Uptrend's Account Talk

[Uptrend]

Birchtree. Thanks for your comment, but I note you are still behind me on the tracker. Everyone knows this is a suckers rally that is not supported by fundamentals. It is more supported by greed and deceit. But as we all know only price pays. We all have different levels of risk tolerance, and ways of viewing what is going on in the markets. Some prosper for a time by dumb luck, but we know that cannot sustain. That is why I have tried to learn (still a student) the technicals to have a chance against the bear. I suppose my downfall is not being patient and lettling the market trend run (selling too early) even when viewed scientifically to be very illogical.

Anyway, I see a high risk trade that I am considering for tomorrow. See chart.

View attachment 6343

The major uptrend line off the March lows broke recently, and the market tested near spx 877 before reversing upwards. Today we broke and closed above the major downtrend line of the last few months. It now appears we will backtest the broken trendline at about spx 943. That is coming in close to the 200 day sma. Tagging this level is a good probability because broken trendlines often backtest the failed level. Also in past bear markets (and in individual securities) often run away from the 200 day sma when touched for the first time from the underside. The market is still rising on low volume (which is a concern -few buyers), but on the other hand is an advantage, because low volume often causes markets to float up. And with the holiday in sight, low volume will continue this week. That is a smile, and all plays into this extra push. You can clearly see why I would not be a buyer until the major downtrend line was closed above. This support is very important and should be a base tomorrow, where I expect indecision and consolidation for a day or two before a push higher. The market should get above the previous high of spx 930 on the way to at least spx 943. The market seems to be building an inverse head and shoulder, and if there were a break-out in the coming days the market would go to the moon. A possible scenario is inflation really picking up, where assets are priced higher because of the rapidly declining value of the US dollar. This is a very real possibility, with all the dollars uncle Fed has been pumping in to the economy lately. So on paper your account will look great, but have little additional purchasing power.

For Tuesady May 19, I am planning on entering the market for this trade, estimated to yield to be between 4-5%. Good luck to all.

 

[Uptrend]

Passing on the possible entry today. I would like to see the market come back and test spx 901. Also, the housing starts for April should be weighing on the market. Home Depot down. Lowes was up yesterday, (even though down 22% for the Q1) selling garden rakes and potted plants? Gold defensive plays are doing well. TSP should have a precious metals ETF.

 

[JTH]

Lowes was up yesterday, (even though down 22% for the Q1) selling garden rakes and potted plants?

Yes the Lowes story is a sham. Contractor business is probably down, while homeowner sales are up. Cheap folks like me are spending money fixing the homes we have and not looking for new ones.

 

[Uptrend]

What to expect next for a market re-test

"• The average length of the testing phase is 53 calendar days and 38 business days (versus 45 calendar days and 33 business days for the interim bear market rallies).
• On average, the S&P 500 undergoes a correction of more than 20%.
• The sectors that led during the rally, corrected most during the selloff. This means that financials, consumer discretionary, materials and industrials should underperform in the next few months, while health care, consumer staples, utilities and telecom services should emerge as the leaders.
• Market volatility more than doubles, on average.
• Bonds rally, with the 10-year Treasury note yield down nearly 15 basis points, on average.
• The flight-to-safety during these periods means that the Canadian dollar declines (on average by 10%), while the trade-weighed U.S. dollar rallies more than 6%.
• Commodity prices decline an average of 15%, again as cyclical trades unwind."

http://www.businessinsider.com/davi...ly-is-finished-here-comes-the-leg-down-2009-5

 

[Uptrend]

Keen Observation from David Rosenburg:

"The fact that the best performing stocks were the ones with the lowest quality ratings and with the largest short interest says a lot about the nature of this rally as well — the 50 heaviest shorted stocks tripled the advance among the 50 least shorted stocks — that its sustainability is in doubt. In other words, this was a rally built largely on short covering, pension fund rebalancing and the emergence of hope wrapped up in ‘green shoot’ data points."

http://www.businessinsider.com/davi...ly-is-finished-here-comes-the-leg-down-2009-5

 

[Bullitt]

I highly doubt that anybody but retail investors even considered the term 'green shoots' in their investment decisions. Anybody who bought because Bernanke used the term 'Green Shoots' is an idiot.

Oh well, I give this analyst some credit for sticking his neck out because there's a shortage of US dollar bulls out there.

 

[DCguy]

Bill Gross, the co-chief investment officer of bond giant Pacific Investment Management Co., said market fears that the U.S. is at risk of losing its AAA credit rating is sending the U.S. dollar, stocks and bonds under severe selling pressure on Thursday.
Asked what is driving the market declines, Gross told Reuters via email that investors fear the U.S. is "going the way of the U.K. -- losing AAA rating which affects all financial assets and the dollar."
Thursday, Standard & Poor's lowered its outlook on Britain to "negative" from "stable," threatening the nation's top AAA rating. Britain faces a one in three chance of a ratings cut as debt approaches 100 percent of gross domestic product.
European shares fell, weighed down by banks and commodities, as S&P's potential UK credit cut added to worries sparked by news on Wednesday that Federal Reserve policy-makers had cut their U.S. growth forecasts over the next three years.
The pan-European FTSEurofirst 300 (^FTEU3 - News) index of top shares fell 2.1 percent to 857.52 points, breaking five successive sessions of gains.
U.S. equities were down as well. The Dow Jones industrial average (DJI:^DJI - News) was down 182.55 points, or 2.17 percent, at 8,239.49. The Standard & Poor's 500 Index (^SPX - News) was down 21.26 points, or 2.35 percent, at 882.21. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 44.89 points, or 2.60 percent, at 1,682.95.
U.S. Treasury debt prices moved in sympathy with equities.
The benchmark 10-year U.S. Treasury note fell 47/32, with the yield at 3.3625 percent. The 2-year U.S. Treasury note dropped 2/32, with the yield at 0.8587 percent. The 30-year U.S. Treasury bond plunged 91/32, with the yield at 4.3106 percent.
In currencies, the dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index (^DXY - News) down 1.01 percent at 80.369 from a previous session close of 81.190.
The dollar extended losses against the yen on Thursday, dipping below 94 yen for the first time in two months.

If the US continues to print tarp money and borrow money from China to to save financial and auto industry, $ will be worthless. I think there's very good chance the F fund will tank this year.

 

[Uptrend]

Market Topping Pattern

"For the past three weeks the SPX weekly range has been between: 883-930, 879-919 and 880-925. When this type of consolidation has occurred during this bear market, after an uptrend, it has been a sign of an impending top."

http://caldaroew.spaces.live.com/

 

[Viva_La_Migra]

Market Topping Pattern

"For the past three weeks the SPX weekly range has been between: 883-930, 879-919 and 880-925. When this type of consolidation has occurred during this bear market, after an uptrend, it has been a sign of an impending top."

http://caldaroew.spaces.live.com/

So when will it drop and low will it go?

 

[Uptrend]

All bear markets retest. Individual stocks restest when they bottom. This is a cycle of human emotion put on a chart. The financials led the market up, and they will be weak during the retest. The banking index ($BKX) closed below the 20 day sma today which is bearish. Also the $BKX MACD (shows direction) flashed a downtrend about 5 trading days ago with a bearish cross. The market has been putting in lower highs, and now must put in lower lows. We are watching for the breakdown of the spx to close below 875 thus being a lower low. This should happen soon. Bear markets retest the lows, and a 20% correction is average. So the first initial target to unfold in a donwward stairstep fashon would be the spx 740 area by the end of July. There still is a possibility the market could go even lower, but nobody really knows for sure.

 

[Uptrend]

Running the printing press on overtime leads to problems. Next crisis.

http://www.youtube.com/watch?v=nehbiKzb9OM&NR=1

 

[Pschiffdicpal]

All bear markets retest. Individual stocks restest when they bottom. This is a cycle of human emotion put on a chart. The financials led the market up, and they will be weak during the retest. The banking index ($BKX) closed below the 20 day sma today which is bearish. Also the $BKX MACD (shows direction) flashed a downtrend about 5 trading days ago with a bearish cross. The market has been putting in lower highs, and now must put in lower lows. We are watching for the breakdown of the spx to close below 875 thus being a lower low. This should happen soon. Bear markets retest the lows, and a 20% correction is average. So the first initial target to unfold in a donwward stairstep fashon would be the spx 740 area by the end of July. There still is a possibility the market could go even lower, but nobody really knows for sure.

If it does go below 740 the bears are in control for the long term?

 

[Uptrend]

No After a retest the market will go higher. That assumes that spx 666 was the bottom. When the 50 sma crosses the 200 sma going upward the market will really take off and the bear market will be over. However, IMO the market will flounder around below that level for awhile. Americans debt load and gov debt load is too high. And dollar will be weak. I think financial and tech will eventually lead the market up. US has some of the highest levels of tech inovation and experience in the world. And with a weak dollar, US will be exporting tech stuff. Perhaps even a new generation of fuel efficient cars. But we are talking 5-6 years out. Meanwhile other countries like China and India will run away without US.

Next week, I am guessing downside, based on chart technicals. A further proof is that gold has been taking off lately to the upside, and the dollar has been falling. Gold and gold companies is a safe haven. Bonds should be a safe haven, but are not because fewer people are bidding on gov bond sales, so the Fed must raise yields which kills the price. And there is worry about US AAA credit rating. This is why I think the G fund and F fund will not be safe plays when deflation stops and hyper-inflation starts. For now the G fund is safe, but when inflation takes off, I think C and I will be the best bets. Asset revaluation will drive the market higher. If assets (like oil) go too high now, anticipating inflation to start, that speculation will help kill any speedy recovery. It is a tricky balance.

 

[Uptrend]

Dollar decline underway. In theory this should prop up the market, but that does not appear to be the case. Every technical I have looked at shows the market falling in the near term.

http://www.youtube.com/watch?v=B56DZoKAA2U

 

[Pschiffdicpal]

Big Pschiff Bull moves in a bear market, Gold and foreign markets will keep your spending power up and inflation (the hidden tax) to a minmum.

 

[Pschiffdicpal]

[SIZE=-1]Sep 3, 1988 - [/SIZE][SIZE=-1]... ''Over the near term, this should ease the recent downward pressure on both the US and Japanese stock markets.'' ... Weakness in the Japanese stock market, largely stemming from the yen's drop this week, had caused uneasiness on Wall Street earlier in the week. ... [/SIZE]

[SIZE=-1]From Dow Soars 52.28 Points, To 2,054.59 - Related web pages[/SIZE]
[SIZE=-1]select.nytimes.com/gst/abstract.html?res=FB0712F93F5F0C708CDDA00894D0484D81[/SIZE]

[SIZE=-1][/SIZE]
[SIZE=-1][/SIZE]
[SIZE=-1]1992[/SIZE][SIZE=-1]Aug 25, 1992 - [/SIZE][SIZE=-1]Global stock markets reacted to the collapsing dollar and higher US interest rates with a broad decline. Many investors are worried that the weak dollar is a harbinger of another recession in the United States, which could in turn drag down foreign economies. The dollar continued its ... [/SIZE]
[SIZE=-1]From Dollar's Fall-and Its Fallout Greenback's... ($$) - Related web pages[/SIZE]
[SIZE=-1]pqasb.pqarchiver.com/latimes/access/61613677.xml?dids=61613677:61613677&FMT=ABS&FMTS=ABS ...Dollar's...Weakness...Markets%3A...[/SIZE]


[SIZE=-1]Oct 5, 1992 - [/SIZE][SIZE=-1]In a see-saw session marked by frenzied trading, the stock market plunged in waves of selling Monday, only to recover in yo-yo fashion, ... The rapid selloff began as soon as the trading session opened, with analysts blaming steep drops on overseas markets, a weak dollar and nagging ... [/SIZE]
[SIZE=-1]From Stocks plunge, then rebound `Confidence is... ($$) - Related web pages[/SIZE]
[SIZE=-1]pqasb.pqarchiver.com/chicagotribune/access/24359163.xml?dids=24359163:24359163&FMT=ABS& FMTS=ABS:FT&type=current&date...Stocks...[/SIZE]


Fast forward MAY 2009 the dollor is dropping also

[SIZE=-1]2009[/SIZE][SIZE=-1]Apr 24, 2009 - [/SIZE][SIZE=-1]LONDON: Oil prices jumped above 51 dollars on Friday, winning support from the flagging dollar and rising stock markets, despite concerns about weak ... A weak US unit tends to boost demand because it makes dollar-priced crude cheaper for foreign buyers using stronger currencies. ... [/SIZE]

[SIZE=-1]From Oil prices rebound on weak dollar, strong equities - Related web pages[/SIZE]
[SIZE=-1]timesofindia.indiatimes.com/Business/Oil-prices-rebound-on-weak-dollar-strong-equities/articleshow/ 4442856.cms[/SIZE]


[SIZE=-1][/SIZE]

 

[Pschiffdicpal]

If the dollar keeps falling the FED WILL HAVE TO RAISE RATES.

[SIZE=-1]Jun 22, 1994 - [/SIZE][SIZE=-1]"I don't recall any time in the recent past where the Fed has tightened just because of a weak dollar," said Edward Yardeni, ... With the dollar falling and the price of oil and other commodities rising, "the markets have clearly told us" that the Fed must raise rates again to keep ... [/SIZE]
[SIZE=-1]From Dollar Slides To Postwar Low Against the Yen ($$) - Related web pages
[/SIZE][SIZE=-1]pqasb.pqarchiver.com/washingtonpost/access/72256493.xml?dids=72256493:72256493&FMT=ABS& FMTS=ABS:FT&type=current&date=Jun+22%2C...Dollar...To[/SIZE]

 

[Uptrend]

Good point! A weak dollar, will influence the credit markets as the FEd will need to raise rates. This will slow the recovery. Also commodities speculation with a declining dollar will drive prices higher and slow consumption of oil, and slow the recovery. This is happening now.

Since the US is measured against a basket of currencies, an unwinding in another country may save US, by making the dollar a safe haven. The concept is the best of the worst. US currency has history going for it, is still the worlds reserve currency, and trends in 6-8 year up/down cycles. We seem to be near the bottom of a cycle, so the currency may recover, if US can actually gorw.

http://www.marketoracle.co.uk/Article10853.html

 

[Pschiffdicpal]

thanks Uptrend, for the imput.... on how US dollar can move forward and remain stable to a point. This unwinding ride will be interesting. The trending up and down of the markets looks to me to be a short term trading play? For the fy 09 and 10

 

[Uptrend]

On the spx we have a decending triangle in play. Breakdown is at spx 878. In the past few weeks the markets have put in a spx 930 high, then 924 high and then 910 today. Volume today had no conviction. We shall see if this is the lower high or we get a lower high up around 920. I am expecting a breakdown below 878 within a week.

For the next 2 months, I see sideways to down trading. IMO a head and shoulders pattern is forming, but we need to test in the mid-700's first, based on prior patterns. The right shoulder should take about 2 months to form.