Comment
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341 Comments
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