Today’s violent rally was accompanied by a 75% shrinkage of New Lows and a 150% expansion of New Highs. Purists may split hairs arguing whether this was the beginning of a new bull market or merely a bear market rally. This will be an easy quesiton to answer a year from now – but today we need to hit the keyboard and trade.
I am writing this at a crack of dawn in the Austrian Alps, with a frozen lake and ski trails outside my windows. I have just checked my emails and was sad to see that Kerry had suffered a massive computer crash last night. While he is restoring his software and data, I will keep updating NH-NL from Europe.
It takes buying to move stocks up, but they can fall of their own weight. GE lost more than 2/3 of its value in as many months as it took years to rise. In October 2008 the new low of MACD-Histogram identified the point of the maximum power of bears. In area B the stock rallied into its value zone, between the two moving averages, and MACD rose above zero, ‘breaking the back of the bear.’ In 2009 GE broke support and fell to a new bear market low – but take a look at MACD-Histogram. This indicator is only slightly below zero, much more shallow than it was in October. The moment it ticks up, turning the Impulse system blue, it will complete a bullish divergence, flashing a powerful buy signal.I use an indicator used MACD XOver, included in all Elder-disks, to identify the level at which that change of color would occur. It tells me that GE must close above $8.20 this week for the signal to occur.The purpose of this post is to open up a discussion about where we are in the market cycle.
- What are your arguments for being bullish or bearish?
- How will you recognize the bottom?
- Which stocks ddo you suggest putting on the shopping list?
I look forward to a discussion that benefots us all. Contrary opinions and arguments are welcome – as long as they are presented in a civil and collegial fashion.Alex
I have a skylight in the ceiling of my bedroom, and this morning, when I woke up, it looked as if someone threw diamonds on it. It must have rained at night, and then it got colder, freezing the raindrops into clumps of ice. Today is March 1, and just two days ago the weather was so warm that I could walk outdoors in a shirt. Does last night’s ice mean that the winter is back?By now we’ve been in a bear market for almost a year and a half. The broad stock market indexes, such as the Dow and the S&P, have lost over 50% of their value, with many individual stocks losing much more. Last Monday, Feb 23, the Dow broke its 2002 low, with the S&P holding one point above its own low, and then both rallied. On Friday, both the Dow and the S&P fell to new bear market lows, with the S&P breaking below its 2002 level.
Even when I am busy with some office work, I like to have a 25-minute chart of a stock I am trading on an auxillary screen on the side of my desk. It gives me a sharper image of the market than a daily chart, without getting into a head-spininng detail of a 5-minute plot. The 25-min chart of the S&P cash, shown below, reveals the details of some of the recent turning points.
"It is hard to forecast, especially the future" – famously said Yogi Berra. It is much easier to write about the past, such as the bottom of the 2002 bear market having been broken. That’s what I would do if I were an analyst – write about the past. As a trader, I must look into the future – and as a Spike trader, I want to share my views with you. Let me climb out on a limb 🙂
Patience is a hard virtue. Where are the warm days of a bull market? Buy pullbacks, leisurely take profits on rallies, and never fear to overstay a trade because the rising tide will eventually make up for most mistakes. Not so in a bear market. The declines are vicious but brief, followed by sharp rallies; good timing is essential. This bear is growing old, but an aging bear can give a vicious fight, and taking out the November lows would not be one bit surprising.
Please pass the Tabasco, I need to sprinkle it on my hat before I chew! Last week I joined the majority of Spikers and SpikeTrade Members – and selected a short pick as my favorite. The market, an unforgiving teacher, has promptly delivered its kick and rallied. How should I position for the week ahead?
Every equity peak is followed by a drawdown. After a fantastic January, when every week was a winner for our group, we skidded into February with a loss. We are still comfortably ahead for 2009.
A very perky rally in the market today. Almost as if a groundhog took a second look and decided there was no shadow – but what does NH-NL say?