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Bull or Bear


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#1 OEXCHAOS

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Posted 05 July 2012 - 02:49 PM

Many long-term investors believe one cannot predict Bull or Bear Markets. I would venture a guess that none of us here believe this. So, if you do make a distinction, how do you do it? What are your criteria for a Bull or Bear market? What do you do differently in each? Mark
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#2 opinionated

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Posted 07 July 2012 - 05:53 AM

Not sure if its the correct answer but I use weekly and monthly charts to see the differences and since Im an options trader I tend to buy the sell offs in a bull and short the rallies in a bear. My typical hold is 1-4 days. I am looking to build long term stock positions and was hoping this board would draw some people to post thoughts and charts on 1-5 dollar stocks with good potential. O

#3 IYB

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Posted 07 July 2012 - 04:48 PM

Many long-term investors believe one cannot predict Bull or Bear Markets.

I essentially agree that bull and bear markets cannot be dependably predicted. But the current context can be identified, and we can trade in sync with that context. Whether we trade in years, months, weeks, days, hours or minutes, for me it has always proven far more profitable to trade with the current context than to set up trades based on when we "expect" the next trend change....i.e., trying to predict and trade now.... the next trend.

In other words, in the words of Stephen Stills "Love (or trade) the one you're with." Here is the current Primary Trend, clearly a Bull Market as defined by direction of the 13 month EMA, MACD, CCI and virtually every other trend identifying measure:

http://stockcharts.com/c-sc/sc?s=$SPX&p=M&yr=12&mn=6&dy=0&i=p75423767004&a=181755078&r=33.png.png
ďMen, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.Ē Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

#4 OEXCHAOS

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Posted 07 July 2012 - 05:20 PM

I think IYB properly clarifies. PREDICTING a Bear market has cost investors more millions than I care to contemplate. On the other hand, knowing with adequate clarity if we are in a Bull or Bear market has saved/made me and my clients a considerable sum. So, what are the best tools for ascertaining the Bull or Bear context? I like the 200-day, but not so much a cross, as the direction. I also like to look at the 50 week, breadth, and some long term stochastics. Mark
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#5 colion

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Posted 07 July 2012 - 06:05 PM

I think IYB properly clarifies. PREDICTING a Bear market has cost investors more millions than I care to contemplate. On the other hand, knowing with adequate clarity if we are in a Bull or Bear market has saved/made me and my clients a considerable sum.

So, what are the best tools for ascertaining the Bull or Bear context?

I like the 200-day, but not so much a cross, as the direction. I also like to look at the 50 week, breadth, and some long term stochastics.

Mark


IMO, the way to answer the "best tools" question is to back/forward test the indicators as a function of market and time frame. A number of programs can do this. Perhaps there is interest in picking some indicators, markets, and time frames and then perhaps some volunteers would crank out the results (would not be a major job for run-of-the-mill indicators). I think this would be the most objective way of getting a handle on this question.

#6 James Quillian

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Posted 09 July 2012 - 11:40 PM

This is a lot like asking if you can predict the end of the world. You can if you have enough evidence. For example, if the earth is on a certain to path to collide with a huge asteroid, it is possible to predict the end if the world. Most of the time there isnít enough evidence. It works the same way with the stock market. If a person saw evidence that that for many years resources had been inefficiently allocated by means of using democracy to over ride the free market, one might expect an eventual adjustment in the form of a major depression. If monetary and fiscal policies have served only to prevent markets from clearing, in time they will clear abruptly and severely. With that in mind, yes it is possible to predict a bear market. Predicting exactly when is not all that easy. I donít see any reason to predict a bull market. Just be out of stocks before a bear market starts. Any time the averages get lower than 80% if their 200 day moving averages, start buying no matter what. If they get under 70% of their 200 day moving averages, buy like a mad man.

#7 colion

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Posted 09 July 2012 - 11:53 PM

This is a lot like asking if you can predict the end of the world. You can if you have enough evidence. For example, if the earth is on a certain to path to collide with a huge asteroid, it is possible to predict the end if the world. Most of the time there isn't enough evidence.
It works the same way with the stock market. If a person saw evidence that that for many years resources had been inefficiently allocated by means of using democracy to over ride the free market, one might expect an eventual adjustment in the form of a major depression. If monetary and fiscal policies have served only to prevent markets from clearing, in time they will clear abruptly and severely.
With that in mind, yes it is possible to predict a bear market. Predicting exactly when is not all that easy.
I don't see any reason to predict a bull market. Just be out of stocks before a bear market starts. Any time the averages get lower than 80% if their 200 day moving averages, start buying no matter what. If they get under 70% of their 200 day moving averages, buy like a mad man.


Your best tool then is some % above/below the 200 DMA. How do you know that this is the best tool?

#8 StillLearnin

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Posted 10 July 2012 - 07:08 AM

I use David Varadi's Aggregate M indicator (AGGM)for a bull/bear designation. Here is a comparison to the common used 200 day SMA and ROC of 200 day SMA Next Day Returns buying 10k SPY since 8/28/1998 --------------------------------------------------------------------- CL > MA#200 Sample Size 2780 W/L % 52 Avg Next Day Gain/(Loss) .0306% CL < MA#200 Sample Size 1373 W/L% 51 Avg Next Day Gain/(Loss) .0219% --------------------------------------------------------------------- ROC#200 > 0 Sample Size 2775 W/L % 53 Avg Next Day Gain/(Loss) .0357% ROC#200 < 0 Sample Size 1378 W/L % 51 Avg Next Day Gain/(Loss) .017% ------------------------------------------------------------------------------------ When Bars Since AGGM > .6 is less than BarsSince AGGM < .4 (Bull) Sample Size 2434 W/L % 53 Avg Next Day Gain/(Loss) .0548% When Bars Since AGGM < .4 is less than BarsSince AGGM > .6 (Bear) Sample Size 1709 W/L % 50 Avg Next Day Gain/(Loss) (.0095)%

#9 James Quillian

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Posted 10 July 2012 - 11:36 AM

This is a lot like asking if you can predict the end of the world. You can if you have enough evidence. For example, if the earth is on a certain to path to collide with a huge asteroid, it is possible to predict the end if the world. Most of the time there isn't enough evidence.
It works the same way with the stock market. If a person saw evidence that that for many years resources had been inefficiently allocated by means of using democracy to over ride the free market, one might expect an eventual adjustment in the form of a major depression. If monetary and fiscal policies have served only to prevent markets from clearing, in time they will clear abruptly and severely.
With that in mind, yes it is possible to predict a bear market. Predicting exactly when is not all that easy.
I don't see any reason to predict a bull market. Just be out of stocks before a bear market starts. Any time the averages get lower than 80% if their 200 day moving averages, start buying no matter what. If they get under 70% of their 200 day moving averages, buy like a mad man.


Your best tool then is some % above/below the 200 DMA. How do you know that this is the best tool?


I don't see where a % above a moving average is of help on the upside.
On the down side, anytime the avereages have been below 80% an upturn has not been far off. The only exceptions occurred during 1931-1932. In those cases the market only rallied significantly. At those low levels, I think it is safe to bet that the world is not going to end. In rare cases where the bottom falls out 70% is a better number.