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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
texas4qld
post Posted: Mar 30 2004, 07:23 AM
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IN REPLY TO A POST BY numlok, Mon 29/03/04 12:20am

((Well, ya sure does have sum fancy gizmoes ta play with boy, for a non-pro trader that is ...))

The last time I read the explaination of a "PRO" it was "someone that does their job for a living, full time".
If I can purchase a few "gizmoes" that helps me towards that goal then all the better wink.gif
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((I should have stuck with my initial instincts - your avitar may have changed, but you're still a prickly piece of works.))

Don't judge a book by it's cover blink.gif


Tox !






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The above comments are just my opinions, do your own research before deciding to buy or sell.
 
The_Muns
post Posted: Mar 30 2004, 01:52 AM
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Great post,

My exit sign is when the Greenspan puts up interest rates.

Which in the current climate, looks like dropping IMOH.

With Germany calling for a drop in EU rates, Japan currency exchange rate issue ?????

Have Fun smile.gif



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The_Muns

People who follow me are bigger fools than I.
 
s4rx7
post Posted: Mar 29 2004, 07:42 AM
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Phew!
March 27, 2004
There is nothing quite like a sudden blast higher to get the Bear off your back (at least for a couple of days, anyway). With confidence beginning to get more than a little shaky, the Dow?s gain of 170 points on Thursday was a welcome sigh of relief. It reminded us that stocks can actually do something besides go down, and that investing may involve more than looking for the Advil after the close. With some of the overbought/oversold indicators hitting readings that we haven?t seen for years, it was obvious to everyone that the market was very oversold and ready for some sort of rally attempt. The problem was that the rallies prior to Thursday had been feeble and the momentum had clearly swung to the dark side.

So it really didn?t matter what excuse the Press gave for the rally, the point was we were due for a pause in the Bear?s game of tag your portfolio. In reality, it was the combination of a little bargain hunting in tech, some decent economic news, a respite from the terror watch, and the realization that earnings will be pretty good, that sent shorts running to lock in profits. And before you could say, ?short squeeze? stocks were flying higher on Thursday. Not surprisingly, the leaders of the mad dash higher were some of our dear old friends in the Tech sector.

And speaking of Tech, just when we were beginning to think that the Four Horsemen would never ever see a green number again, Microsoft, Dell, Intel, and Cisco enjoyed a surge higher. Frankly, the rise doesn?t change the trend of late for these darling duds, but it was nice to see some gains for a change this week. And maybe, just maybe, we are starting to see some basing going on here ? especially in Dell and Cisco. If we could get some interest in these stocks beyond the one-day wonder rallies, the market could definitely enjoy a run here.

But before we get too excited, let?s recognize this action for what it is right now? a bounce. Just as we have counseled not to get sucked into all the talk of a new Bear Market, we must now recognize that one day does not a trend reversal make. Especially when the bounce occurs on less-than inspiring volume. Yes, the volume was ?decent? but it was not the kind of thrust we need to qualify Thursday as a reversal day. This tells us that the bounce was, well? a bounce.


Does This Really Mean Anything?
In one morning?s work, the market recovered 25% of the recent decline. Friday?s attempt to ?follow through? (which fizzled at the close) looked like it wanted to prove Mr. Fibonacci knew what he was talking about centuries ago, as we quickly approached the 38.2% retracement level (which, by the way, would be a convenient spot for the Bears to reenter the game). This was certainly enjoyable, but the question is ? does it mean anything? The answer is, of course, yes, and no. (Did you REALLY expect a different answer?)

Let?s explore both sides of the coin here. No ? the brief rally doesn?t mean a whole lot yet because the downtrend that is in place on most of the averages has not been reversed by the relief rally. While the blast higher did plunk the Midcap and Russell indices back into their previous trading ranges, the jury is still out on whether they can stay there over the next week. (But the longer they can stay above the old ?floor? of the range, the better.)

However, the S&P, NASDAQ, and Dow remain in a downtrend and need some additional upside work to break out of the downward spiral of lower highs and lower lows. I don?t want to sound fussy, but a little volume when this move occurs would be nice.

On the other hand?Yes ? the bounce DOES change things a bit? it means that we are now taking a shot at ?putting in? a bottom. While the move higher didn?t have enough ?oomph? to reverse the downtrend, it did make the statement that the Bulls aren?t afraid to try and make a stand. And there you have it; the game is on!

But ? after their profitable three-week run, don?t expect the Bears to just roll over and go back into hibernation. I may be restating the obvious, but we shouldn?t be looking for the market to ?V Bottom? and immediately resume its march higher. The fact is that the strong momentum we saw at the end of last year is no longer present. We should also expect a ?retest? (at least on an intraday basis) of the lows at some point soon. And this will be where Ms. Market may tip her hand. The bulls will be looking / hoping for a reversal with some volume after this inevitable move lower ? which would be a positive sign.

In all likelihood, we should expect the battle for the bottom to be spirited. In other words, don?t expect the recent volatility to go away quickly. (Although, if I had my druthers, I?d prefer to see a period of ?quiet? trading on low volume, which would indicate the market was sold out.) We also need to remember that the decline did some damage, which means the bottoming process could take a while.


Where?s the Bottom?
We?ll Know it When We See It
I could go on for cyber-pages about the different ways a bottom could potentially play itself out. This would definitely allow me to crow about being right at some point in the future, but frankly, it would be really boring and I?m not sure how it would benefit anyone. And since I really didn?t set out to write a textbook, let?s instead go another route with the question of where the bottom is? Let?s admit that no one can predict with any consistency, when, or where, a bottom will occur. However, we do know what to look for and thus, we like our odds of being able to identify the bottom reasonably quickly when it occurs. (And we?ll be sure to let you know.)


The Mini Bull?s Demise?
The same approach also goes for the end of the current Mini Bull cycle. As I?ve stated several times in the last two weeks, we don?t believe it?s time to start looking for cemetery plots for our friend "mini Bull." But the cold, hard reality is we will have to say goodbye to the cycle at some point. And thus, the really important question that we will most likely have to deal with at some point over the next year is: how will we know when the cycle is ending?

Having been in the investment business since 1980, I?ve seen a lot of cycles come and go. And one thing that I can say with absolute certainty is that the beginning and end of every one is different. The conditions that exist can be similar, but how things unfold is usually pretty unique. (I?ll spare you all the supporting data on this point? it?s also not really that interesting.)

We can tell you that the average Mini Bull lasts a little over 14 months (431 days to be exact) while the median is right at one year. We can also say that the average gain for Mini Bulls is about 62% for the Dow Jones Industrials, while the median is a bit lower at 50.6%. Given that, in our opinion, the Mini Bull began last March, (or in October of 2002) we could start guessing that this cycle ?should? be ending in the next few months. However, this bull has been quite strong in terms of its momentum, and thus, we?d expect it to wind up being classified in the above average category. For those of you keeping score at home, if you mark the beginning of the Bull as the low of the Bear, then this cycle is now 17 months old and has moved the Dow up +47.4% from the bottom. While this may be statistically preferrable, we believe the Bull began in March of last year and thus has recently had a birthday to go along with a gain of +42.7% for the Dow, +44.6% for the S&P 500, and +69.4% for our buddies on the NASDAQ.

Back to the quesion of how we will be able to tell when this "mini Bull" will get chased away by, what we hope will be, a "mini Bear." At this point, long time readers will recognize that this is a loaded question, because we don?t spend much time at all guessing when, or how, things may, or may not, happen. As we?ve said about a million times before, we like to stay ?in-line? with what IS happening ? because you never ever win an argument with Ms. Market.

The point is that our models have an excellent record of being able to identify the ?big picture? environment. And we are confident that they will help us know when the ?Big Picture? is about to change colors. How can we be so sure? As my lawyers like me to say, while there are no guarantees in the investing business, and past performance is not a guarantee of future results, the bottom line is that the record is on our side. For example, during the last Bull Market cycle, our models told us that the Bull was strong (which was correct). They told us that the Bubble Bull?s leadership was getting very narrow and risk was high in late 1999 (right again). They told us that momentum peaked long before the last Bull Market did (check). They told us to get out of tech in April of 2000 (double check, with an exclamation point). They told us to avoid ?growth? during much of the Bear Market (another good move). They told us to take defensive measures during the vast majority of the grizzly?s reign (this helped us avoid a lot of pain). They told us to buy bonds (right again - but did we listen?) They told us to ?Buy? in March and April of 2003 (Dead on, but scary). And the models told us to focus on small caps last year (small caps were the leaders in '03).


So What are the Models Telling Us Now?
As we?ve laid out over the past two weeks, our models say that the current decline is a correction in an ongoing (but aging) Mini Bull Market. They are telling us that the correction has taken its toll on the ?environment? and that a lower risk profile is warranted going forward. The models are telling us to stay focused on Midcaps for now (but they may give Large Caps the nod on April 1st). They clearly tell us that Value is the style to use at this point in the cycle. The models tell us that Momentum has fallen off a bit, but is still pretty darn good for a corrective phase. They say that we should underweight bonds in our portfolio. The models are telling us that we should be between 70% and 80% invested right now. They say that stocks are still overvalued on an absolute basis and cheap relative to the levels of interest rates. The models tell us the economy is improving. They say that interest rates (and inflation) are headed higher, but only mildly so. They told us that investors have become quite pessimistic in a very short period of time. Finally, they have been telling us to expect a bounce? and that the bounce may eventually become a tradable move higher.

Will the models be right all the time? Of course not! Keep in mind that we are investment strategists, not magicians. But they have proven over the years that they do a very good job of steering us in the right direction. So when you add everything up, the models are telling us that the environment is still positive, but not nearly as positive as it was at the beginning of the year.


Best wishes for a safe and successful week.

David D. Moenning



Positions in Stocks Mentioned: MSFT, INTC, DELL, and CSCO.




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Get Rich or Die Trying
 
numlok
post Posted: Mar 29 2004, 12:26 AM
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Sorry TEX,

I seem to have the same trouble that you have with monickers.

 
numlok
post Posted: Mar 29 2004, 12:20 AM
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Wot was that ya said thar Tex?

...
QUOTE
I'm using a triple screen feed and agree that this form of trading is not recommended for those using slow or data restricted systems. I've been making a kill employing these methods. Have a read of my last 20 trades.
...

I distinctly recall you stating on the How Can We Make ASXBOARD.COM Better For You Forum (your post: Tuesday, 02/03/04, 8:03am) that:

...
QUOTE
I am not a pro trader
...

Well, ya sure does have sum fancy gizmoes ta play with boy, for a non-pro trader that is ...

I should have stuck with my initial instincts - your avitar may have changed, but you're still a prickly piece of works.

Cheers Tox!

P.S. Thanks Oavde for your very helpful and informative contributions to the various ASXBOAORD forums on which you choose to post. From what I have read, you are an honest poster who genuinely tries to help members (eg: Pess on the PSD forum). Although you come across as a TA trader/investor, you also seem to have an open mind to other points of view.

 
texas4qld
post Posted: Mar 26 2004, 06:40 PM
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IN REPLY TO A POST BY Oavde, Fri 26/03/04 06:06pm

##NO NO NO NO NO that is not shorting that is trading long in extremely tight timeframes and is not recommended ... buy on support when a stock is trending UP, not buy on support when it is trending down##

Hi Ovade

Perhaps you should read my post again ?
I respect your views, but Selling on ANY rally is not trading long.
As far as time frames go, I'm using a triple screen feed and agree that this form of trading is not recommended for those using slow or data restricted systems.
I've been making a kill employing these methods.
Have a read of my last 20 trades.

Tex.




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The above comments are just my opinions, do your own research before deciding to buy or sell.
 

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Oavde
post Posted: Mar 26 2004, 06:06 PM
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IN REPLY TO A POST BY texas4qld, Fri 26/03/04 08:15am

yeah or you could trade CFD's ... contracts for difference ... prob. not available on those small caps you mention, but WHY trade small caps? you want big swings? trade derivitives like options and warrants and CFDs, on big companies, but with the big swings of the small caps.

anyway, those companies you mention should not be affected by bear markets, because if they are moving it is because something important is going on e.g discover oil, developing new tech. ... if anything they might be more tradeable on the long side during a bear market

texas, your description here

"By placing a low bid and selling on any rally, you are effectively betting that the stock will continue to go down..........hence you are shorting the stock, and making money on a downward trending chart."

NO NO NO NO NO that is not shorting that is trading long in extremely tight timeframes and is not recommended ... buy on support when a stock is trending UP, not buy on support when it is trending down



 
texas4qld
post Posted: Mar 26 2004, 01:36 PM
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IN REPLY TO A POST BY Hector, Fri 26/03/04 12:07pm

Cheers Hector, I'm still not experienced in that area, and don't want to tinker with those sort of options until I've done a few courses.
I can't see that happening in the near future, but thanks for the input.

Tex.



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The above comments are just my opinions, do your own research before deciding to buy or sell.
 
Hector
post Posted: Mar 26 2004, 12:07 PM
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IN REPLY TO A POST BY texas4qld, Fri 26/03/04 08:15am

Tex, have you considered CFD's to short stock such WOW which i noted you commenting on earlier? I started a thread on this topic over a month ago but received no replies. I think these could be the vehicle to trade if you have a view on a top 20 stock over a shortish period. Perfect for swing trading. Brokerage is $10 and on a margin of $10,000 you can trade $100,000 worth of stock. You can also go long or short the indices. Strategies such as shorting banks and going long resources in pairs trading could be a good strategy. Just a note to raise a comment. Perhaps others have had experience with these. I am a SPI trader and am investigating the benefits of CFD's over futures.
Regards
Hector



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When you least expect it, expect the unexpected....
 
texas4qld
post Posted: Mar 26 2004, 08:15 AM
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IN REPLY TO A POST BY Barrios, Fri 26/03/04 07:34am

The way to short a stock (that is not shortable) is to trade it defensively.

By placing a bid just below the resistance line, and selling it on ANY rally.
The stock needs to be liquid, so that you can get out with ease.
One example of a dead cat bounce chart is RRS from 16th of Feb 5.8c to todays date 3c.
Or MST from 60c on 29th of August to 41c on 17th of February.

By placing a low bid and selling on any rally, you are effectively betting that the stock will continue to go down..........hence you are shorting the stock, and making money on a downward trending chart.

The same method can be used on an upward trending stock such as AVV the only difference is the timing of your sell, because the trend is upwards to can choose to hold longer and only sell on extreme rallys that are not sustainable short term.

Tex.



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The above comments are just my opinions, do your own research before deciding to buy or sell.
 
 


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