Thanks for the chart Gary. I didn't have one last night but was working purely from memory of 35 years ago. As I look at your chart, I see that I had it precisely right except for the size of the initial spike off of the Aug 1974 DJ570 low- Indeed that spike was just under 20% (not 40-50%)....but the important and relevant fact remains that it was followed by a full blown retest of the August lows in December and then finally the market turned up off this base in January 1975 and broke through the 200 day MA, which in turn turned up shortly thereafter. Thanks again. D
Don, I too was around in 1974 and my memory of the end of the 1974 bear market was much different than yours so I looked it up and found this informative link with a chart and then scrolling down some commentary on the bottom.
bears: if this really was the start of a bull market what would be different?
Posted 20 May 2009 - 10:45 AM
Posted 20 May 2009 - 11:21 AM
Posted 20 May 2009 - 11:28 AM
Price and Volume Forensics Specialist
Richard Wyckoff - "Whenever you find hope or fear warping judgment, close out your position"
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Posted 20 May 2009 - 11:45 AM
Points well taken Cirrus. I am not actually advocating that trading accounts stay out of the long side during IT advances in a bear market---as you know the current IT advance has made me a lot of money....but am only trying to respond to the title line of this string. My simple point is that by any reasonable definition, I for one, could never, ever call the current climate a Bull Market. And to blindly get long or stay long now with a buy and hold mentality on hopes that this is a bull market, to me is insanity. Anyhow, I appreciate the exchange.....Regards, D
The point I was attempting to make is using the 13 month with positive slope (or, even the 200d as you just mentioned) would have caused one to miss over half the bull run! In the case of the 13 months you would have missed more than the 200d, obviously.
That's why I posted. Again, in many major market turns the 50wema type strategy (or 200d/13 month) works but not all. It's important to consider the market dynamics or what's behind things instead of just a "black box" technique like always waiting for said MA to turn. Here we have a nasty bear that brought the averages so far below these MA's that using that type of strategy would be unwise.
That's why I complemented you on the value of something like the 7 Sentinels for IT trading....I'm calling this a bull rally in a bear market...like you....because I too use the 50wkema and its slope. However, I think there's more than a chance that using this as a context of this rally could be wrong in this case due to the dynamics of the bear that preceeded this rally.
Posted 20 May 2009 - 12:19 PM
Edited by Cirrus, 20 May 2009 - 12:20 PM.