22 replies to this topic

[NAV]

After some anlsysis post friday market close, i must conclude that a major bottom is in with about 80% odds ! Have stops in place for the rest 20%.

http://nav-ta.blogsp...ttom-is-in.html

[greenie]

I am reasonable confident that we are in bear market now. July 17th was the top.

[arbman]

Here's my simple observation and wonder, we had a market that was overly speculated only 3 weeks ago and now we have a market that's overly hedged for about 2 weeks. The truth was probably somewhere in between, but now we have the central banks also in panic, throwing gas to the fire! How come the market was so wrong since 2006 major low to climb higher on the bad debt? How come the market is so right to hedge so much at this low? How did the credit markets come basically to an halt with so little damage? None of these makes any sense to me. It is all the greed and fear within a 10% market gyration, there is always something. I guess it is better to turn off the TV and just follow the trading model... - kisa

[NAV]

I guess it is better to turn off the TV and just follow the trading model...

I agree 100%. Markets are all about greed and fear. It has got nothing to do with the dollar, bonds, credit. economy, blah...blah...blah. It took me 10 years to understand that. Not by discovering anything pathbreaking, but by observing, otherwise extremely smart people, many with economic and financial Phds, failing again and again. If anyone can explain market dynamics with an economic model, i will dare them to explain the brazil market going from 10000 to 60000 in 4 years. Those cuties from Rio have driven the valuations insane !

When folks are greedy, they beg, borrow, steal and spend. That drives up the asset values. There will be greedy bankers to accomodate the same demand. When folks are scared, they sell, borrow, steal to eke out an existence. The fearful bankers will shirk away from accomodating these folks demands for credit. That's why the stock market falls ahead of the economy. It's not because the stock market knew something about the economy. It's the stock market falling that's a manifestation of crowd fear, which will eventually curb borrowing/spending, which will drive the economy into a recession. The opposite transpires after a bust.

The economic problems that surface at the top of the bull markets are the proverbial wall of worry to climb. The economic problems that surface after a long bear markets are the genuine ones. So to predict the stock market, one needs to have a solid understanding of the stock market dynamics, the dynamics of fear and greed, a model to trade around it. Economic models are futile in predicting stock market dynamics. Anyone who disagrees with me, feel free to do so.

Edited by NAV, 11 August 2007 - 04:51 AM.

[NAV]

Fundamentals are good for nice discussions over the weekends with friends, with some good beer or wine. That's about it. I have made more money with wrong fundamental ideas, which validates my conclusion that fundamentals are useless Back in 2002, i was very bearish on real estate. Wifey forced me to buy some properties in India. I said "Are you nuts ? In the middle of this great bear market, cash is king. The fundamentals are horrible. The stock market has crashed. Real estate will follow sooner rather than later, just like the night follows the day. Real estate is one of the most riskiest asset that anyone should be owning at this junture. I am not gonna take the risk". Prechter was scaring folks of the impending disaster every other day. Like a moron, i use to read all those great economic discussions on longwaves.net (all those embarassing archives have now been removed from the internet) and i was convinced that the great economic disaster of the 20th century was around the corner. Greenspan finally forced my hand. I coudn't see my savings account earn .5% anymore. I threw in half my savings into real estate in India, hesitantly giving into my wife's pressure, with that broad macroeconomic disaster disturbing my sleep every other night. Those properties today have appreciated anywhere between 800-1000% ( That's right. Not 80% - 100%). I have sold some of them at obsence gains. Holding some, and ain't gonna lose sleep on any of those, anymore. My economic ideas were so right at that time, but doing the exact opposite was what made me big money. As mush as i would like to call myself a visionary, i can only call myself a failed economist. But my wife claims that she certainly saw this forthcoming, based on her gutfeel ( a.k.a greed) . So in the end, it's all about greed and fear.

Edited by NAV, 11 August 2007 - 05:33 AM.

[eminimee]

Nav..I tend to agree with you....I think we are looking at a double bottom with divergence. If lower...the weekly spx top channel has to be taken out...and if it is...then 1405 is next stop....that's my short term line in the sand. Forth chart just shows two counts for lower lows and we move south of that channel top...ABC or ABCDE.

http://stockcharts.com/c-sc/sc?s=$OEX&p=D&yr=2&mn=8&dy=0&i=p30596725455&a=104688425&r=978.png

http://stockcharts.com/c-sc/sc?s=$OEX&p=60&yr=0&mn=6&dy=8&i=p65012123784&a=107003689&r=7116.png

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=4&mn=0&dy=0&i=p97179082638&a=82806185&r=9353.png



http://stockcharts.com/c-sc/sc?s=$SPX&p=60&yr=0&mn=6&dy=27&i=p84781333250&a=93045759&r=9365.png

[NAV]

Another observation on the divergence. This whole panic is about financials and XLF did not even take out the Aug 6 lows, while DOW took it out. Something to chew on the weekend...

[Tor]

I agree with all you say NAV, and it makes for fascinating reading. I am a fund manager in the industy and the whole industry is structured and centred around the funnymental. The funnymentalists say the technical guys are a moving fest. The TA guys say funnymentals are a moving fest. I think of the 200 day ma being fundamentals. Ultimately fundamentals do drive markets, and that includes cash BUT it is very difficult to interpret them correctly. I do think some people can do it and hence get the direction of the 200 dma. There are right now quite strong cases for the bear market. There are also issues over a shrinking equity pool, higher incomes, asset wealth, risk aversion towards hedge and credit, so equities are the place to be. It is tricky to weight up these factors and come up with the correction conclusion. So I agree with you in the main, but I do think fundamentals drive the markets, as one componenet and you mentioned others, but they are difficult to read and interpret correctly. Thats my take anyway.

[NAV]

Tea, I love those two charts. Pitchfork on OEX and channel retest on SPX. Good eye !

[LarryT]

After some anlsysis post friday market close, i must conclude that a major bottom is in with about 80% odds ! Have stops in place for the rest 20%.

http://nav-ta.blogsp...ttom-is-in.html

Later today I will post a chart with my super cycle top count and where the wave two high has the highest odds of topping and where wave three 1.618 target is at. By the close 8-20-07 the market will reveal the truth and we will all find out if this is a major bottom or a wave one low. This may be the most important week for the markets since the previous 235 new moons ago in 1987.

Best,
Larry

Edited by LarryT, 11 August 2007 - 07:47 AM.