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Frank started market timing in 1982 when the Federal Reserve cut interest rates and sparked the 1980’s bull rally. Realizing that this rally could have been forecasted, he began to search for indicators which had similar forecasting ability. Within a year, his first newsletter was launched,... More
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  • Shares of Apple Inc (NASDAQ: AAPL) Headed Lower

    February 9, 2010

    Shares of Apple Inc (NASDAQ: AAPL) have lost ground since the announcement of their highly anticipated tablet device, the new Apple iPad.

    A couple weeks back we wrote; “shares of Apple are not acting right.”

    Since we wrote that, share prices have declined almost 10%. There are several other negative indicators to worry about.

    Apple shares look like they have had a bearish double top on January 5 and January 19.

    Apple shares have broken below a rising trend support line that has held all declines since May 14, 2009.

    Apple shares have crossed below their 50-day moving average.

    All of these bearish events could add up to nothing more than a normal correction, except that they have occurred right after blow-out earnings and the Apple iPad announcement.

    We are looking for declines to reach $151.57 in coming months, and possibly $136.47.



    Disclosure: no positions
    Feb 08 5:50 PM | Link | 1 Comment
  • Don't Make It Personal

    Veteran, successful market timers and traders stay detached. They know that the markets are impersonal and they trade their strategies methodically. But novice market timers often have trouble achieving this rational mind set.

    Stay Detached From Trading Decisions

    For example, novice timers (and traders) may take market timing losses and subsequent drawdowns personally. Seeing it as a hit to their ego, and attaching personal significance to what is just an everyday fact of all timing and trading decisions.

    Small losses should be expected, and it's vital that you don't take them personally. What is important is keeping them small. Never allowing any loss to grow into a big one. That is accomplished by following a timing strategy that is designed to protect capital.

    Disappointment Is Natural

    It is natural for a person to feel disappointed after experiencing a drawdown. Financially, real money has been lost.

    It's perfectly reasonable to feel a little disappointed, but it isn't useful to take it personally. Disappointment is a natural emotion, but not very helpful in market timing.

    In fact, if you take it personally, you might then try to gain back that small loss, by exiting your strategy and taking an ego inspired trade. The odds are good that you will be the poorer for it.

    Market Timing Requires Doing The Unnatural

    Although we spend a lifetime building up an array of emotional responses to help us cope with uncomfortable feelings, those same, quite normal emotional responses are exactly the opposite of what is needed to succeed in market timing.

    Timing requires that you do the unnatural, and control your emotions. A lifetime of learning how to respond to uncomfortable feelings or situations MUST by unlearned to succeed in market timing (or any trading for that matter). Responses that are correct in personal and even business situations, are sure to cause losses in trading the financial markets.

    You expect to make a profit over time, but in the short term, even a winning timing strategy is bound to have losers. That's just the nature of probability theory.

    So why make it personal? Why put your ego on the line with each trade?

    Why brag when you are lucky enough to have the odds work in your favor and then be depressed when the odds go against you? Both emotional responses are normal, yet they are dangerous to successful market timing.

    But how do you control perfectly natural emotional responses?

    "Unlearning" A Lifetime Of Lessons

    When it comes to market timing, you've got to UNLEARN responses that you've spent your whole life learning.

    Market timing isn't about you. It is just a strategy that works over time.

    In other fields, probability plays little if any role. You put in effort, make sure you meet the expectations of the people who pay you, and you're a success.

    In the traditional workplace, it makes sense to put a little ego and pride into your work. Your effort and talent often have a direct payoff.

    But with market timing, the odds can go against you, no matter how much work you put in. The perfect trade can go wrong.

    That's hard to accept for most people because it means that being a successful (profitable) market timer or trader, to some extent, is just a matter of the odds randomly working in your favor. But there is good logic behind this randomness. And a successful timing or trading strategy uses this logic to profit.

    A successful timing strategy will exit losses quickly. It will not stay with a bullish or bearish position to sooth the ego of the strategy's designer. It will also stay with a successful trade and not exit quickly to lock in a profit. That may feel good for a day, but if the profitable trend lasts two, three, five times longer, you have lost out on a huge profit.

    Recognizing that odds are part of trading takes some of the glory out of it. But on the other hand, understanding odds helps you cope with inevitable drawdowns.

    Conclusion

    If you are a seasoned market timer who really has mastered his or her emotions, you are assured that the odds will, over time, work in your favor. You will enjoy your times of glory as the gains add up. You will hunker down and quietly follow the signals during unprofitable sideways markets or during failed trends.

    Taking a detached, unemotional approach may take some of the glory out of market timing, but on the other hand, that same unemotional approach is the KEY to market timing success.

    Most importantly, the unemotional market timer will implement the timing strategy. He or she will make each trade consistently, with the certainty that over time the odds will make him or her a successful timer.

    At FibTimer we offer strategies with years of success behind them. But all of them, at one time or another, have had losing trades. Staying with the chosen strategy eventually paid off. Timing strategies are designed to make their profits over time, not in a few weeks or even months, though it is always nice when that occurs

    Remaining unemotional, so that a timing strategy is adhered to not only in easy (profitable) trading conditions, but also during the tough (unprofitable) ones, leads to success in a field where the majority fail.



    Disclosure: no positions
    Feb 05 1:30 PM | Link | Comment!
  • Huge Declines Signal Lower Lows Ahead

    February 5, 2010

    Both the S&P 500 Index (SPX) and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY) suffered huge declines on Thursday, February 4 with the SPX dropping 3% and the SPY 3.1% in six and one-half hours of trading.

    Only a week ago we wrote; “several support levels have been broken including the 50-day moving average; the 50% retracement support for the October-January rally at SPX 1774 fell on Thursday. The December lows at SPX 1088 and SPY 108.8 were also broken on Thursday. This is increasingly looking like a market headed for dramatically lower lows.”

    Several financial newsletters have forecasted a catastrophic decline ahead based on Elliott Wave patterns, with the current selling possibly the beginning of the decline.

    We do not know if such forecasts are about to be fulfilled, but we are bearish for the short term on the stock markets in the U.S. as well as global markets.

    If this turns into a typical correction, and not a catastrophic decline, there will likely be three waves in an ABC decline before a bottom is reached. We are only in the declining Wave A now. There is probably a rally Wave B ahead and then a third Wave C down. How far down, and how many bearish patterns remain ahead, cannot yet be forecasted.

    The SPX and SPY could make a case that Wave B occurred at the highs on the first two days of this week and that we are now in the final Wave C down. But most other indexes did not have solid rallies early this week. The Nasdaq Composite Index COMPQ, Nasdaq 100 Index NDX and Russell 2000 Small Cap Index RUT had only minor advances and appear to still be in the initial down wave (Wave A).

    The next support levels are at SPX 1042 and SPY 104.32, the November 2 lows.



    Disclosure: The www.fibtimer.com ETF Strategy has a position in the S&P 500 SPYDRs.
    Feb 04 4:50 PM | Link | 2 Comments
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