Posts Tagged ‘DJIA’

Tempting Tuesday – Weak Dollar Props Up the Markets

UUP WEEKLYWhenever the manipulators need to boost the markets, they just crash the Dollar.  

And what a dive we've had!  As you can see from Dave Fry's Chart, the Dollar is down 7% since last summer and down 2.5% this year and that keeps stocks and commodities 2.5% higher – because we buy them with Dollars.  

Keep in mind, at the same time you are buying IBM shares for $200, someone is buying the same shares for 20,400 Yen and another guy is buying them for 340 British Pounds and yet another guy is buying them for 280 Euros.  

It's obvious that, if the value of the Pound or the Yen or the Euro changes, the price of IBM in those currencies will change to reflect the currrency valuation but Americans tend not to realize the same thing happens when the Dollar gets stronger or weaker too.  Once you do realize this – you have a huge advantage in trading the Futures (and we have a Live Futures Workshop this afternoon at 1pm).

SPX WEEKLYThe Fed's easy-money policies keep the Dollar weak (because we're printing another Trillion of them each year and, in this economy, no one is using them – ie. no demand) and that has goosed the market by 7% since last summer, when the S&P was about 1,650 – about 10% lower than it is now.  

That means that 75% of the gains in the S&P since last summer have been the result of a weak currency and have noting to do with a "strong" economy.  Now THAT makes sense, doesn't it?

"THEY" had to tank the Dollar to get us over the 1,600 level, which was a very key technical off our consolidated bottom at 800 during the crash.  It's no coincidence that we were hitting resistance there in May and pulling back to 1,560 and looking weak in July when, suddenly, the Fed went into a new round of crazy, which led to 6 months of fairly steady value erosion for every single Dollar you have worked for and saved your entire life.  

It's kind…
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Prechter On Market Rally

Video (Part 1): Prechter On Market Rally

(Note: This interview was originally recorded on September 20, 2010)

In the two videos below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about extreme readings in various indicators that support his bear-market forecast.

 

Video (Part 2): Prechter: Ominous Pattern in the DJIA

Get Up to Speed on Robert Prechter’s Latest Perspective — Download this Special FREE Report Now.


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Put on Your Party Hats – It’s Time to Party for Another Decade!

Mish is a picture of optimism compared to Robert Prechter (of Elliott Wave Fame).  Robert Prechter is wrong, instead of dropping to 1,000, the Dow may only drop to 5,000, and even that may be too pessimistic in Mish’s eyes. - Ilene 

Put on Your Party Hats – It’s Time to Party for Another Decade!

Courtesy of Mish 

I don’t know about you but I am psyched. The prospects of an ongoing party for another decade are extremely good as the following chart shows.

Dow Jones Industrial Average – 1999 to Present 

click on chart for sharper image

Market participants put on their party hats and started cheering in 1999 when the DOW crossed 10,000 for the first time. They have been cheering pretty much nonstop ever since.

Admittedly there was a bit of a party lag between early 2005 and late 2008 but the party hats have been working overtime since mid-2008 as shown below.

Dow Jones Industrial Average – October 2010 to Present 

click on chart for sharper image

Lost Decades Comparison

Please bear in mind that some pessimists liken the above behavior to a period of stunning underperformance of the Japanese Nikkei Index over the last two decades.

Japan’s Two Lost Decades

click on chart for sharper image

The Perpetually Optimistic Mish

Being the ever-optimist that I am, I want to quickly point out that while Japan essentially went straight down over two decades, the US by comparison has put in stunning outperformance by going nowhere.

Top hat and champagne glass held aloft for New Year's

Indeed, the Dow Jones Index is remarkably sitting exactly where it was in April of 1999, over 10 years ago while the Nikkei over the same timeframe fell by about 50%.

Optimists such as myself have only one thing to say: Hallelujah!

Meanwhile doom and gloomers like Robert Prechter think the Dow will fall to 1,000.

To that I say "Poppycock" (pretty harsh language indeed for those who know me well).

By my optimistic comparison, I think the Dow’s downside is 5,000. That is a stunning 400% more optimistic appraisal of the current state of affairs than Prechter.

Furthermore, I freely admit that the DOW, instead of dropping, just may meander around 10,000 for another decade.

Wow. Except for public pension plan assumptions, imagine the parties we can have over that!

Mike "Mish" Shedlock


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DJIA’s 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

DJIA’s 200-Day Moving Average: Will the Dow stay above or below this demarcation line? 

By Elliott Wave International

Moving averages are one of the most widely followed indicator in technical analysis.  Simply put, when the price of an index or stock stays above a particular price moving average line on a chart, that price level serves as support -- a level where buyers reside. If the price falls below a moving average line and "can’t" break through from the underside, this price level is a line of resistance -- a price level where sellers hover.  That’s an easy explanation of moving averages for you.

A commonly watched line is the 200-day moving average.

After the DJIA fell below its 200-day moving average in May, prices remained mainly below the line until June 15, when the market rose 213 points. But, as this chart from Elliott Wave International’s June 16 Short Term Update shows, the NYSE volume has remained muted:

DJIA's 200-Day Moving Average: Will the Dow stay above or below this demarcation line?

"There was no follow-through today. More stocks closed down than up on the day on the NYSE, within the S&P 500 and also for the DJ Composite. Today’s Big Board volume was similarly slow relative to yesterday. …" -- Steven Hochberg, Short Term Update, June 16, 2010

With a lack of buying conviction, how long will the stock indexes remain above the 200-day moving average?

For the answer, you need to look at the DJIA’s Elliott wave structure. It strongly suggests the market will move in a definite direction in a matter of days or weeks.

****

Learn to integrate Elliott wave analysis with other technical disciplines. Read the FREE Ultimate Technical Analysis eBook to discover some of the favorite technical analysis methods used by the analysts at Elliott Wave International.  Learn more and download your free, 50-page technical analysis ebook here.

 


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Monthly Trade Set-Up

Monthly Trade Set-Up

Courtesy of Allan

Below is a monthly chart of the DJIA with the Monthly Trend Model and Elliott Wave analysis courtesy of Advanced GET:

 Advanced GET Mechanical SELL SIGNAL requirements [these four have already been met]: 

(1) Measured 4th wave;
(2) Oscillator back to zero line (bottom study);
(3) False bar stochastic Sell Signal;
(4) Break of trend regression channels.

What is missing, so far, is the Trend Model Sell Signal. But on a Monthly chart, this will always be a lagging indicator with way too much lag to be of any worth in trading. We have seen in the last two monthly bars how that Monthly Trend Line has attracted prices, but repelled them both times. Will the next time finally break the back of this last remaining vestige of the 2009 bull market?

I find it fascinating how this particular trade set up works on all time frames. I used it last week on an hourly chart that I sent out to subscribers that just nailed a mid-day reversal. Here today, we see how it applies to a much larger time frame. I have been using this trade set-up since 1995 and it works just as well now as it did the 20th Century. For our purposes, giving us an edge for the next few months will have to do.

******

Here’s Allan’s weekly chart which helps illustrate his point: the weekly chart has already signaled a sell; it takes longer for the monthly charts to change courses compared to the weekly charts. – Ilene 

Allan’s “Trend Following Trading Model” is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here.  For a more detailed introduction, read this introductory article.


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11 Commonplace Market Views: True or Myth?

11 Commonplace Market Views: True or Myth? 

Dragon breathing fire

By Susan C. Walker, courtesy of Elliott Wave International 

"Cash on the sidelines is bullish for stocks." Have you ever heard some stock market pundit utter these words? Have you ever wondered if the statement were true? Read this item from the latest issue of The Elliott Wave Financial Forecast, and you’ll wonder no longer:

Myth — Cash on the sidelines is bullish for stocks. This refrain rang like a gong all the way through the declines of 2000-2002 and 2007-2009. In February 2000, when mutual fund cash hit 4.2% (compared to 3.8% in November), The Elliott Wave Financial Forecast issued its “cash is king” advice. Once again, the word on the street is that there is way too much “cash on the sidelines” for stocks to fall precipitously. This chart shows net cash available to investors plotted beneath the DJIA. In December 2007, available net cash expanded to a new high, besting all extremes since at least 1992, a 15-year time span. Despite the presence of this mountain of cash, the DJIA lost more than half its entire value over the next 15 months. Indeed, as the chart shows, cash remained high right as the stock market entered the most intense part of the crash in 2008. Available cash does correlate with the market’s moves, but the market is in charge, not the cash.
--The Elliott Wave Financial Forecast, Jan. 29, 2010

 

Crashing Through The Cash 

 

Now take a look at these 10 statements and decide if they are true:

  1. Earnings drive stock prices.
  2. Small stocks are the place to be.
  3. Worry about inflation rather than deflation.
  4. It’s enough to simply beat the market.
  5. To do well investing, you have to diversify.
  6. The FDIC can protect depositors.
  7. It’s bullish when the market ignores bad news.
  8. Bubbles can unwind slowly.
  9. People can make money speculating.
  10. News and events drive the markets.

Bob Prechter and our other analysts have debunked each of these statements as a market myth. You can discover how we exposed these ideas as myths, and in turn make more informed decisions about your investing.

We’ve gathered the writings that expose these 10 statements as market myths in our 33-page eBook, called Market Myths Exposed. They come from two of our premier publications, The Elliott Wave Theorist and The Elliott Wave Financial Forecast, as well as two of our books, Prechter’s Perspective and The
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Why You Should Care About DJIA Priced in Gold

Why You Should Care About DJIA Priced in Gold
"The Real Dow" has proven to be a good leading indicator for nominal DJIA.

Courtesy of Vadim Pokhlebkin at EWI
 
The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial wisdom, download EWI’s free 118-page Independent Investor eBook.
 
————-
 
Of the many forward looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold — "the real money," as EWI’s president Robert Prechter calls it.
 
We’ve been tracking the Dow/Gold ratio for many years and it has served our subscribers well. It’s not a short-term timing tool, yet in the longer term, as our January 6 Short Term Update put it, "the nominal Dow eventually plays catch up to what is transpiring in the Dow/Gold ratio."
 
Here’s a good example. Remember when the nominal DJIA hit its all-time high? October 2007, just above 14,000. At that time, most investors expected new highs still to come. But our Elliott Wave Financial Forecast warned five months prior, in May 2007:
 
One key reason [for a coming top in the DJIA] is the undeniable bear market status of the Dow Jones Industrial Average in terms of gold, the Real Dow…
 
djia priced in gold
 
Notice, by contrast, the relative strength of the Real Dow versus the nominal Dow, the index in terms of dollars, from 1980 to 1982. By August 1982 when the Dow denominated in dollars bottomed, the Real Dow was rising strongly from its 1980 low… The nominal Dow soon played catch-up, and they both rallied more or less in sync until 1999.
 
Now, instead of soaring the Real Dow is crashing relative to the nominal Dow. In fact, it’s barely off its low of May 2006. This dichotomy reveals the weakness that underlies the financial markets’ push higher. When mood turns and credit inflation reverses, the ensuing drop in the nominal value of the market should be dramatic.

Dramatic drop" did indeed follow: Between October 2007 and March 2009, the DJIA lost 53%, high to low.

For more information, download Robert Prechter’s free Independent Investor eBook. The 118-page resource teaches investors to think independently by challenging conventional financial market assumptions.

 


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Thrilling Thursday Morning – Jobless Recovery Edition

As I mentioned yesterday, the ADP numbers were not good.

Now it’s one thing to see something happen and quite another to do something about it.  One of the reasons we like to be in cash is we get to wait for the market to do something silly so we can bet against it.  Yesterday was a gift as the Dow climbed all the way to 8,577 at 10:30 and we gave it a few minutes for the Crude Inventories, which were a disappointment for the oil bulls and our first Trade Alert of the day went out to Members at 10:35 saying: "OIH $95 puts are a good deal at $1.58."  These trades don’t happen in a vacuum – we had been watching OIH all week and decided it was a safer short than USO, which also sold off nicely but the OIH was no slouch with the $95 puts finishing the day at $2.30 (up 45%).

Just a few minutes later, at 10:43, we were able to take advantage of the DIA $84 puts at .84, which finished the day at $1.08 (up 28%) and we were able to get back to cash while speculating on TOT $55 puts at $1.20 and BG $60 puts for $1.30 into today as we expected some downside follow-through to grip Europe, who were overly complacent yesterday.  I wanted to mention this as I hear from many traders who are getting hit hard because they feel the need to stay "invested" for fear of missing something and the only thing you are missing in this market by not having a cash position is a good night’s sleep.  Having cash allows us to pick our spots, make money and get back out to cash.  We’re not day-traders but we sure as hell take our profits if we hit our goals in a day! 

We’re still waiting for the market to pick a real direction but there are some things we do know and one of them is that oil is massively over-priced.  AAA just released a report stating that the peak for gasoline prices has already passed and estimates that auto trips will be down 2.6% this summer.  As I keep saying, people simply CAN’T afford to pay these pumped-up prices, no matter how much speculators wish it to be otherwise.  Clearly the dumb money is following Goldman et al into…
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Q2 Tuesday – Ending With A Whimper, Not A Bang

What happened to our great rally?

We started the quarter off well enough, with the Dow at 7,522 and S&P at 787 on April 1st, we flew right up to 8,000 on the Dow and 840 on the S&P the next day but then it took us the rest of the month to gain 200 more points and the last day of May we finished at 8,500 Dow, S&P 920 - nothing to write home about on the whole.  June 1st was very exciting as we made all our gains for the month that day, flying up to Dow 8,800, S&P 944 but that's where we called a top and cashed out and it's been pretty dull ever since as we've bounced up and down between 8,800 and 8,300 on the Dow and 940 and 900 on the S&P, waiting for a breakout one way or the other.

It's dull to stay in cash, it's like going to the track and not betting on any races.  We really thought we'd get a proper indicator by now and we had fun betting the downturn from the middle of June but even that fizzled and left us back in cash as we head into the holiday weekend.  On the bright side, the VIX has come down substantially and we are now able to pick up long options again at reasonable prices.  This will be fantastic and give us some great leverage but we still need the market to pick an actual direction. 

At least now we have earnings coming so we can evaluate various sectors and place some bets for Q3 but index buying has ruled Q2 and the performance of individual stocks has been washed away as a factor as machine trading has yanked the broader market up and down on a daily basis.  It used to matter how IBM or INTC was doing as an individual company, now the entire Nasdaq can fly to the moon and take PALM, AAPL and RIMM with it, even though it's not very likely that all can do well in the same space for very long (remember MOT?).  We are no longer deluding ourselves that 2Bn people in Asia and Africa will be sporting the newest smart phones on the beach next summer yet the pie in the sky valuations persist, as if there is infinite room for all competitors to sell…
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Monday Market Madness – Last One in Q2!

What a nice, quiet weekend.

There was very little news of note and, despite a nervous sell-off in early Asian trading, the markets are back to their usual pre-market positions of UP.  The Dow is up 100 points since 2:30 am, the Nas is up 2.5% as is the S&P and the Russell.  Oil has been jammed all the way back to $70 after falling below $68.50 in early morning trading and the dollar has been pressed back down to 95 Yen while it once again costs more than $1.405 to buy a Euro and $1.66 to buy a pound.  It's no wonder we have such success playing the middle – "THEY" don't allow the market to go anywhere else!

$70 OilI really thought this morning they'd have trouble holding oil up as the IEA cut its 5-yer oil forecast for EVERY year through 2012 by 3 Million barrels a day (3.5%).  In fact, according to the IEA, oil will not return to 2008's consumption level of 85.6Mbd UNTIL 2012.  “The deep economic recession that has spread worldwide in the past year has taken a severe toll on oil demand,” the IEA said in the report, updating estimates made in December. “This marks a break after several years of strong oil demand growth.”  In its “lower GDP scenario,” which assumes that a rebound in the global economy will be 3 percent a year, the IEA said global oil demand could fail to reach last year’s levels by 2014, standing at 84.92 million barrels a day, 6.34 million barrels less than predicted in December.

Bloomberg led off this morning with the headline "Commodity Rally May End as Supply Rises, Speculators Sell Bets" but not all speculators seem to have gotten the message as speculation proceeds apace.  “Commodities have gotten a little ahead of themselves,” said Walter “Bucky” Hellwig, who helps oversee $30 billion at Morgan Asset Management in Birmingham, Alabama. “As long as there’s uncertainty about growth, that’s going to be headwind commodities won’t be able to overcome.”  The World Bank forecast for this year’s economic contraction to be 2.9 percent, rather than the 1.7 percent decline previously anticipated, may curb sales just as producers expand output in anticipation that the worst is over.

Hedge funds and other large speculators are holding a net 653,915 contracts betting
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Phil's Favorites

Big Pharma has failed: the antibiotic pipeline needs to be taken under public ownership

 

Big Pharma has failed: the antibiotic pipeline needs to be taken under public ownership

A.G. Sanders with penicillin extraction equipment. Image reproduced with permission of the Sir William Dunn School of Pathology, University of Oxford, Author provided

Courtesy of Claas Kirchhelle, University of Oxford; Adam Roberts, Liverpool School of Tropical Medicine, and Andrew Singer, ...



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Zero Hedge

Aramco Scraps US And London IPO Roadshows Amid Too Many "Uncertainties" 

Courtesy of ZeroHedge View original post here.

Saudi Aramco has withdrawn from IPO roadshows in the US and London after it's likely they don't want to disclose oil reserve totals to Western banks and regulators. 

Meanwhile, it's becoming a giant circle-jerk for the Saudis, the IPO is expected to list on the Tadawul exchange, while the Saudi Arabian Monetary Authority (SAMA) is expected to double the amount it would lend out to domestic "buyers" for IPO purchases, reported Bloomberg.  ...



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Kimble Charting Solutions

Dow Megaphone Breakout Continues, As It Tests 77-Year Breakout Level

Courtesy of Chris Kimble

I’ve heard many times over the past 39-years I’ve been in the financial services business that charts have memories? Is it true they do? Is it possible that they have very long-term memories?

This theory looks to be put to a big test by the chart above, which looks at the Dow Jones Industrial Index since 1910.

The Dow has spent the majority of the past 77-years, inside of rising channel (1). While inside of this channel, it looks to have created two very long-term megaphone patterns.

It broke above the first megaphone pattern in the early 1980s, where ...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Insider Scoop

HP Rejects Xerox's Buyout Offer: Experts Debate What's Next

Courtesy of Benzinga

HP Inc. (NYSE: HPQ) rejected Xerox Holdings Corp (NYSE: XRX)'s $33-billion takeout offer Sunday, and experts are divided on what will occur next in the ongoing saga between two tech...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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