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Wedgies! At Least They're Not Swirlies ..... Wait That Comes Next

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11

December 17, 2009 – Comments (12)

I was showing in my Tuesday Post Cabin Boy the sideways wedge breakout on the SPX (actually the chart was SPY) and remarking that a similar pattern was in play on the HSI, with breakdowns already occurring on the HSI.

12 Comments – Post Your Own

#1) On December 17, 2009 at 12:57 PM, binve (< 20) wrote:

Here are my charts and notes from Tuesday:

I was just taking a look at my trendline chart and the large wedge since the bottom has been broken. But the break sideways itself is forming another wedge



Large wedge break sideways into another wedge .... hmmmm, that seems familiar. Where have I seen that before? .... oh yeah!, here it is :



Boy that's a pretty chart. That doesn't look at all unhealthy or doesn't make me want to vomit all over my desk. A chart like that makes me want to go long with lots of margin. I can sleep well at night knowing I'm invested in a chart like that.

Am I serious? No!! it's called "Acting!!!"

Good luck buying all those dips.


Well, that was so much fun, I decided to throw in a few more :)





So for those of you who believe that the large wedges were fake, and that the proof is that we didn't have a violent breakdown: observe that the next formation is itself a wedge.

.... And if middle school memories serve me correctly, Swirlies come after Wedgies. Down, down, down into the toilet

(binv quietly sobs at his keyboard confronting repressed memories of the US public school system)

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#2) On December 17, 2009 at 1:30 PM, leohaas (31.85) wrote:

As usual, your work looks amazingly impressive. Wow!

But considering that you have been bearish throughout the whole rally, I really wonder how valuable your analysis is. Maybe it is time to pull a George Costanza-like 'opposite'?

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#3) On December 17, 2009 at 1:48 PM, binve (< 20) wrote:

leohaas,

Thanks ... sort of :)

But considering that you have been bearish throughout the whole rally

This is not strictly true. I have been bearish too early, but I have cut my losses and gone long:

See this post Market Thoughts and Analysis: Ready for A "Crash"? ... Not Yet - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=235129 and I have other examples where I have played this rally from the long side on my other blog.

And we discussed this very same issue previously: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=192777 see your comment #69 and my response comment #70.

I really wonder how valuable your analysis is

My analysis is worth precisely what you paid to read it :). Whether you choose to follow it, do the opposite, or ignore it is immaterial. I am sharing my thoughts and opinions, nothing more or less. I am not trying to convince anybody of anything and I have nothing to sell

Maybe it is time to pull a George Costanza-like 'opposite'?

LOL! perhaps :)

I have no problems admitting my mistakes and bad calls. I have done so publically many times. Such as here: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=312362#comment312379.

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#4) On December 17, 2009 at 1:53 PM, binve (< 20) wrote:

But the point is, I have always maintained with was a large cyclical bear market rally in a overall larger secular bear market. And I think the cyclical trends (bullish) is almost done. The Long View.

For what that's worth. And since it comes from mean, it means precisely zero ... :)

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#5) On December 17, 2009 at 2:42 PM, leohaas (31.85) wrote:

Just tried to pull your leg. Could not resist. Will probably do it again. Or not...

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#6) On December 17, 2009 at 2:54 PM, russiangambit (29.12) wrote:

This prolonged going nowhere reminds me summer of 2008. I am not saying it will end to downside to the same degree. Most likely it won't without any unexpected shocks. But the overall environment  is very similar.  Sort of a listless, directionless market with 50-50 split as to where it will go next.

I am actually very surprised how well the market is taking USD rebound so far. I would've expected more of a violent reversal of a carry trade because the assumption was that it was on high leverage. Either there wasn't much of a carry trade or nobody is taking USD reversal seriously yet.

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#7) On December 17, 2009 at 2:58 PM, binve (< 20) wrote:

leohaas, No worries then :) My ego isn't that large. I am quick to admit when I make a mistake (which is so often it is actually a habit now :) ). And I am very happy to use self-deprecating humor, as per the last 2 paragraphs in comment #1 :)

But I get people who become very combative with me over my posts, even though I have stressed over and over that I am just sharing opinions and observations, not giving advice. Some of my obsevations will turn out to be valid and some won't. Just part of the game.

Pick a direction in the market based on current sentiment, be mindful of the macroeconomic situation, and trade the waves as best you can. For the short term: Get out of a postion when things go against you and never forget to take profit. For the long term: understand the macroeconomics, determine for yourself if you believe the economy is sound or not, and put your hedges in place.

That's the best anybody can do.

Thanks for your comment man :).

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#8) On December 17, 2009 at 3:04 PM, binve (< 20) wrote:

russiangambit,

Hey man! Did you see my reply to you on my other post?: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=313536

I agree. Very listless. Momemtum is stalling and rounding off. See my DAX chart above on the MACD. This is also happening all over the place

I am actually very surprised how well the market is taking USD rebound so far. I would've expected more of a violent reversal of a carry trade because the assumption was that it was on high leverage. Either there wasn't much of a carry trade or nobody is taking USD reversal seriously yet.

Exactly. I think it will be unwinding in an unorderly fashion in the not too distrant future. Here is my take on that from a post that I wrote this morning I'll Bring Home the Turkey If You Bring Home the Bacon

So even though I have no preferred count at this point, and will not until we break out of this range, here is an update on the 3 most likely counts in my mind.

No favorites, just 3 possibilities out of a multitude of others.

But why am I focused on these as opposed to a count that shows either we already topped (ended P2) or a wildly bullish count?

Because the Dollar has broken trend. It is in rally mode and will rally for the next 4-6 months (past that I differ substantially with the long term Dollar bulls). But this is an important trend change. I find it very difficult to believe that the market will be able to maintain its rally mode in the face of this. However nothing goes up and down in a straight line, and the current rally in the dollar needs a correction. It is working on a 1 and needs a 2 pullback. The stock market will likely rally, albeit anemically, during the next short Dollar correction. But beyond that is wave 3 (Minor Degree) up for the Dollar and the market will quite likely react very negatively to this. And we must not forget the end of year rally. Erik has a well-thought out post for the reason behind the traditional December rally: USD trend change: When will it start dragging down the market?.

So that is why I am focused on this count variant: Either current consolidation or perhaps a pullback followed by one more technically weak higher high for the broad US equity market
.

Thanks for the comment!.

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#9) On December 17, 2009 at 4:35 PM, leohaas (31.85) wrote:

Now I am confused. russiangambit (one of the prolific gloom-and-doomers here on CAPS) now talks about the market being directionless, and sees a "50-50 split as to where it will go next".

And then binve, who wrote this blog to reannounce that the market is about to drop agrees with the directionless market comment. So which is it? Directionless for now, down long-term?

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#10) On December 17, 2009 at 4:53 PM, binve (< 20) wrote:

leohaas,

Here is my take: We have been in a trading range for about a months now. So for the short term (now to the end of the year) I am expecting choppy action that will drift higher: I'll Bring Home the Turkey If You Bring Home the Bacon.

My thoughts / targets: 1120-1150 to the last week Dec / first week of January.

I put a post together in November that was suggesting how the end of the current bull market / resumption of the bear market might play out Projections, In the Corner of My Mind. Read the whole post, but the chart where I lay things out is the 4th one down.

This actually still fits with what I wrote back in August: The Long View.

If you take a look at this chart I put together in August:

The prediction was for a rally to about 1100 to the end of the year. 1100 I think will turn out to be a little low, but not bad for a prediction made 4 months ago.

But yes, I think January marks the resumption of the bear market.

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#11) On December 17, 2009 at 6:16 PM, binve (< 20) wrote:

Here is a good Steve Meyers video on Jesses Cafe Americain: http://jessescrossroadscafe.blogspot.com/2009/12/steve-meyers-market-outlook-and.html

His outlook is very similar to my own. You might find this video useful .... or not :) 

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#12) On December 17, 2009 at 8:43 PM, russiangambit (29.12) wrote:

> Now I am confused. russiangambit (one of the prolific gloom-and-doomers here on CAPS) now talks about the market being directionless, and sees a "50-50 split as to where it will go next".

Just to clarify, 50-50 split is between people who think the market will go up or down. I personally don't have a clear idea. I think the higher probability is down  unless government comes up with another stimulus. Just last week we got two stimulus packages voted on in the House.

I really have no idea why people think I am gloom& doom. I've seen gloom&doom already and I have no desire to revisit it, though it doesn't really scare me either. I think of myself as somebody with common sense and good analytical skills. Not being raised in the US helps a lot with not making assumptions and not taking things for granted.

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