Posted by marketguy on 16th of Oct 2009 at 09:45 pm
I don't get it and am looking for some answers from folks who
may be smarter than me and/or have the backtesting ability to look
at this historically (Matt or Steve maybe)...yesterday the SPX
was down hard in the morning yet the VIX was down pretty big and by
the end of the day the SPX was green...now today the SPX was
actually down almost 1% and "again" the VIX was down big (1.5%
roughly)....this is obviously a divergence but what does it
mean? is it bullish because the VIX is falling with a falling
market or bearish in that it's a sign of complacency?
Posted by marketguy on 18th of Oct 2009 at 06:35 am
I'm calling it now..."if" we still have a devastating C wave
down into next year and we revisit or break through March's lows
then I believe GS will go by the way of Arthur
Andersen when it eventually comes out about all the games and
manipulating they were doing (there's no doubt in my mind in that
kind of environment it would come out). I think the country
(and even the gov't..what a shocker that would be) will be looking
for a scapegoat and they'll be THE prime target.
This is a great question and something I've been looking for for
answers to as well. In his latest updates, Jack Chan and his
models have become bullish. He is no longer considering
shorting, and is looking for the VIX to drop quickly back into the
teens to indicate to him that "volatility" has subsided and a new
steady bull market has started. I pointed out to him that the
last time the VIX was this low, it was a year ago when the s*&^
hit the fan (and complacency was high). He replied to tell me
that the difference this time is that technical configurations at
the time were very bearish and we were coming off a top, while this
time, we are bottoming out of a bear market.
Technically speaking, we might have started a bull market (but
we would have to have a good correction for me to "buy and
hold"). The market has passed every test that Matt laid out
back in March (and other more common simple indicators): 50
daily MA is rising and is above a rising 200 daily MA; 13 weekly
ema is rising and above a rising 34 ema; we are above 20 month MA;
we are above 89 wk MA. Daily stochastics just crossed to give
a buy signal (although there is a lot of divergence); VIX is
nearly back to bull market levels (but not quite yet though -- this
was Jack Chan's big reservation about the market right now).
With all of this, I still can't bring myself to trust this
market. Seems too easy to me: lots of people escaped the
biggest credit bubble in history dollar cost averaging in tech
stocks only to come out wealthier in the end?!?!?! GS
employees suffered a stressful few months, but in the end received
the biggest bonuses of their lives? I talked to some friends
up in Canada -- they say the real estate market in Vancouver now is
hotter than ever with bidding wars becoming the norm
again.
Is it possible that we just re-inflate every bubble out there
for years to come and happy times will be here again?
Posted by Palladin on 18th of Oct 2009 at 01:53 pm
It boggles the old grey matter! Bubbles have a life of their
own. Got to know exactly when to jump off or be consumed by the
explosion.
No matter where or how I look, confusion and dissonnant
opinions reign. We are living in dangerous times. I cannot
find a path to follow that makes me feel I've chosen right. I trade
the trend and play the countertrend short term, and keep my
finger on the trigger.
Eventually, the house of cards will crumble. Hope I'm nimble
enough to get out in time!
Posted by stevedfw on 17th of Oct 2009 at 12:18 pm
I am in the "same boat". I am sitting in 100% cash in my
retirement account for the last 6 months. I have been hoping for
all the indicators we watch on here to go bearish and then get
in LONG after all these indicators on here go Bullish
again.
But I am starting to wonder with the 20MA on the monthly and the
89MA on the weekly looking to turn bullish. Plus all the
other longer term trending indicators are still bullish. I got
excited when the Aroon on the 60min went negative a week or so ago,
LOL. But it turned postive again a few days later.
I am open to suggestions. I can only go long in mutual
funds but can trade in and out (end of day) as much as needed.
why have you been out for 6 months? Even back in
Mar/April, we expected at least a move to SPX 1011 (38%) to 1120
(50% retrace). for 401K's, etc you need to focus on larger
time frame charts than 5 min, 15 min, 30 min charts etc.
Focus on the longer term daily charts and ignore the short term
charts. We have 3 types of people here: short term day
traders, swing traders, and those who manage 401K's etc. We
focus a lot on the short term because we have a lot of professional
traders here, but if you are trying to manage a 401K plan, then
ignore all those short term charts.
Even though we of course cover the big picture charts, all of
our charts are currently mixed together. Therefore, in
order to help you guys keep this straight, I will have a new
section in the future called "long term analysis or 401k analysis,
etc, in that section I will have my longer term swing trade charts,
indicators, etc all in once place.
Currently, if you have been out this whole time, then I don't
think now is the time to go in. Even if this is a bull
market, it will have a decent pullback sometime, and it would be
more prudent to enter after a correction for a better
risk/reward.
I see lot's of emotion
buildingnow, people can't stand it because they think they
are missing the boat. Don't think that way, that's what leads
the 'sheep' to buy in near tops and sell near bottoms.
Also, people seem to be more concerned about capital
appreciation rather than capital preservationwhich is the
most important.
The long term moving average crossovers such as the
50/200 daily
EMAcrossover, the
13/34
weekcrossover, the
89 weekand
20 monthare all
good guidelines for pointing out the long term trend changes, but
they are not perfect. If you want to follow those and enter
your 401K based on those, that's fine,
but then you have to be
disciplined and exit when they reverse. They are no
different than the MA mechanical systems listed on this site; they
whipsaw from time to time and give false signals, and when they do,
you have to adjust.
So yes all these MA's
crossed as you knowand this is potentially positive, however
if they happen to cross back down a month from now, then you have
to reverse/etc, no excuses.
The one thing
differentthis time around however is that these Long Term
MA's waited until more than a 50% move up in the market before
crossing, that is far larger than any past signal, all the past
signals/crosses have occurred in the range of a 10% - 25% move in
the markets, but nothing approaching 50%. I'm not saying that
this means they are wrong, I'm just pointing it out.
The time to go long 401K's was back in late Mar, and even April,
or even Mid July after the H&S patter failed. However
right now the risk/reward is not so good.
However if you want to go Long based on those long term
MA's crossovers above, that's fine, but again, if they happen to
reverse down again say in a month or two, then you must exit, even
if it is for a loss.
Posted by marketguy on 16th of Oct 2009 at 10:36 pm
thanks for the comments....I guess my sense is it would be a
sign of complacency (but then again that might be the bear inside
of me as RP noted earlier)...hard to believe the it's going to
continue to implode with the % of stocks trading about their
50 and 200 day moving avgs, the put/call being so low, the bullish
percent charts being over 90% for the most part...yadda, yadda,
yadda....
Posted by simon_says on 17th of Oct 2009 at 10:53 am
Interesting will be the inevitable retests of these tests
(particularly the 89 wk MA). So long as companies post earning
surprises this market will continue to inflate. Wait for
November...
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VIX vs SPX
Posted by marketguy on 16th of Oct 2009 at 09:45 pm
I don't get it and am looking for some answers from folks who may be smarter than me and/or have the backtesting ability to look at this historically (Matt or Steve maybe)...yesterday the SPX was down hard in the morning yet the VIX was down pretty big and by the end of the day the SPX was green...now today the SPX was actually down almost 1% and "again" the VIX was down big (1.5% roughly)....this is obviously a divergence but what does it mean? is it bullish because the VIX is falling with a falling market or bearish in that it's a sign of complacency?
all thoughts are welcome...thanks!
GS
Posted by mkrmdz on 17th of Oct 2009 at 07:08 pm
Unfortunately GS is taking advantage of the tools presented to them. We can't do anything about it until it until the gov't cuts off the cheap money.
I'm calling it now..."if" we
Posted by marketguy on 18th of Oct 2009 at 06:35 am
I'm calling it now..."if" we still have a devastating C wave down into next year and we revisit or break through March's lows then I believe GS will go by the way of Arthur Andersen when it eventually comes out about all the games and manipulating they were doing (there's no doubt in my mind in that kind of environment it would come out). I think the country (and even the gov't..what a shocker that would be) will be looking for a scapegoat and they'll be THE prime target.
... hoping for justice!
Posted by cal1 on 18th of Oct 2009 at 09:53 am
... hoping for justice!
This is a great question
Posted by kalinm on 16th of Oct 2009 at 10:15 pm
This is a great question and something I've been looking for for answers to as well. In his latest updates, Jack Chan and his models have become bullish. He is no longer considering shorting, and is looking for the VIX to drop quickly back into the teens to indicate to him that "volatility" has subsided and a new steady bull market has started. I pointed out to him that the last time the VIX was this low, it was a year ago when the s*&^ hit the fan (and complacency was high). He replied to tell me that the difference this time is that technical configurations at the time were very bearish and we were coming off a top, while this time, we are bottoming out of a bear market.
Technically speaking, we might have started a bull market (but we would have to have a good correction for me to "buy and hold"). The market has passed every test that Matt laid out back in March (and other more common simple indicators): 50 daily MA is rising and is above a rising 200 daily MA; 13 weekly ema is rising and above a rising 34 ema; we are above 20 month MA; we are above 89 wk MA. Daily stochastics just crossed to give a buy signal (although there is a lot of divergence); VIX is nearly back to bull market levels (but not quite yet though -- this was Jack Chan's big reservation about the market right now).
With all of this, I still can't bring myself to trust this market. Seems too easy to me: lots of people escaped the biggest credit bubble in history dollar cost averaging in tech stocks only to come out wealthier in the end?!?!?! GS employees suffered a stressful few months, but in the end received the biggest bonuses of their lives? I talked to some friends up in Canada -- they say the real estate market in Vancouver now is hotter than ever with bidding wars becoming the norm again.
Is it possible that we just re-inflate every bubble out there for years to come and happy times will be here again?
It boggles the old grey
Posted by Palladin on 18th of Oct 2009 at 01:53 pm
It boggles the old grey matter! Bubbles have a life of their own. Got to know exactly when to jump off or be consumed by the explosion.
No matter where or how I look, confusion and dissonnant opinions reign. We are living in dangerous times. I cannot find a path to follow that makes me feel I've chosen right. I trade the trend and play the countertrend short term, and keep my finger on the trigger.
Eventually, the house of cards will crumble. Hope I'm nimble enough to get out in time!
I am in the "same
Posted by stevedfw on 17th of Oct 2009 at 12:18 pm
I am in the "same boat". I am sitting in 100% cash in my retirement account for the last 6 months. I have been hoping for all the indicators we watch on here to go bearish and then get in LONG after all these indicators on here go Bullish again.
But I am starting to wonder with the 20MA on the monthly and the 89MA on the weekly looking to turn bullish. Plus all the other longer term trending indicators are still bullish. I got excited when the Aroon on the 60min went negative a week or so ago, LOL. But it turned postive again a few days later.
I am open to suggestions. I can only go long in mutual funds but can trade in and out (end of day) as much as needed.
why have you been out
Posted by matt on 17th of Oct 2009 at 05:34 pm
why have you been out for 6 months? Even back in Mar/April, we expected at least a move to SPX 1011 (38%) to 1120 (50% retrace). for 401K's, etc you need to focus on larger time frame charts than 5 min, 15 min, 30 min charts etc. Focus on the longer term daily charts and ignore the short term charts. We have 3 types of people here: short term day traders, swing traders, and those who manage 401K's etc. We focus a lot on the short term because we have a lot of professional traders here, but if you are trying to manage a 401K plan, then ignore all those short term charts.
Even though we of course cover the big picture charts, all of our charts are currently mixed together. Therefore, in order to help you guys keep this straight, I will have a new section in the future called "long term analysis or 401k analysis, etc, in that section I will have my longer term swing trade charts, indicators, etc all in once place.
Currently, if you have been out this whole time, then I don't think now is the time to go in. Even if this is a bull market, it will have a decent pullback sometime, and it would be more prudent to enter after a correction for a better risk/reward.
I see lot's of emotion buildingnow, people can't stand it because they think they are missing the boat. Don't think that way, that's what leads the 'sheep' to buy in near tops and sell near bottoms. Also, people seem to be more concerned about capital appreciation rather than capital preservationwhich is the most important.
The long term moving average crossovers such as the 50/200 daily EMAcrossover, the 13/34 weekcrossover, the 89 weekand 20 monthare all good guidelines for pointing out the long term trend changes, but they are not perfect. If you want to follow those and enter your 401K based on those, that's fine, but then you have to be disciplined and exit when they reverse. They are no different than the MA mechanical systems listed on this site; they whipsaw from time to time and give false signals, and when they do, you have to adjust. So yes all these MA's crossed as you knowand this is potentially positive, however if they happen to cross back down a month from now, then you have to reverse/etc, no excuses.
The one thing differentthis time around however is that these Long Term MA's waited until more than a 50% move up in the market before crossing, that is far larger than any past signal, all the past signals/crosses have occurred in the range of a 10% - 25% move in the markets, but nothing approaching 50%. I'm not saying that this means they are wrong, I'm just pointing it out.
The time to go long 401K's was back in late Mar, and even April, or even Mid July after the H&S patter failed. However right now the risk/reward is not so good. However if you want to go Long based on those long term MA's crossovers above, that's fine, but again, if they happen to reverse down again say in a month or two, then you must exit, even if it is for a loss.
I just joined your site
Posted by stevedfw on 17th of Oct 2009 at 06:09 pm
I just joined your site a month or so ago so I did not have access to your earlier projections.
But nevertheless, thanks for responding and the help.
You "summed it up" perfectly!
Posted by Peridot on 17th of Oct 2009 at 09:37 am
You "summed it up" perfectly! Thanks for a very good post. p.
thanks for the comments....I guess
Posted by marketguy on 16th of Oct 2009 at 10:36 pm
thanks for the comments....I guess my sense is it would be a sign of complacency (but then again that might be the bear inside of me as RP noted earlier)...hard to believe the it's going to continue to implode with the % of stocks trading about their 50 and 200 day moving avgs, the put/call being so low, the bullish percent charts being over 90% for the most part...yadda, yadda, yadda....
Interesting will be the inevitable
Posted by simon_says on 17th of Oct 2009 at 10:53 am
Interesting will be the inevitable retests of these tests (particularly the 89 wk MA). So long as companies post earning surprises this market will continue to inflate. Wait for November...