23 replies to this topic

[IYB]

Looking at the action of SPX over the last six days, one could fairly easily build the argument that it is a repeat of what we saw in the six days leading up to August 9....and that the outcome will be the same.

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=5&dy=0&i=p23366500307&a=209406260&r=86.png

But would one be correct? My work comes up with a resounding "no" to that question. Why? Well actually for quite a few reasons having to do with the set up over the last 4 months which I see as very similar to the set up in the second year of the last cyclical bull market, 2004, after a half year long IT downtrend. Now, as then, internals improved as prices went down after the NYMO and NAMO low of May 20, 2010. From that point forward here, as in 2004, the market put in a base for a sustained advance.

But rather than go into great detail on that basing process and the advancing internals, let's just focus in this particular post on the last six days as compared to those six days leading into the August 9 top. Notice the action of NYMO over those six day is August, and the action of NYMO over the last six days:

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=5&dy=0&i=p52861189019&a=199263752&r=632.png

Same flat SPX but notice if you will that the pattern of NYMO is precisely opposite now versus August. There it was deteriorating...here it is building. Notice the same for NAMO:

http://stockcharts.com/c-sc/sc?s=$NAMO&p=D&yr=0&mn=5&dy=0&i=p30255520916&a=199263753&r=605.png

And the Russell 2000? There it was declining....here it is advancing:

http://stockcharts.com/c-sc/sc?s=$RUT&p=D&yr=0&mn=5&dy=0&i=p89223609153&a=199263760&r=14.png

And how about TICKS? In august they were deteriorating through those six day....here thay are advancing:

http://stockcharts.com/c-sc/sc?s=$TICK&p=D&yr=0&mn=10&dy=0&i=p65979412138&a=203421539&r=3382.png

Anyway enough examples. You get the point......that this is not August 9 redux. It is the exact opposite according to my work, and I believe that the outcome over coming weeks will be the opposite of mid August....higher not lower, and the the correct trade is long, not short.

For those who believe that "context is everything" as do I, you may find this comparison with late 2004 on the long term charts of interest. Happy trading, D

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=8&mn=6&dy=0&i=p98280175200&a=186901514&r=163.png

Edited by IYB, 02 October 2010 - 11:36 PM.

[arbman]

D, there is some NYMO divergence from the August high and the energy only pushed to close the 1150 gap this week, I think even if there is more upside, sustainable follow through won't come immediately, I tend to think any rally on Monday will be completely given back once again by mid-week...

[TechMan]

I do enjoy reading thoughtful and well presented comments, especially with opposing views. Nonetheless, the fundamental question to the validity of your analysis is… Who’s comparing these two periods? One’s a reaction high/resistance of a double bottom formation, and the current period is the “morning-after” of the breakout party. As far as I can see there’s little parallel there, if any. I can’t recall anyone here posting any comment to that regard. I could be missing something here ‘cause I don’t read half of the threads here.

[diogenes227]

I do enjoy reading thoughtful and well presented comments, especially with opposing views.

Nonetheless, the fundamental question to the validity of your analysis is… Who’s comparing these two periods? One’s a reaction high/resistance of a double bottom formation, and the current period is the “morning-after” of the breakout party. As far as I can see there’s little parallel there, if any.

I can’t recall anyone here posting any comment to that regard. I could be missing something here ‘cause I don’t read half of the threads here.

Who's comparing these two periods? The comparison of these two periods by this guy on Friday was not intended to be bearish?

THIS GUY

[TechMan]

I do enjoy reading thoughtful and well presented comments, especially with opposing views.

Nonetheless, the fundamental question to the validity of your analysis is… Who’s comparing these two periods? One’s a reaction high/resistance of a double bottom formation, and the current period is the “morning-after” of the breakout party. As far as I can see there’s little parallel there, if any.

I can’t recall anyone here posting any comment to that regard. I could be missing something here ‘cause I don’t read half of the threads here.

Who's comparing these two periods? The comparison of these two periods by this guy on Friday was not intended to be bearish?

THIS GUY

You do know the difference between drawing a parallel model between the two different periods and making a point reference of a random event happened in the past, right?

Oh, you’re the one claiming the VIX was in a “grinding decline” and that the ADX “clicked up everywhere” on Friday… Never mind then.

[TechMan]

diogenes227 - BTW, what does it mean when the ADX "clicked up" while the +DI dropped? In the case of the Nasdaq 100, not only the ADX dropped on Friday but the +DI dropped even further below the ADX, what does that mean?

Edited by TechMan, 03 October 2010 - 03:26 AM.

[andr99]

You say the nymo was deteriorating while now it's improving. Look at the ema of the nymo (or namo it's no different) from july 12th to july 19th. A pull-back in an up trend. Why couldn't it be that we are having now the opposite i.e. a pull back in a down trend ? I would rather look at the divergences between the nymo chart and its ema from july 26th to august 9th and from september 13th to september 30th.

Edited by andr99, 03 October 2010 - 03:43 AM.

[andr99]

anyway if we get down from here, 1070-1080 sp is the wildest ride I can think of. Election time is a guarantee that no crash can happen from now till after early november. I' ve just two options : 1) a little pull-back to 1120-1125 and then up to a november top or 2) down to 1070-1080 then up to 1150 again in mid november.

[pisces]

Looking at the action of SPX over the last six days, one could fairly easily build the argument that it is a repeat of what we saw in the six days leading up to August 9....and that the outcome will be the same.

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=5&dy=0&i=p23366500307&a=209406260&r=86.png

But would one be correct? My work comes up with a resounding "no" to that question. Why? Well actually for quite a few reasons having to do with the set up over the last 4 months which I see as very similar to the set up in the second year of the last cyclical bull market, 2004, after a half year long IT downtrend. Now, as then, internals improved as prices went down after the NYMO and NAMO low of May 20, 2010. From that point forward here, as in 2004, the market put in a base for a sustained advance.

But rather than go into great detail on that basing process and the advancing internals, let's just focus in this particular post on the last six days as compared to those six days leading into the August 9 top. Notice the action of NYMO over those six day is August, and the action of NYMO over the last six days:

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=5&dy=0&i=p52861189019&a=199263752&r=632.png

Same flat SPX but notice if you will that the pattern of NYMO is precisely opposite now versus August. There it was deteriorating...here it is building. Notice the same for NAMO:

http://stockcharts.com/c-sc/sc?s=$NAMO&p=D&yr=0&mn=5&dy=0&i=p30255520916&a=199263753&r=605.png

And the Russell 2000? There it was declining....here it is advancing:

http://stockcharts.com/c-sc/sc?s=$RUT&p=D&yr=0&mn=5&dy=0&i=p89223609153&a=199263760&r=14.png

And how about TICKS? In august they were deteriorating through those six day....here thay are advancing:

http://stockcharts.com/c-sc/sc?s=$TICK&p=D&yr=0&mn=10&dy=0&i=p65979412138&a=203421539&r=3382.png

Anyway enough examples. You get the point......that this is not August 9 redux. It is the exact opposite according to my work, and I believe that the outcome over coming weeks will be the opposite of mid August....higher not lower, and the the correct trade is long, not short.

For those who believe that "context is everything" as do I, you may find this comparison with late 2004 on the long term charts of interest. Happy trading, D

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=8&mn=6&dy=0&i=p98280175200&a=186901514&r=163.png

Just an inquiring mind:
on your 3rd chart,with the circles,the last week of august the NAMO was clearly building,yet some prominent posters called
for a strong continuation of the downtrend,which did not happen.
pisces.
IMO,a correction is about to start,maybe two weeks of it,but one has to be careful, election! intervention?

[andiron]

i always thought folks do TA based on their position.... As an exercise, i have gone thru multiple TA indicators and flag it as bullish/bearish, there would always be some fair share of both w/ some being neutral......