29 replies to this topic

[NAV]

All the following thoughts have nothing to do with what the market will do in the next few hours or days. The market remains in a very whippy zone ST.

I spent a few hours looking at various e-wave possibilities (IT and LT), wave channelling, weekly and monthly momentum, the A/D line etc. The massive intermediate term congestion pattern will resolve to the upside. I am not saying "may" here. I am saying "will". 11/26 was the IT bottom and i posted about my IT buy signal here.

http://nav-ta.blogsp...-it-bottom.html





My bull market momentum indicator is also reaching a level that has marked major IT bottoms in the past. What is most interesting here on that indicator is that SPX is making a series of higher bottoms since August, while the momentum is rolling down in a series lower lows. That's a classic reverse divergence setup. We acheived the trip to zero line on that indicator without causing any technical damage on the LT charts. What a beauty !. You gotta love TA.

The amount of time consumed by this consolidation attests to the magnitude of ugliness to come on the upside. During the last 4 years, there has never been a period during which the market has been pounded with so much of bad news. This time the bad news have been real and not perceived. The market's resilience in absorbing all this bad news and yet going sideways and not breaking down, also attests to the strength of the bull market and is saying in subtle terms that the bull market ain't complete yet !.

This time ain't gonna be different. The bull is not going to end without Euphoria. Last year, we saw huge number of bear sites and blogs which were closed down after the upside blast. 2008 will be worse. There will be massive capitulation, by the time this is all said and done. Bear market seems the most easy and obvious choice here. When was the last time the entire planet predicted a recession ? When was the last time the entire planet predicted a bear market ? When was the last time the barbers and the dentists got defensive at the bull market tops ? Before the bear hits, there's fours years of inventory to be unloaded on the mass. They will accomplish it, as they always do, with a near vertical rally. The market is lulling everyone into a state of beleif that this volatility is perpetual. One of these days, the market will take off and never look back. It's comiiiiing !!


As for the housing problems and the wall of worry, i wrote this in my blog, in 2006

Bull markets do not begin when the economy is in a state of utopia. It needs that constant wall of worry, to keep the majority from participating. I think the housing market decline over the next few years from the mania top of 2005 will provide fresh fodder for the bears to worry and the wall of worry for the bull market to climb.

http://nav-ta.blogsp...24_archive.html


The subprime news has been digested, assimilated and excreted by the market. If anything, it will be a great wall of worry to climb going forward.TWT.

I know a lot of folks hate me here for being a bull. But it's the grand irony of our times that bulls are hated in a bull market. Feel free to disagree with me. But no hate mails please !

Happy holidays to all. Will see you folks in 2008.

Edited by NAV, 15 December 2007 - 06:02 AM.

[NAV]

What will prove me wrong ? Since the whole argument is based my momentum indicator and e-wave analysis, a break below zero line on that LT indicator accompanied by a price break below Aug lows means that the BULL is done. Obviously that is not what i am expecting and that is not what the weight of the evidence is suggesting at this point.

Edited by NAV, 15 December 2007 - 06:19 AM.

[endisnear]

What will prove me wrong ? Since the whole argument is based my momentum indicator and e-wave analysis, a break below zero line on that LT indicator accompanied by a price break below Aug lows means that the BULL is done. Obviously that is not what i am expecting and that is not what the weight of the evidence is suggesting at this point.

NAV,
I wholeheartedly believe that the entire world could fall apart while the mkt keeps advancing. However, you and others mention the worry about the credit mkts and subprime as if it is a single one time event that worries the masses.. Of course it is not. It is ongoing and will last for years, getting worse as time goes on. I sold these loans and I'm very aware of the outright fraud that was done. I believe it is much worse than the media portrays.

[NAV]

What will prove me wrong ? Since the whole argument is based my momentum indicator and e-wave analysis, a break below zero line on that LT indicator accompanied by a price break below Aug lows means that the BULL is done. Obviously that is not what i am expecting and that is not what the weight of the evidence is suggesting at this point.

NAV,
I wholeheartedly believe that the entire world could fall apart while the mkt keeps advancing. However, you and others mention the worry about the credit mkts and subprime as if it is a single one time event that worries the masses.. Of course it is not. It is ongoing and will last for years, getting worse as time goes on. I sold these loans and I'm very aware of the outright fraud that was done. I believe it is much worse than the media portrays.

I am not disagreeing with you at all. Nor am i making light of the subprime situation/mess. I am saying that's another wall of worry that this bull will climb.

[CLK]

Something out of the ordinary is definitely happening.

[ogm]

What will prove me wrong ? Since the whole argument is based my momentum indicator and e-wave analysis, a break below zero line on that LT indicator accompanied by a price break below Aug lows means that the BULL is done. Obviously that is not what i am expecting and that is not what the weight of the evidence is suggesting at this point.

Nav, your momentum indicator will prove you wrong. Look at MACD, it has turend back down. It hasn't happened on any previous ocasion on the weekly chart since 2003. Not on any previous bottom of the past 4 years MACD looked like this. Zoom in a little.

I'll post a bunch of SPX charts in a min. This thing has FAILURE written all over it.

Edited by ogm, 15 December 2007 - 07:21 AM.

[eminimee]

Nav, big picture...you have no argument from me ..... I do believe once this 6 month (or longer) consolidation pattern finishes...we will be coming out of it strongly to the upside.

Having said that....I agree...we can not take out the Aug low. In fact I wouldn't want to see OEX lose 640 on a daily close... If that were to happen and the 233ema of nyupv divided by total volume indicator (third chart) loses support where previous bottoms have occured. ....we are done. I've drawn a possible double bottom at 640 scenario on there...for kicks.

http://stockcharts.com/c-sc/sc?s=$OEX:$SPX&p=M&st=1992-01-01&i=p80505712060&a=122076531&r=3411.png

http://stockcharts.com/c-sc/sc?s=$NDX:$SPX&p=M&st=1994-01-01&i=p48014261366&a=122076024&r=6470.png

http://stockcharts.com/c-sc/sc?s=$OEX&p=D&yr=8&mn=6&dy=0&i=p35496465046&a=124626876&r=9497.png

Edited by Teaparty, 15 December 2007 - 08:23 AM.

[Tor]

I hope you are right NAV. As you know I have been clinging onto the rampant bullish call into 2008. I have seen this hindered but not broken yet.

[TMN]

NAV, as much as i would like to agree with you when youy say "they will achieve to unload... etc" fact is that banks have not. as for the euphoria, this was a housing, finance and energy led bull mkt and i can report: 1) housing: crazy euphoria in the US, UK, Spain, Ireland, Greece, the whole of Eastern Europe and plenty more. As we know, everyone and their mum wanted to "get on the ladder". 2) finance: originate & distribute, structured products galore, derivatives derivatives and more derivatives and in the end everyone is "insured" with everyone. this can be called northing else but euphoria. only in germany EUR 200bn of structured products sold to RETAIL!! check on the BIS report and u will see that this is actually still going on. although rumour has it that suddenly banks, of which u wudn't expect it, have stopped making mkts in very much standard first generation vanilla options... we will see who that is about in the future... 3) energy: dunno how many "oil $100" books have been written recently but there are many... to sum it up, the banks took a larger bite than they cud swallow and they have at this moment, excl the SIV related stuff, around 550bn $ worth of unsold deals in their books. congrats! of course they are still trying to sell the BRIC story, the decoupling story, the commodities story etc...every trick in the book is good enuf in order to lure people in. wasn't it the same in 2000-2001 where a lot of people bought into a falling mkt just to find themselves holding the bag?

[nicolasillo]

Well written, couldn t agree more with you Maxter.