2 replies to this topic

[arbman]

Check this out;

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=6&dy=0&i=p52132118620&r=1751&.png

I showed the 20 wk FLD that Airedale showed a few days ago, I don't think the 40 wk FLD is around 1430s, I wouldn't think Airedale would've covered his short position in this case, I am sure. Although 40 wk FLD will reach to 1440 level in about 2 weeks, so the market has to rapidly rise in order to avoid crossing the 40wk FLD from here. If the market declines to mid 1430, it will trigger a 40 wk FLD within a week though. This would trigger a 120 points decline roughly to 1310!

Basically the sooner it penetrates to the 1400-1430 region, the faster a massive crash risk is increasing...

- kisa

Edited by kisacik, 01 August 2007 - 12:18 AM.

[kaiser soze]

Kisa, You've been harping on the character of the market changing and I agree. Its a new class of sellers. I think they are arbitrageurs and they are not too technically oriented. They dont wait for prices to neatly hit the upper bollinger bands before beginning a new wave of selling. Take LEH for instance. Has a significant convertible bond offering. Bonds have gone down since the credit rating of all brokers have been downgraded. Arbs buy the convertible bond which is now cheap and short-sell the stock at no risk. This drives the equity prices lower. Looking at the equities prices heading lower, the ratings agencies further downgrade the credit of the firms. Another cycle of buying the bond and selling the stock begins and a vicious cycle takes hold. I have some indicators that are telling me this is happening now. Best trading to you, KS

[Echo]

Kisa, In my post, I'm pretty sure that I said that the fld would be in the 1435 area by late this week, which it will be by tomorrow if you use a 96 day offset. Keep in mind that on stockcharts, you are looking at closing price offsets and not midpoint offsets as in Hurst methodology. Bought an initial position in SSO late Wed afternoon at 86.40 Let's see if it holds. Echo Also, stockcharts offsets are for actual trading days excluding holidays, while barcharts (and Hurst) includes weekday holidays. Airedale also believes in including weekday holidays.