Saturday, October 03, 2009

Plunge mode

Structural set-ups for a plunge, lasting weeks, maybe months.


SPX hourly


SPX 240 minute


SPX Daily

Blue horizontal line = support off of Wave 4 low

SPX Weekly

The big one


A

31 comments:

anonymous said...

Well,we've watch the fed/gs/government manipulate and engineer the rally for the last 6 months,now we get to see whether they will be able to manipulate it (keep it under control)on the downside.

Anonymous said...

Well, if it follows the path of the Dow during that deflationary spiral of the 1930s it will lose 85.66% in the span of 22 months. Such a decline would leave the S&P500 somewhere in the neighborhood of 114 in July of 2011. That may seem overly dramatic, but that is history's lesson of what happens when you run the nation on a credit card.

We talk about a plunge, but looked at from afar, it was really a slow strangulation of the economy, which is exactly what this economy feels like to me. However, looked at from the ground, it appeared to be something completely different.

There is danger today for bull and bear alike. From an analytical perspective, it was only a -3.89% per month average decline. Incidentally, that matches the pace we've been on since Sept. 23rd, just a slow bleed. The actual experience for the individual investor in that two year period was a bit more dramatic. That is because it was a stair step decline with plenty of 50% retracements on that long slope of hope. That's where the danger comes in.

Investors in the 30s didn't see the reality of the situation with so many emotion charged rallies. The bears are in danger of holding through the rallies, which can be ruinous when they are so large. We just saw an example of that in March. The bulls obviously will suffer a similar danger if they mistake the rallies for another bull market. We hear that kind of delusional talk today.

All I'm saying is, Bull or Bear, if you don't expect the magnitude of this event to similarly affect the size of the retracements, you won't make any money on the decline because you may be left with only half your stake after each rally. Go through that process enough times, and you can go bust even though you got the overall direction of the market correct.

I'm bearish until the next rally. Don't make their mistake.

Smiddy

Anonymous said...

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Anonymous said...

Readers:

This is just Allan "crying wolf" again to support his own positions. We've heard and seen all these weird chars before and the market has gone straight up.

This is because WE ARE IN A RAGING BULL MARKET folks.

The trend is your friend and Allan at least used to support the book "Trend Following" now he has been anti-trend for the whole run up. Bullish only in NNVC which is ONE penny stock that has gone down.

BUY LIKE CRAZY ON ANY PULLBACKS.

THE ECONOMY IS FIXED.

THE JOBS ARE FIXED.

THE HOUSING MARKET IS REBOUNDING.

OBAMA WON, NOT McCain.


DON'T BE AN IDIOT!


MAKE MONEY! BUY BUY BUY BUY BUY with high leverage!

Doug

9:22 AM

alfaomega said...

Sorry Doug, but you presented a pretty big stake of idiocy...
:-) alfaomega

Anonymous said...

Doug, I am a physician-friend of Allan's who also owned a small mortgage company. Let me respond to your statements:

THE ECONOMY IS FIXED.
Surely you are kidding.

THE JOBS ARE FIXED.
Absolutely untrue. Because I treat a lot of people on the periphery of the economy I can state categorically that I saw these job losses coming 3-4 years ago and even said so to a number of people. While the job losses slowed down for awhile, they appear to have picked back up. Every day a patient or family member has lost a job. 3-4 families live under 1 roof (thank God for roofs!). Do NOT believe the Washington job numbers...they are an accounting manipulation.

THE HOUSING MARKET IS REBOUNDING.
I don't think so. Again, I'm in the business. I have not seen a big drop , and expect one, in mid-upper mid range house prices. When those low-mid level execs lose their jobs, look out. BTW no one is lending, for all practical purposes.

OBAMA WON, NOT McCain.
Got me on that one.

DON'T BE AN IDIOT!
Agree and the statement works both ways.

Dr. Mo

pimaCanyon said...

Doug,

I wish you were right, I hope you're right, I want you to be right. Unfortunately there is plenty of evidence that suggests otherwise.

There are many ways to read the charts and the fundamentals. No one has a crystal ball. But the odds favor another big move down to at least a retest of the March lows. WHEN that happens is open to conjecture, but the charts indicate it has already started. Let's hope that a retest of the lows is as low as we go, and that we don't get the doomsday scenarios painted by many EW chartists.

Anonymous said...

Re: ATR Trailing Stop:

What inputs do you use for ATR period and ATR multiplication for the Metastock formula?

Allan said...

confidence means not having to argue about your outlook for the future......

curt504 said...

Anonymous re ATR, what is that system/ source of the signals. I know MC from Allan.

Doug, Some TX based real estate org released a paper last week saying there's 7 million dead beat homes stuck in the system right now inside zombie banks where the bank has no motivation to book the loss yet the homes are for all practical purposes on the shadow market. Many past due home occupiers are 12 months behind. When they get kicked out and have to fork out $1k / month for rent they'll spend even less. And this is just a rifle shot issue amongst a stinking mountain of other problems that are being over looked by you/the Media. Folks might also sub to Steve Peutz's letter puetz.steve@gmail.com. Cheap $6 or $10/month and excellent reading for another view. Similar to Armstrong, another view. CNBC/Fox/US Gov are the last places we should get our econ data from.

Good luck, curt

Anonymous said...

Allan, Why are you so bullish on NNVC? Is there something you expect them to do with a big pharm company? I usually trade based on GET and BWT indicators, made an exception on this one and bought at $0.94, I do not intend to sell, however it's not my usual type of trade. In fact when it hit $0.76 on Friday I felt like Alfred E. Neuman, "What, me worry?" and bought some more. I'm taking the long term perspective here like Warren Buffet, my usual long-term is about 5 days. I would be interested in the info for setting up ATR as well. Thanks for your blog by the way, it is great! as is your analysis. Steve

Allan said...

Steve: Do a Search of "NNVC" in the upper left hand corner, you will get everything I have written on the subject for the past 3-4 years.

Charts and Coffee said...

Allan,

My thoughts for the coming week.

http://chartsandcoffee.blogspot.com/2009/10/sunday-night-coffee-1042009.html

I'm new to your blog and I look forward to stopping by on a regular basis.

Anonymous said...

Every wonder why there is so much effort to define this recovery? I keep hearing new terms being coined. I have heard it's an anemic recovery, green shoots, L shaped, blah, blah, blah. Has it occurred to you that people don't need to coin new terms when it is a real recovery? If we were in a real recovery, wouldn't the recovery itself be a given and conversation would turn towards something else, like the future, not the form the recovery seems to be taking? Wishful thinking? This smells suspiciously like people are trying to convince one another that a recovery is a fact. That says volumes about how precarious our economic state is today.

Smiddywesson

thomas said...

....thats right,Smiddy

Anonymous said...

No Plunge
This week next week or the week after. Not gonna happen.

Background said...

All,

Why is NNVC falling despite NanoViricides Secures $4.3M in Financing....am I missing something?

Thanks,
MR

Anonymous said...

NNVC is all hat, no cattle. Based on Allan's reco's here I did my own DD and saw that there's really nothing of value there. Don't be a bag holder.

Anonymous said...

Well, one very disappointing issue with NNVC and Allan, is he has yet to be right about any of his short term price (chart) analysis, and its hard to see why he will be right about the long term, $100.00 plus.

Allan said...

is he has yet to be right about any of his short term price (chart) analysis,

Another one with his head up his ass. Here is a link to my analysis (chart) made July 14, 2009:

http://allallan.blogspot.com/2009/07/nnvc.html

With NNVC at 66c, I projected a target of 84c-1.00.
On August 10, 2009, NNVC printed 1.09. That's a gain of 70% in less then a month.

Now shower to get that crap off of your head and get back in the game.

Anonymous said...

gee Allan, you seem to forget all the price target you made at 1.85 short term?!

Allan said...

Look, some jerk made the sweeping statement that I have never been correct in my short term forecasts for NNVC. It took me 10 seconds to find a short term forecast of mine that was spot-on.

I'm not saying they have all been perfect, it was the jerk who wrote that I, "have yet to be right." He is full of it.

If you want to take me on, get your facts right.

Michael said...

Hey Anonymous, next time, save yourself and the rest us time by sparing your worthless post . The reality is that you keep coming back to read Allan's thoughts. Why is that? He shares his own opinions with everyone about his passion, something he is not obligated to do, and he owes us nothing.

Anonymous said...

I agree, Micheal. Add to that, he posts ANONYMOUSLY.....obviously not enough faith in his own words to put his name on it. Typical of those who enjoy taking down others to build themselves, and only themselves, up.
A flawed short term strategy IMO that inevitably results in self-destruction. (That odor you smell? Fear mainifesting as bitterness)

Allan, Carry on! You are much appreciated by those who have the wherewithall to appreciate your effort/sacrifice and have no ego axe to grind --just a desire to improve themselves (and those they support).

Thanks!

Carl

Anonymous said...

I'm not convinced that another 1.5% move up or down in a market like this proves anything at all.

Now, if you follow that up with some strength later in the week or the next, THEN we can have a productive argument, but I don't think it bouncing off resistance and remaining within the downward channel it's taken for the last two weeks is a very convincing bullish argument.

If it breaks strongly above 1050, I'll reconsider my timing, but it has to tell me I'm wrong before I change my opinions. I know that costs money, but it's part of the overhead of doing business.

Smiddy

Oh, yeah, I almost forgot: No recovery in sight, "This week next week or the week after. Not gonna happen."

:-}

T said...

..."if it breaks above 1050,I'll reconsider, etc"...I'm looking at that idea as well, but watching it play out, I'll be looking for not just a break back into the up channel above 1060...but Holding ...inside the channel...holding above ,lets say 1050 area...and establishing some sort of support range between 1000 and 1100
....through the time zone period of the next 4 weeks.

Its not just price point that matters...its also very important the TIME aspect of price movement.

I think if price stretches out in the coming weeks,holding at the 1060,with at least a hold above 1020(1000) level by the next lunar time point (go ahead and laugh,but look at all the tops and bottoms,starting with march 3)...if price holds up within this range ,at the 1060 area, with a bottom of 1020 holding up as support...by november 3 time area (alternate nov 17 area).... there might be no big wave 3 down....and the time factor would stretch the game out into the next month.
Still, hard to imagine no correction ??!?

Such a wave action,sliding sideways along the 1020 to 1060 range would suggest the development of a "wave 4" which redefines the whole rally wave from july 3 to sept 21 as a "wave 3" rather than a 'wave 5'
If that were to be the case...I would expect to see a break up thru 1080 and thru 1100 toward a target 1200 as the completion of wave 5.(starting at a bottom hold support in the 1020 area)

i.e. some kind of double or triple bottom,holding at the 1020-1000 area in the next 6 weeks...could recast the wave structure as a set up for a Wave 5 to target 1200 .
...Imagine what a collapse would look like from 1200 instead of 1080. only that much worse.
If this 'wave 5' scenario to 1200 happens...it would at least confirm that 5 waves up have concluded. and it would have to be all down hill from there in 2010
maybe a target time zone of mid november thru december to jan 2010. target 1200 s+p 500
The next moment to 'see' if this is what is playing out will be when the s+p 500 drops back to the 1020 area,holds there, does it again, holds at 1000 ,creating at least a few double bottoms,in the next 6 weeks. especially the time period november 3 to november 17 area.
it would make for a very optimistic christmas. If the markets are being 'engineered' I could see this happening.

Anonymous said...

I don't know to what extent the markets are being engineered. The dollar certainly is. The Fed. conducted credit default swaps to engineer a rally in the dollar recently. Gold is also manipulated by central banks lending out their supplies to major banks and then extending the leases when it suits them. Stocks respond to the price of gold and the dollar, so at the git-go, yes, the market is manipulated even during ordinary times. Unfortunately, these are extraordinary times. My guess is we have no clue to what extremes the acolytes of Keynes will go.

Also, the volume in stocks is so thin right now, there is plenty of potential for manipulation. This rally has so few leaders, only a handful of stocks (Citi, AIG, etc.) have accounted for up to 40% of the NYSE trading recently. Even if there is nobody pulling the strings, that kind of pinch in volume just invites the the giant squids of finance to latch onto the face of America and manipulate the markets (GS et al).

My great fear has also been that the agony is prolonged and the pronounced leg down doesn't come. I hope you are wrong because that would be a worse case scenario. It was bad enough growing up in the age of disco and being told the world was going to end every day. I couldn't handle that again.

I don't believe in astrology but market tops and bottoms corresponding with the calendar is always interesting. However, I wouldn't jump to the conclusion it's related to the stars or the moon, because so much of market contributions and reporting are tied to monthly and annual periods. The Federal TSP is a case in point, with 13 million participants paying into their 401k every two weeks. Please elaborate on what you see. Are you saying the tops and bottoms over the last few months are tied to a monthly rhythm?

Smiddy

Anonymous said...

Oops, I meant to say the Fed engineered currency swaps, not CDOs. sry

T said...

Smiddy, thanks for addressing my points. I can see that we are basically 'on the same wavelength' in what we are seeing. however whatever way we come to see it. my own vision does include this peculiar 'indicator' of watching the calendar for the full moon and the new moon. you can always find it by looking at an ephemeris . (www.khaldea.com)
I read a blog post or two here that pertains to the (Nobel Prize nominee?!) J.Taylor's work ...involving the research he did to show that markets move in relation to ....gravitational energy... ok, I can relate to that idea. it must be about the moon... like the way it affects tides, and psychological emotions..(many studies have been done and stats from mental hospitals and police departments confirm the effects the full moon has on people. it's well know in government and universities this effect. a major study was done in the 90's about this issue. it confirmed that the moon cycles, especially the full moon, does affect the emotions of people, and in a market environment, where 'emotion' plays a big part in 'investor sentiment' ,public mood, etc... it does have an effect on the markets and its participants.
the university study is worth reading.
there are some specific details about it that are especially pertinemt.
Anyway, the bottom line, is that I have been open minded about ....watching the full moon time and new moon time, to see if it can be used an an indicator, like the other indicators, CCI, RSI, etc....elliot waves, etc. and so far, I am seeing that it does look to be a very good 'timing' indicator.
Having said that....I also agree with the point you made about the Fed TSP, monthly reports, etc. the news releases are important.

but when you put all these indicators together , I think it can give us some 'vision' of potential that is tradable.

the next tradable timing point , for me , is october 17/21 area...IF the S+P 500 is hitting big resistance at the 1060 area,with a double or triple top, etc, and other indicators are telling....I will be looking for the trigger to sell short the market for the start of sub wave 3 down....my target is (s+p 500) the 950 area. between the june top and july bottom. (925 area)(950)

BUT ..... the place along the way... for the government to 'engineer a stick save'....would be 1020. the recent bottom. (1020-1000 area)....so it has to be watched daily.

well, thats what I'm looking at....while I wait.

Anonymous said...

Thanks T, I never studied that subject but I'll take a look at it. I've got plenty of spare time since the open today.

I covered this morning when it blew through 1050. You can't fight a falling dollar. Each time the rally resumes, the euphoria grows. A bull would point out that they successfully reinflated the bubble before, so why not now? There's logic in that position, but I think it's a whole different economic situation now and we're perched on the edge of a cliff.

Smiddy

T said...

I agree. One place you can find that university study that was done....is go to Elite Trader web site. and search for the thread that is called....'trading the moon'. Its an older post from a few years ago. you might also locate it by searching the posts of username ...Yoohoo.... he uis a master trader,I learned alot from in his posts.
In that thread is a link to the university study.
The most significant point I got out of it was their evidence that the Full moon energy has the Most effect on emerging markets,small cap businesses, smaller systems.smaller economies of scale.
and that makes sense, because the smallness, smaller volume, etc, and localized nature,makes the public emotion around the market , or company, that much more emotionally invested, makes sense. like the way a family business has more emotion vested in it. smaller, emerging economies are more personal...so the moon has a stronger influence. I surmise (the study didnt address it) that for this reason, the Forex market would also be one that is more influenced by the timing of the moon cycles.
T