Prechter on Bloomberg

Here is a link to a live interview of Robert Prechter on Bloomberg yesterday:

Robert Prechter, August 11, 2010

Prechter discusses current market conditions in the stock market and US Dollar.


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Key Trend Models

Today has the potential to end the summer rally and lead-off an intermediate decline into autumn.  We have seen them rally the market back into the close too often to remove the word "potential" from this analysis. 

A couple of things though: 

First, the Russell 2000 (low volatility settings) is the weakest of all indexes and was never able to turn up, summer rally or not.  It should lead the markets lower should this downturn be confirmed.

Second, yesterday we saw the VXX_240 Trend Model reverse LONG.  Today, the VXX_Daily Trend Model is close to a BUY SIGNAL, but not there yet.  Should the DJIA SHORT SIGNAL be confirmed  at the close today and the Daily VXX reverse LONG, that would be a strong combination of signals to usher in the long-awaited intermediate market decline. 

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VXX_240 Trend Model

VXX_240 Trend Model

Would you take this trade?  This reflects back to this weekend's post, The Tao of Trading. The LONG Pending signal still has not been confirmed, so as I am writing this there is about a 45 minute window in which this trend model is in "Pending" mode only.  The characteristic of this summer's market is to reverse initial moves like today's and recover to at least about break-even for the day.  This flies in the face of jumping into this signal early, if at all.  Such is the lot of the committed trader of this system.  One of these days the opening move will extend.  Who will be on board for that one?

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Can't remember if we said good-bye

The Tao of Trading

I just sent out a Weekend Update to subscribers, titled, The Tao of Trading.

Tao 

1. In Taoism, the basic, eternal principle of the universe that transcends reality and is the source of being, non-being, and change.
2. In Confucianism, the right manner of human activity and virtuous conduct seen as stemming from universal criteria and ideals governing right, wrong, and other categories of existence.

What is the Tao of Trading?  It is the way.  Our indicators line up and we take a trade.  The outcome is not important.  If we are detached from the outcome, we can more easily do our job.  What is our job?  To implement strategies designed to generate profits.

Enter our Trend Models:

SPX_Daily Trend Model

We have seen this sucker before, it along with it's weekly counterpart, defines the dominant trend of the market. 

SPX Weekly Trend Model

Such has been the nature of our summer.  Our parenting unit, as represented by the above two SPX Trend Models, has been squabbling.  One is Yin, the other Yang.  Oh cruel fate......

Friday was a callous hoax.  The SPX_240 minute went SHORT, but the market refused to follow-through on the downside and recovered nicely into the close:

SPX_240 Trend Model

Yet we had to take this trade.  That is our way.  The 240 minute model is our heads-up and head-start on what is usually a pending Daily reversal.  But apparently not so in this case.  What did we do wrong?

Nothing.  

Such is the Tao of Trading.  If you are looking for perfection, marry me.  But as far as our trading strategies go, we are batting about .500, which means that half of our trades are like the one above, busted.  It's the other half that provides our sustenance.

In an ironic twist of karma, taking losses are part of the winning trading paradigm:

In order to take wins, you have to take trades;

In order to take trades, you have to take losses.

 
Was it Yogi Berra who said, "Half of psychology is mental"?  Well, at least half of trading is psychology and its never easy to take a losing trade in our accounts. But if successful trading was easy, everyone would be doing it.

The point that I made to my subscribers and which I am sharing here today is that successful implementation of a trading strategy isn't defined by taking profits alone, its defined by taking the trades that your system generates, all trades, regardless of the outcome.

The Tao of Trading.

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VXX 240_min Trend Model

We've been watching this one all week:

Mid-seesion edit:

 This DJIA_10 minute chart is looking ominous, more so should today's lows get taken out:

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NNVC - time to bang the table?

Sun turnin' 'round with graceful motion
We're setting off with soft explosion
Bound for a star with fiery oceans
It's so very lonely, you're ten thousand light years from home.

Time to bang the table again on NNVC?
 
I found this succinct analysis of NNVC's prospects over on the iHub NNVC forum and wanted to make sure everyone understood where this company is on its path to becoming a major anti-viral pharmaceutical company:

Let's look at possible valuations for NNVC:

Currently completing animal studies and known to be entering pre-IND tox package:
Hiv-Cide for treatment of AIDS-- potential market $3 to $5 billion
Dengue-Cide treatment for Dengue and in particular DHF-- potential market over $1 billion
HSV-1 and HSV-2 treatment for genital Herpes-- potential market well over $1 billion
Once one indication is approved, the other 2 indications will be less than a year from market or revenue.
So, $1 billion divided by 200 million shares o/s worse case scenario leaves $5 earnings for each indication.
That sure looks like a share price over $2 to me.
If you disagree with the above you really, really don't know anything about NNVC, it's market potential, its technology, or the likelihood of approval.

The poster, "Dr. Feelgood," is a long-time shareholder and supporter of the company.  He deals in facts and logical deductions therefrom.  Assigning a modest PE of 20 to the above numbers suggests a share price of $300.  If their stuff works, the company may be worth $300 a share, just based on three out of 6-8 indications from their drug platform.

Does their stuff work?  It's early, but reputable, respected viral researchers are chiming in with a resounding, "Yes!" from their laboratories.

Yet the stock is mired in a painful 50% decline from it's May 3, 2010 high of $2.64.  I am awaiting a Trend Model BUY Signal before banging the table for NNVC shares, much the way I did last October when it dipped under $0.50.   An interim BUY on the 240_minute Trend Model comes in today at $1.38, a Daily BUY at $1.45.

What does the company have to say?

In response to a question to Dr. Seymour about the daily fluctuations in stock price:

"We know from its historical performance that major events have had a significant impact on the price.  If I'm asked, I suggest that people not obsessively watch the price but check it only every now and then. In fact, I subscribe to a service that gives me real-time quotes with the number of shares bought and sold. The sheer manipulation of the stock by the market makers drove me crazy so I followed my own advice and stopped watching. People should be more interested in the fact that we've never had a failure...some minor glitches perhaps, all corrected, but that's just Mother Nature having fun with those who attempt to divine her closely guarded secrets. Progress of the Company is all that one should focus on."

---EUGENE SEYMOUR, MD, MPH
Chief Executive Officer
NANOVIRICIDES, INC

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The whole world is watching

Notwithstanding big picture caution, there is no other way to describe the current Daily and Weekly GS Trend Models then as bullish:

GS Daily Trend Model

GS Weekly Trend Model

The GS Weekly Model reverses LONG on a weekly close above 151.23.  This price level may be key this week, not only for GS, but for financial stocks in general, as well as for the overall stock market.  GS breaking higher is bullish, falling back under 151.23, neutral to bearish.

There you have it, one price level for one stock, everything riding on it and the whole world is watching.


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VXX Daily Trend Model

The VXX_Daily Trend Model has steered true all summer long.  It will take almost a 10% pop to reverse this model LONG, which would be a Sell Signal for the market:

4/27: BUY   @ 20.50
6/15: SELL @ 26.70
6/24: BUY  @ 28.24
7/7:  SELL @ 26.90
Currrent:   @ 21.73

Note that half the trades were wrong, but that the winners gained substantially  more then the losers, with all four trades gaining a cumulative 8.69 points, or about 42% for the period shown.  This has been a characteristic of this model going back 18 months making it a candidate to filter all market timing signals from the indexes directly, avoiding trading against the direction suggested for the market (inverse to indexes). 

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The path ahead, Part II

Whoosh. 
What was that? 
Your life mate.
Do I get another chance? 
Sorry.

 ---From Monty Python's, "The Meaning of Life"

Of his song, "For Emily, Whenever I May Find Her," Paul Simon says it is not about Emily, not about any real woman, but its about a belief.  In his companion song, "Overs," he said it was about the loss of that belief. 

I waited for her to come, in the allusions of my life.  There was always so much time, so many years and adventures ahead, that belief was easy, a rubber stamp on each new day.  Much the same can be said about everything else in life, success, achievement, family, faith, peace and tranquility.  It's all out there, needing only belief and effort to reel it in.

I started this Blog about six years ago, November 18, 2004.  Earlier that year I had left my then wife and two teenage daughters to start my life over with someone who is now long gone from my life.  Whoosh, what was that?  The Blogs, especially the Sunday ones,  chronicle my journey from a barrier island off the coast of Charleston, South Carolina, to the frozen tundra (or so how I remember Spokane) of eastern Washington, to the desert Southwest.  It is hard for a Cancer to be on the road as we are homebodies.  But I have been a man without a home for so long, I have forgotten what home is and that is the saddest rip of all.

Before any judgments are made,  we have some score-keeping to update.  The labor of love that is AllAllan has morphed itself into a flourishing subscription service with a 90% renewal rate and a satisfaction from the sharing of my work that transcends anything I ever remotely achieved as an attorney.   And last fall I met a delicate soul of immense beauty and grace, who is now a part of my life, or what's left of it.  Score two for the journey.

I can reach deep down into the angst and find its source code, dating back to 2004 and in many ways, 20 or so years before that, or even to the first time I heard, understood and embraced, "For Emily."  Maybe that was the journey, that was my road trip and this is where my home has been waiting for me all these years.  At times (And when I awoke and felt you warm and near), it all makes perfect sense.  That this was the time and place, and person, who was waiting for me to come home for such a long time.

Or maybe this is the first step in a journey that is unfolding as we speak (or I write, but for me at least, its more of an ongoing conversation then a series of essays).  The challenges are certainly real enough on all sides of my ledger.  And where once I was too young to crash and burn, that is no longer the case.  Second chances are finite, a realization that hits only when its too late to do anything about it. I have seen first hand how the ravages of outrageous fortune drained the life out of better men then me.  There but for the grace of God......

I just don't know and I wonder if in the end, any of these questions will get answered, or if there is some plan, some rhyme or reason for all that has gone down, all that I have been, or have done, or have felt.  It is in that sense that maybe we all share life's quandary, predicaments and confusion. 

In the end, will my path make any sense at all?

Another shot of belief, please.


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