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#1 NAV

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Posted 02 November 2017 - 06:20 AM

I posted the spread of Investors Intelligence yesterday, which is at a 30 year extreme, at 49.1%. It did not raise any eyebrows !

 

Mark, who i consider a market sentiment expert brushed it off as less important, as other factors are driving this rally. Fib another savvy technician believes that the liquidity trumps the sentiment measure even if it's a 30 year high !. Da_cheif another savvy technician, considers the 30 year high as normal but instead tries to focus on the AAII, which is more in line with his epicenter theory. These folks could be right. But when you see a savvy group of professionals saying "This time is different and hence different factors are in play", it raises red flags.

 

Now i am in no way comparing the current market to 1987 or any other period as i believe each market environment is unique. Besides being a price follower i am only worried about the present and will not let anything else which has implications only in the future, to obstruct my present trading. Besides a whole lot of technical damage happens before a major price correction. Firstly you need a simple 8 x 34 cross on hourly before even getting mildly worried. This follows by a break of daily pivots and the 3 week / 4 week lows. Then the monthly 5 ATR gives way, which is the precursor to the final collapse. Hell, that takes a lot of time and would give the smart folks to exit the market.

 

But if you start seeing persistent price weakness in the context of the "conditioning" that in place with the pros today, you better get really worried.

 

Even more interesting was Prechter's interview that da_cheif posted. When the host asked Prechter what his downside projections would be, he refused to answer. This coming from a perma-bear who would in a heartbeat talk about 90% declines and DOW 400. He refused to throw a number. That is classic capitulation. 

 

I can imagine the kind of capitulation from various quarters if the market were to advance another 200-300 SPX points from here.

 

When the amateurs post bold crash calls based on hindenberg, gann turn, sentiment, war blah blah blah, it's a wall of worry. When the experts get conditioned to ignore the warnings and believe in a new normal, that's when the market gets them. 


Edited by NAV, 02 November 2017 - 06:22 AM.

It's not the knowing that is difficult, but the doing. 


#2 NAV

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Posted 02 November 2017 - 06:23 AM

Now back to short term trading a.k.a dip buying laugh.png


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#3 NAV

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Posted 02 November 2017 - 06:29 AM

Meanwhile the bitcoin is trying to see if it can get a better angle of advance beyond 90 degrees laugh.png

 

I think some folks are going to lose their shirts pretty soon.


Edited by NAV, 02 November 2017 - 06:34 AM.

It's not the knowing that is difficult, but the doing. 


#4 da_cheif

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Posted 02 November 2017 - 06:36 AM

>When the experts get conditioned to ignore the warnings and believe in a new normal, that's when the market gets them.<.....u left off tje fact that investors intel got to 65% bulls 3 months off the 03 low but the market kept goin up for 4 more years   ...and 3 months after the 03 low all the worriers kept looking for a crash because of the 65% bulls from II.....winners have long memories    675 ono



#5 NAV

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Posted 02 November 2017 - 06:51 AM

Wow this bitcoin is freakin' amazing ! Declined 10% in less than an hour. There were no bids for nearly 300 points. It just gapped down on intraday charts. It's truly a sight to behold. How the heck are people going to get out, if this develops into a panic. rolleyes.gif


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#6 OEXCHAOS

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Posted 02 November 2017 - 07:51 AM

Everything needs context. The way I used to trade, I'd have considered II to be fulfilling one of my preconditions for an IT correction. But, I've learned that you need more than one indicator for the sentiment that you're measuring to have confidence and you need technical confirmation as well. We definitely don't have the latter yet.

 

NAAIM measures essentially the same type (professional market timer) of sentiment, except that it measures real money not opinion. NAAIM is at exposure levels that CAN set up a correction, but it's far away from levels that show real acceptance of the rally.

 

One other really important context to keep in mind is that II was in Sell territory for most of (including the beginning of) this entire rally. That's a pretty good reason reduce the importance you place on this indicator. At least for now.


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#7 NAV

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Posted 02 November 2017 - 08:20 AM

>When the experts get conditioned to ignore the warnings and believe in a new normal, that's when the market gets them.<.....u left off tje fact that investors intel got to 65% bulls 3 months off the 03 low but the market kept goin up for 4 more years   ...and 3 months after the 03 low all the worriers kept looking for a crash because of the 65% bulls from II.....winners have long memories    675 ono

 

It's not just the bulls, it's the bull-bear spread i am talking about. Bull/bear ratio coming off the 03 low was about 3.8. Right now it's 4.41. The only other time in the market history you can find this kind of spread was before the 87 top. Those are facts.


It's not the knowing that is difficult, but the doing. 


#8 libertas

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Posted 02 November 2017 - 08:20 AM

Karl Popper:

  • If we are uncritical we shall always find what we want: we shall look for, and find, confirmations, and we shall look away from, and not see, whatever might be dangerous to our pet theories. In this way it is only too easy to obtain what appears to be overwhelming evidence in favor of a theory which, if approached critically, would have been refuted.
    • The Poverty of Historicism (1957) Ch. 29 The Unity of Method


#9 NAV

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Posted 02 November 2017 - 08:25 AM

Everything needs context. The way I used to trade, I'd have considered II to be fulfilling one of my preconditions for an IT correction. But, I've learned that you need more than one indicator for the sentiment that you're measuring to have confidence and you need technical confirmation as well. We definitely don't have the latter yet.

 

NAAIM measures essentially the same type (professional market timer) of sentiment, except that it measures real money not opinion. NAAIM is at exposure levels that CAN set up a correction, but it's far away from levels that show real acceptance of the rally.

 

 

 

Sentiment is the context. You need technical confirmation now.

 

 

 

One other really important context to keep in mind is that II was in Sell territory for most of (including the beginning of) this entire rally. That's a pretty good reason reduce the importance you place on this indicator. At least for now.

 

That's not true. You need to look at Ed Yardeni's charts. Bull/Bear ratio was at around 3 when the Trump rally started. It has moved to 4.41 over the last 6 months. It appears, you guys are not paying attention.


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#10 libertas

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Posted 02 November 2017 - 08:43 AM

I don't remember who it was, or the exact words, but a "guru"  made what I thought was a useful comment which has stuck with me. He said that an analyst provides his best advice at extremes, and is much less helpful at other times. But at extremes, clients do not want his advice.