Wednesday, September 16, 2009

Monthly SPX with BWT & ATR (1972-2009)


Anonymous said...


Thanks very much for posting this!

Perhaps there is no Holy Grail in investing but that's pretty impressive. (Final chart alone brings me to my knees).

I'm not sure whether to laugh or cry.
When I think of all the $$$$ I've spent on investment newsletters, magazines etc. over the years.

I dare not look into how long this software has been around. Ouch!

Oh well, as they say:
FORE !!!!!!!!!!!!!!!

Lazy Investor

Allan said...

Lazy: You had a good idea, glad to oblige. Remember my mantra, "Find something that works....then use it."

Anonymous said...


I have been a frequent visitor if not daily one. Very nice blog and most helpful.

Could you give me your perspective on Rob Prechter's target range 9653~9794? Would a intra-day breach nullify the resistance? Today, Dow reached 9800 I believe. Much appreciate it!!

Allan said...

It's just a target zone and it did attract prices right up into it, without a significant break-through. Precther also write that Primary Wave 2 could retrace 90% of Primary Wave 1 without nullifying his wave count. One day at a time, this thing isn't over by a long shot (excuse the pun).

Anonymous said...


I am monitoring daily insiders activity. I spotted LGDI with extreme high insider buying and stock is lifting up. Is there any chance you could show us your wave count on this one ?

Anonymous said...

Normally a 50%+ rally gets pretty stale, but...woops! Maybe not!

These are not normal times. Our game is usually a tug of war between the bulls and the bears. But this game isn't a fair contest.

1 The throngs in treasuries, money markets, and other ultra low interest rate vehicles are finding it increasingly hard to sit tight. When they bolt, they are going to join the bulls, not the bears, and that fixes the game. Do the bears have an unlimited number of sellers Q'd up and ready to go?

2 Bernanke, and the M20 basically saying they are going to pull out all the stops fixes the game in favor of the bulls too. They know their best chance to spend our way out of the recession is the first swing of the bat. They won't let this phoney bull die if they can help it.

3 The weakening dollar, more than anything else, favors the bulls.

4 All the hype about the recession being over doesn't bother me either. You need the hype to lure in the suckers and feed the rally. Is there ever a real good rally without hype? There's still plenty of people in the mainstream media predicting a drop this fall, which tells me we are not at the euphoria stage yet. We had three years of hype prior to the tech stocks, and just as much with the real estate bust. We still have time to make money on the long side.

5 Sentiment is clear: The market is reaching higher highs on negative news. Trade wars with China! Oracle releasing crappy sales data! Nothing can stop this hollow shell of a rally.

Prechter says the dollar's drop is just about done. That WOULD change my opinion. But until then, the rally will continue because it can continue.

The lesson so far is that everything has been larger and longer than expected. That's dynamite in the sack baby, but it will kill you in the markets. Don't predict, just trade.

PS: With all due respects to Mr. Prechter, I think the dollar has a lot further to drop. After the safety seekers pumped up the dollar 17% between Sept. and March. The dollar could have done one of three things. It could have either changed its trend, resumed its downward trend, or accelerated downward to seek the level it would have been at if the safety seekers hadn't propped it up. Looking at a chart, I would say the dollar is doing the latter. It is sprinting to erase the 17% of artificial improvement that it experienced during those 7 months. I would therefore expect it to correct for 7 months of artificial improvement, but also to correct for 7 months of decline that never happened during that period too. That's a whole lot of correction. It may take a number of months, during which its natural rate of decline will also contribute to the fall. I haven't run any numbers, and couldn't prove it anyway, but my conclusion is we are nowhere near the bottom of the dollar, particularly in light of the fact that Mr. Bernanke has clearly indicated that he will debase the currency to save the market. There is no limit to the mischief government can play in the near term and you won't find that on any chart.

Yes, the rally has gone on a long time, and yes the economy sucks, but the economic numbers sucked when the rally started too. I don't care how much insider trading there is. I already know what the insiders know, the economy sucks and their companies are in horrible shape. Maybe they are just taking profits, or maybe they are selling for the same reason you are cutting back. Their wives have spent them into oblivion and they need the money.

Every time Allan says wait for the market to confirm the turn around I hear Jesse Livermore speaking about his greatest trades being ruined because he didn't wait for confirmation. I'm long until I start losing serious money.