Monday, February 16, 2009

A little night music

Some of my best ideas for blogs and such, come from a little night music. Such was the case last night, with a haunting rendition from a Broadway play by the same name. You have to read this blog to get there.


Let's start with a new chart, a Monthly chart of the DJIA:


A number of fascinating aspects to this chart, going back all the way to the early 90's. First, the False Bar Stochastic (available only on Advanced GET software) was suggesting that the proper position of the decade of 1990-2000 was to Hold Long. The long horizontal black line above the stochastic oscillator is confirmation of a decade long bullish trend. If we follow the oscillator into the Wave 4 that begins at the 2000 Top, it provides an excellent re-entry Long signal with a double bottom in 2002-3.

The most significant aspect of this chart is the change-in-trend that occurs in the fall of 2007. From this top, a five-wave decline is in progress and as of today, Presidents Day 2009, it appears that there is a heck of a long way to go before this five wave decline is complete. Just the third wave is targeted to complete somewhere under 6,000 on the DJIA.

In a previous blog, I introduced a Cycles chart from software developed by the Foundation for the Study of Cycles. That chart was based on data going back to 2001. I ran another chart this morning on data going back decades, all the way to 1928. Here is the cycles chart based upon 80 years of data:


This cycle is suggesting a low coming in around the first week of March. Again, this coincides with my shorter-term EW analysis which is suggesting a significant decline in prices directly ahead:


The projected end of this Wave 5 low is between 6800 - 7400. The horizontal black line on the bottom of the right chart is acknowledging a down trend already in force. The left chart, which I have been publishing for the past couple of weeks and still haven't gotten around to describing it, comes from software developed by Blue Wave Trading. Suffice it to say that the indicators on the left chart will always, ALWAYS, keep you one the right side of whatever trend is dominant in the underlying prices.

In summary, news notwithstanding, the markets are in an unfinished downtrend.

Odds & Ends

Re: MACD

I'm not a big fan of using the same indicators as everyone else and expecting to see something distinguishable from the crowd. The reason I like the FBS Stochastic is that very few traders other then institutions have access to this indicator. The same theory holds for the Blue Wave charts, these are expensive programs, usually out the the range of weekend warriors who dabble in technical analysis. Yet, price should never be a factor if you find something that works, as you can usually make the cost of the tool back on a single good trade. The hardest part is finding tools that work. Except I have already done some of that for you. If I write about it, or if it is allowed to advertise on my blog (with the sole exception Google click-ads over which I have no control over content) you can be assured it is earning it's keep in my arsenal of advantages.

Re: NNVC

Since the first of the year, the market is down 11.50%. NNVC is down 8.75%. While we are waiting for this ship to come in, it is outpacing the market by about 25%. This remains my best pick of 2009 and I'll say it again, I'm holding this stock until it goes to zero or goes to over $200 a share, whichever comes first. Obviously, I am pretty certain it will be the ladder.

A week ago, NanoViricides issues a very important press release. Why this stock didn't double overnight on this news is beyond me. A fellow who uses the pseudonym, "Dr. Feelgood," over on the iHub NNVC forum has posted an excellent analysis of this news. You can access it by clicking on the following headline:

WEST HAVEN, Conn.--(BUSINESS WIRE)--NanoViricides, Inc. (OTC BB: NNVC.OB) (the "Company"), reported today that on-going negotiations with a large pharmaceutical company have now progressed to an advanced stage.

The market cap of NanoViricides is currently $89.7M. Based just on what I know and believe about the company, about 2/3 of which I've posted in prior blogs, I'm suggesting that decimal point should be shifted over to the right one place. As news flows about their progress in the coming year, that decimal point will shift even further to the right. This is one of those stock stories you will tell to your grandchildren, or use to pick up girls in bars, whichever comes first. Do I still like this stock? Are the Detroit Red Wings the current Stanley Cup Champions of the world?

A


On a more personal note......

17 comments:

Mike said...

couldn't agree more....here's another for your arsenal:

http://www.youtube.com/watch?v=tcrfvP11Hbo

-Mike

Anonymous said...

"it appears that there is a heck of a long way to go before this five wave decline is complete. Just the third wave is targeted to complete somewhere under 6,000 on the DJIA."

I thought the third wave ended in November?

Or are you talking about the third wave of Wave 5?

Allan said...

Mike: Thanks for that, simply outstanding!

Anonymous: Whatever wave we are in depends on the time scale of the analysis, Google, "Theory of Fractals"

mlomker said...

"Or are you talking about the third wave of Wave 5?"

Yup. It will be an interesting week.

Anonymous said...

Hope all of you lose everything for cheering for the worst.

Allan said...

No one here is cheering for the worst. Read my blog for the past five years, super-bull until the fall of 2008. But even then, I was never a cheerleader for a bull market, just acting on what I saw developing in the markets. That is the case today. If the market tips its hand, and we observe it by the use of patterns and indicators, are we to argue with the market, or exploit it? With every top, there comes a bear market and with every bear market bottom, their springs forth a wealth-building bull market. That's all this is, no cheerleading, just trend following and we don't determine the trend, we just follow along.

Allan said...

Globex down big tonight, down 13.50 S&P points and 22.50 Nasdaq points. Here is a link:

http://www.cme.com

David said...

This false bar stochastic is interesting. Seems to be a regular 14,3 stoch but with a trend indicator that tells to ignore what could otherwise be interpreted as overbought/oversold readings. I can see how this can give a slight "edge" over other traders who might be considering playing for a trend reversal upon seeing those stoch readings. Arsenal of Advantages indeed...

I notice futures are all down signficantly. The Nasdaq seems ripe for shorting. Getting very overbought relative to the Dow...

Allan, you are a true Market Wizard. I have been studying hard in the hopes that one day I will be able to see what you see in the markets. Keep the great posts coming!

Anonymous said...

Allan,
I like this one.
http://www.cme.com/trading/dta/del/globex.html
Whether we drop or rise, thanks for the effort here.

Anonymous said...

Hey Allan, any update on your picks GFRE.ob and TGB? Do you post when you do sell your previous strong buys? thanks in advance.

abot said...

too much arsenal... here some ammunition

http://www.youtube.com/watch?v=YQOr7Kmh4Fw

Anonymous said...

I hope all of your computers get infected by viruses and that all your bank accounts get wiped. Serves you right for cheering for the end of America and for the pain the majority of us are suffering, particularly the ones old enough to retire who now cannot because all their savings went up in smoke.

mlomker said...

NNVC has an interesting story. A couple major breakthroughs in biomedicine and alternative energy are the sort of thing that could pull us out of the bottom, when we get there.

I decided to buy a small position as a fun little gamble.

Anonymous said...

This is for the "I hope all of your computers get infected" guy: if you really want to be obnoxious, how about also being a little bit creative? Here is a hint: did you know that Allan's posts come from an IP address that is located somewhere around the Afghanistan-Pakistan border? Yes, that's right, he is really Osama Bin Laden! Encouraging the American populace to short U.S. stocks is indeed a much more effective weapon of mass destruction than downing a couple of (admittedly large) buildings...

Anonymous said...

Ahh Allan:

When are you coming to Greece, my friend, the birthplace of mankind and civilization?

Perfect analysis again and I agree the Gods DO seem to be lining up for a big down move.

Might I suggest we buy puts on the SP500 and all sacrifice a lamb to the Deity Perseus this evening?

Despite the technicals, I fear that some sort of divine intervention is needed to get us out of this sideways pattern.


Leonidas
Southern Greece

Anonymous said...

*&$(*&*$ pagans.

Anonymous said...

Oops! Time to change the subject....

http://www.youtube.com/watch?v=BYyt6w8XZG8

:)))
Sheila

PS Thanks, y'all, for the beautiful music. Keep it comin'!