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Posts: 4,418
Reply with quote  #1 
2008-10-07 19:02:15 [Message] fib_1618 -> Main Room: good day
2008-10-07 19:02:20 [Message] fib_1618 -> Main Room: how is everyone?
2008-10-07 19:03:07 [Message] fib_1618 -> Main Room: I will assume that everyone is still in one piece [smile]
2008-10-07 19:03:25 [Message] fib_1618 -> Main Room: Lots to talk about this evening, so let's start by finding out if there's any questions or comments first and go from there
2008-10-07 19:04:14 [Message] denleo -> Main Room: Never seen so much value in land and some equities in my life. Short-term trading is not my priority any more with all these opportunities.
2008-10-07 19:04:36 [Message] denleo -> Main Room: But I will play a bounce, then off to world investment
2008-10-07 19:04:54 [Message] geosing -> Main Room: what kind of land?
2008-10-07 19:04:55 [Message] tahiti -> Main Room: great call about the crash, fib!
2008-10-07 19:05:06 [Message] denleo -> Main Room: any land
2008-10-07 19:05:12 [Message] fib_1618 -> Main Room: well...the warning signs were there
2008-10-07 19:05:43 [Message] fib_1618 -> Main Room: the Dow has now lost 1700 points in 8 trading days
2008-10-07 19:06:03 [Message] fib_1618 -> Main Room: we have broken many chart support levels as well
2008-10-07 19:06:04 [Message] geosing -> Main Room: Is yesterday's gap down the mid point of this wave?
2008-10-07 19:06:07 [Message] fib_1618 -> Main Room: yes
2008-10-07 19:06:24 [Message] fib_1618 -> Main Room: which presents us now with downside objectives to work with
2008-10-07 19:06:36 [Message] fib_1618 -> Main Room: I did some figuring before I came into the room
2008-10-07 19:07:06 [Message] fib_1618 -> Main Room: we are now going through a 3rd wave decline where we have a series of 1's and 2's behind us
2008-10-07 19:07:37 [Message] fib_1618 -> Main Room: but from a chartist stand point, yesterday's gap lower would be considered a "measuring gap"
2008-10-07 19:07:57 [Message] fib_1618 -> Main Room: for those who don't know, measuring gaps occur during accelerated phases in a price trend
2008-10-07 19:08:33 [Message] fib_1618 -> Main Room: it's where the "point of recognition" for the same price pattern occurs
2008-10-07 19:09:03 [Message] fib_1618 -> Main Room: in order to generate price objectives when these gaps appear, it's a simple process of measuring what came before and then pushing forward the objective from this same mid point
2008-10-07 19:09:38 [Message] fib_1618 -> Main Room: so with this in mind, these are now the downside objectives for the Dow, and see if these numbers jive with your own work
2008-10-07 19:10:27 [Message] fib_1618 -> Main Room: 8917, 8533, 7263, and ultimately, 6202
2008-10-07 19:11:00 [Message] fib_1618 -> Main Room: what I have found is that many of the objectives seem to lie within about 10% BELOW the lows of 2002
2008-10-07 19:11:05 [Message] fib_1618 -> Main Room: for the SPX - 899, 851, 724, and ultimately, 588
2008-10-07 19:11:59 [Message] fib_1618 -> Main Room: keep in mind that these price levels are areas in which support might be seen, but it doesn't tell us what exactly will happen when areas are challenged
2008-10-07 19:12:02 [Message] geosing -> Main Room: are these fib extensions?
2008-10-07 19:12:15 [Message] fib_1618 -> Main Room: no...these are based off the center point of the measuring gap - basic bar chart analysis
2008-10-07 19:12:53 [Message] geosing -> Main Room: distance from previous pivot highs?
2008-10-07 19:13:06 [Message] fib_1618 -> Main Room: some of these numbers might also be within reach of Fib extensions or other methods of measurement
2008-10-07 19:13:10 [Message] fib_1618 -> Main Room: correct
2008-10-07 19:13:17 [Message] geosing -> Main Room: ty
2008-10-07 19:13:35 [Message] fib_1618 -> Main Room: when we get to the DP stuff I will direct you to the points in which these measurements are taken
2008-10-07 19:13:37 [Message] fib_1618 -> Main Room: NDX - 1126, 927, 845, and ultimately, 661
2008-10-07 19:14:19 [Message] dave -> Main Room: are we supposed to hit all four targets on each index? or is it if we break the first objective to the downside, we go to the next one
2008-10-07 19:14:38 [Message] fib_1618 -> Main Room: NASDAQ Composite - 1532, 1377, 1299, and ultimately, 989
2008-10-07 19:14:47 [Message] fib_1618 -> Main Room: so we remain in gear to the downside
2008-10-07 19:15:19 [Message] dave -> Main Room: so we are looking to hit bottom price objectives, are the first 3 areas of support where a likely bounce would happen?
2008-10-07 19:15:21 [Message] fib_1618 -> Main Room: the probability of a correction within a larger bull market has now been destroyed by yesterdays gap, which included major breaks on the various MCO's
2008-10-07 19:15:37 [Message] fib_1618 -> Main Room: that is the $1 question Dave - I'll atttempt go more into it as we move along tonight
2008-10-07 19:15:49 [Message] dave -> Main Room: ok
2008-10-07 19:15:54 [Message] fib_1618 -> Main Room: now...
2008-10-07 19:16:16 [Message] fib_1618 -> Main Room: I did some Fib retracement levels in relation to this same measuring gap, and all of the .618 retracements from the 2002/2003 lows, with the exception of the Dow, gapped right at this same level of this retracement level making it all to clear on the markets intentions
2008-10-07 19:17:21 [Message] scottzman -> Main Room: this is some scary stuff coming
2008-10-07 19:17:23 [Message] fib_1618 -> Main Room: the DOW was at 10,063, the SPX was 1076, the NDX was at 1349, and the NASDAQ composite was at 1790
2008-10-07 19:18:44 [Message] fib_1618 -> Main Room: now we have clarity
2008-10-07 19:19:01 [Message] fib_1618 -> Main Room: what was thought to be a correctional structure has now collapsed, and now we have to bring out the bear claws for a while
2008-10-07 19:19:45 [Message] scottzman -> Main Room: what time period are we talking
2008-10-07 19:19:46 [Message] fib_1618 -> Main Room: bear markets are nothing like bull markets
2008-10-07 19:19:56 [Message] fib_1618 -> Main Room: time period isn't an issue
2008-10-07 19:20:08 [Message] scottzman -> Main Room: k
2008-10-07 19:20:08 [Message] fib_1618 -> Main Room: sometimes these things can take their time, or they can hurry up
2008-10-07 19:20:37 [Message] fib_1618 -> Main Room: I should say, however, that the only time in which time is an issue is if you're playing options
2008-10-07 19:20:55 [Message] fib_1618 -> Main Room: now...hopefully, many of you took out put insurance last week
2008-10-07 19:21:01 [Message] scottzman -> Main Room: gotcha, no options, tks
2008-10-07 19:21:15 [Message] fib_1618 -> Main Room: options are only for those with iron stomaches [smile]
2008-10-07 19:21:22 [Message] scottzman -> Main Room: exactly
2008-10-07 19:21:43 [Message] fib_1618 -> Main Room: but if used appropriately, can be a nice way to off set a portfolio
2008-10-07 19:22:01 [Message] fib_1618 -> Main Room: besides, there are so many ways to play declining price structures these days
2008-10-07 19:22:02 [Message] geosing -> Main Room: any puts for cash?
2008-10-07 19:22:08 [Message] fib_1618 -> Main Room: selling?
2008-10-07 19:22:19 [Message] scottzman -> Main Room: now i have to decide to tell my wife to get her funds into cash or ride it
2008-10-07 19:22:21 [Message] geosing -> Main Room: buying
2008-10-07 19:22:49 [Message] fib_1618 -> Main Room: the best trading technique during bear markets is writing covered calls - it's the most conservative, and tends to be highly profitable during these market phases
2008-10-07 19:23:23 [Message] geosing -> Main Room: don't you need some underlying for that?
2008-10-07 19:23:34 [Message] fib_1618 -> Main Room: selling naked calls are OK, but there is inherent risk with that
2008-10-07 19:23:38 [Message] fib_1618 -> Main Room: you do
2008-10-07 19:23:56 [Message] fib_1618 -> Main Room: I have to figure that there are more than just traders who read these scripts - there are also investors looking for objective reasoning (in which I hope I provide)
2008-10-07 19:24:54 [Message] fib_1618 -> Main Room: OK...any questions before we get into the meat and potato's?
2008-10-07 19:25:00 [Message] denleo -> Main Room: As far as those projections are concerned, here is what I think. We are approaching 40% decline on SPX. 2002 bear was just shy of 50%, 1974 was about 50%, 1987 was 40%, many others were between 40 and 50. The one that exceeded 50% was Great Depression. So the market is telling us that the world is entering something similar to a great depression. = social changes, wars, poverty, end of some countries.
2008-10-07 19:25:50 [Message] fib_1618 -> Main Room: with the backdrop of governmental social engineering, along with the current globalization of the markets, this might be the best idea here
2008-10-07 19:26:03 [Message] fib_1618 -> Main Room: but remember, wars don't generally break out until the bottom has past
2008-10-07 19:26:09 [Message] denleo -> Main Room: you got it from a Monday's gap?
2008-10-07 19:26:23 [Message] fib_1618 -> Main Room: if you look back on history, you will see this
2008-10-07 19:26:39 [Message] fib_1618 -> Main Room: Monday's gap was the last spear in the bull in a dieing bull
2008-10-07 19:26:50 [Message] fib_1618 -> Main Room: there is just too much money leaving the market right now, and above all, there is a severe lack of confidence
2008-10-07 19:27:12 [Message] denleo -> Main Room: we are talking about 1 time event -- 1929 -- 1932. Meaning, there is no statistical evidence at all.
2008-10-07 19:27:30 [Message] fib_1618 -> Main Room: this period is different from any bear market in history
2008-10-07 19:27:38 [Message] denleo -> Main Room: it is just a bearish guess.
2008-10-07 19:27:47 [Message] denleo -> Main Room: as good as bullish guess.
2008-10-07 19:27:58 [Message] fib_1618 -> Main Room: so although it's OK to compare, it's probably not a good idea to use it as a blueprint
2008-10-07 19:28:05 [Message] fib_1618 -> Main Room: remember, we had a period leading up to this that was extraordinary - never seen before
2008-10-07 19:28:53 [Message] fib_1618 -> Main Room: we had a tremendous amount of liquidity that came into the markets, and by this same measure of ying and yang, we should see an equal and opposite period to balance this out
2008-10-07 19:29:39 [Message] fib_1618 -> Main Room: like we have said so many times before, each market sequence is as different as a snowflake - it may "look" the same, but each flake is different as to its compostition
2008-10-07 19:30:43 [Message] fib_1618 -> Main Room: and who to blame is not important - we have to deal with what we have always have dealt with in this business - capital preservation
2008-10-07 19:31:29 [Message] fib_1618 -> Main Room: especially with the amount of money many made during the last several years, it would be a shame to lose it based on what has happened before will happen again
2008-10-07 19:32:14 [Message] fib_1618 -> Main Room: we just go along for the ride
2008-10-07 19:32:55 [Message] fib_1618 -> Main Room: OK...let's go to DP and see what we have to go with
2008-10-07 19:33:01 [Message] geosing -> Main Room: Gaps in weekly (which monday's gap was) tend to close VST. This any different?
2008-10-07 19:33:15 [Message] fib_1618 -> Main Room: and instead of the 1 year charts, this would be an appropriate time to switch to the 3 year data
2008-10-07 19:33:37 [Message] fib_1618 -> Main Room: daily measuring gaps separate one market segment from another and aren't closed to quickly
2008-10-07 19:34:04 [Message] fib_1618 -> Main Room: they act as new resistance for the market going forward
2008-10-07 19:34:13 [Message] fib_1618 -> Main Room: 1987 is a good example where the measuring gap on the Dow came in at around the 2200 level
2008-10-07 19:36:27 [Message] fib_1618 -> Main Room: and it wasn't until the beginning of 1989 before we were able to once again move above this level
2008-10-07 19:36:32 [Message] fib_1618 -> Main Room: so these things like this take time
2008-10-07 19:36:48 [Message] fib_1618 -> Main Room: what we do know is that have now have longer term clarity
2008-10-07 19:37:03 [Message] fib_1618 -> Main Room: that of 6 month or longer on the probable direction of the market
2008-10-07 19:37:21 [Message] fib_1618 -> Main Room: and with it...we will have many more negative surprises still yet to come
2008-10-07 19:37:27 [Message] fib_1618 -> Main Room:'s a shame
2008-10-07 19:37:44 [Message] scottzman -> Main Room: gonna be brutal
2008-10-07 19:37:52 [Message] fib_1618 -> Main Room: but it was something in which we were warned about for several months before
2008-10-07 19:37:56 [Message] fib_1618 -> Main Room: yes, it is
2008-10-07 19:38:14 [Message] fib_1618 -> Main Room: I don't really think anyone today truly understands how tough it's going to be
2008-10-07 19:38:24 [Message] kean -> Main Room: So even long-term holdings should be switched to cash? Like college funds, etc.? Give your objectives, it seems logical.
2008-10-07 19:38:45 [Message] fib_1618 -> Main Room: well...that's a tough question to answer
2008-10-07 19:38:53 [Message] dave -> Main Room: dave, may i ask you, the bear market rallies that occur tend to be vicious to the upside, any idea of how to judge when to short a bounce? what should we look for in the internals to gauge the strength of a bear bounce?
2008-10-07 19:39:15 [Message] fib_1618 -> Main Room: one has to know how long it will be before college
2008-10-07 19:39:25 [Message] kean -> Main Room: 5 to 7 years
2008-10-07 19:39:30 [Message] geosing -> Main Room: ES broke 1000 level again in Globex
2008-10-07 19:39:55 [Message] fib_1618 -> Main Room: like anything in which there's not enough time to make it back again, cash is probably the best way to go
2008-10-07 19:40:06 [Message] kean -> Main Room: Thanks.
2008-10-07 19:40:08 [Message] fib_1618 -> Main Room: the key here is capital PRESERVATION
2008-10-07 19:40:35 [Message] fib_1618 -> Main Room: keep in mind that if you lose 10% in value, you have to make 20% back just to break even
2008-10-07 19:41:00 [Message] fib_1618 -> Main Room: a good example for Dave - bear market rallies tend to be swift and short
2008-10-07 19:41:32 [Message] fib_1618 -> Main Room: the use of an indicator, like the Open 10, helps in this area immensely
2008-10-07 19:41:41 [Message] fib_1618 -> Main Room: look what it showed before we accelerated lower - this was our first clue that something wicked was coming
2008-10-07 19:41:55 [Message] scottzman -> Main Room: so nothing the fed can do at this point will stop this train
2008-10-07 19:42:19 [Message] dave -> Main Room: are there certain fib numbers that are more often hit on retracements on bear market rallies?
2008-10-07 19:42:37 [Message] fib_1618 -> Main Room: especially since it was price, and not time, that pushed this tool back to a more appropriate "bottoming level"
2008-10-07 19:42:46 [Message] fib_1618 -> Main Room: yes Dave...50%
2008-10-07 19:43:02 [Message] fib_1618 -> Main Room: if the market is in rapid decline, as it is now, 30%
2008-10-07 19:43:26 [Message] fib_1618 -> Main Room: it's very hard to pull up when you're falling apart
2008-10-07 19:43:29 [Message] dave -> Main Room: now is that 30% from the current wave down, or from the top?
2008-10-07 19:43:48 [Message] fib_1618 -> Main Room: whoa...we're mixing methodologies here
2008-10-07 19:44:12 [Message] dave -> Main Room: where is the most appropriate place to start your retracements from? (any methodology will do)
2008-10-07 19:44:16 [Message] fib_1618 -> Main Room: if you're speaking Elliott, .236 retracements are common during center point 3rd the degree of trend stabilizes, .382 is more common
2008-10-07 19:44:46 [Message] fib_1618 -> Main Room: I like to use daily, close only as it clears up the intraday mess - it gives focus
2008-10-07 19:45:10 [Message] dave -> Main Room: ok, where do you start the measurement from? the top of the market in oct 07 or the individual peaks along the way down?
2008-10-07 19:45:21 [Message] denleo -> Main Room: OK, there many many many extremes out there. I am not going to bore you with complicated ones, I will just use simple 9-period RSI on monthly DOW. It is at 19.It was below 24 only 10 times over the last 90 years. The average return one year later was 55%. Only one failed after a 25% bounce in 1931. Almost all of them were at the bottoms.
2008-10-07 19:45:23 [Message] fib_1618 -> Main Room: depends on your time frame objective
2008-10-07 19:45:29 [Message] dave -> Main Room: daily - but daily charts can go back a long time
2008-10-07 19:46:21 [Message] fib_1618 -> Main Room: yes they can...and Dennis, although I appreciate the information, I would humbly suggest this to be used only as a guideline
2008-10-07 19:46:24 [Message] fib_1618 -> Main Room: here's why
2008-10-07 19:46:46 [Message] fib_1618 -> Main Room: unlike past price pattern collapses that tended to be multi day events, today's internals are suggesting a more longer term grind to the downside that could take weeks to finish
2008-10-07 19:47:42 [Message] fib_1618 -> Main Room: add circuit breakers to the mix, and it may not be until sometime in December before this current center point decline concludes
2008-10-07 19:47:53 [Message] fib_1618 -> Main Room: the biggest problems today are global in scope, no less, a major government has now nationalized private business
2008-10-07 19:48:35 [Message] fib_1618 -> Main Room: and there doesn't seem to be any leadership to push away from this in the near term
2008-10-07 19:49:02 [Message] fib_1618 -> Main Room: the market is now discounting that whoever gets elected next month, they will do little to help (which has been one of past discussions)
2008-10-07 19:49:27 [Message] fib_1618 -> Main Room: however, so far, it would only seem that the market will probably only correct back to the longer term mean based on the measuring gaps downside objectives
2008-10-07 19:50:02 [Message] fib_1618 -> Main Room: this can change, but it's all we know for now
2008-10-07 19:50:22 [Message] fib_1618 -> Main Room: now...there are other methodologies that might give different results
2008-10-07 19:50:27 [Message] denleo -> Main Room: Dave, I don't want to sound like a bull here. I think we will have lower lows either immediately or after a bounce, but there are too many things out there for me suggesting that most of the selling is done.
2008-10-07 19:50:52 [Message] fib_1618 -> Main Room: but for now, it's far better to see how these price targets react as we approach them and then make better decisions later on
2008-10-07 19:51:02 [Message] fib_1618 -> Main Room: I don't agree
2008-10-07 19:51:04 [Message] fib_1618 -> Main Room: not any more
2008-10-07 19:51:07 [Message] dave -> Main Room: me neither
2008-10-07 19:51:24 [Message] fib_1618 -> Main Room: we have had a major change in the make up the financial markets - this is why I was so agitated two weeks ago
2008-10-07 19:51:39 [Message] dave -> Main Room: if the market wanted to put in a bottom, it would not have rallied back 500 yesterday, it would of sold off 300 more and another 800 today and bottomed, it doesn't want to
2008-10-07 19:52:00 [Message] fib_1618 -> Main Room: the market will continue to move lower until everything is on the table - it's just too heavy now to recover
2008-10-07 19:52:26 [Message] dave -> Main Room: fully agree, from a non internals point of view
2008-10-07 19:52:28 [Message] fib_1618 -> Main Room: and the measuring gap will now provide tough resistance moving forward
2008-10-07 19:52:33 [Message] scottzman -> Main Room: well I am gonna hope for a decent retrace and have my wife sell her funds and 401k into cash...this is terrible what has come of this
2008-10-07 19:54:35 [Message] fib_1618 -> Main Room: if I may suggest, waiting for a "decent" retracement might trap you emotionally
2008-10-07 19:55:18 [Message] geosing -> Main Room: fib, are you saying that it will be waterfall decline from here? Or relentless one?
2008-10-07 19:55:22 [Message] fib_1618 -> Main Room: your main concern with a retirement fund is capital preservation
2008-10-07 19:55:25 [Message] scottzman -> Main Room: so just go ahead and do it
2008-10-07 19:55:34 [Message] fib_1618 -> Main Room: you will feel will be done
2008-10-07 19:55:39 [Message] scottzman -> Main Room: ok gotcha
2008-10-07 19:55:45 [Message] fib_1618 -> Main Room: do you have access to many funds?
2008-10-07 19:55:55 [Message] scottzman -> Main Room: think so yes
2008-10-07 19:56:08 [Message] fib_1618 -> Main Room: I would suggest a money fund that invests in T-Bills - the safest in the US is what used to be the Benham Capital Preservation fund which is now run by 20th Century investments
2008-10-07 19:56:42 [Message] scottzman -> Main Room: wonderful, thanks
2008-10-07 19:56:44 [Message] fib_1618 -> Main Room: you might want to look into that
2008-10-07 19:56:52 [Message] fib_1618 -> Main Room: you want safety of capital especially with what's going on right now
2008-10-07 19:57:15 [Message] mojave -> Main Room: keep wondering 'non responsive' equity put/call is because folks think it's too late to sell?
2008-10-07 19:57:28 [Message] fib_1618 -> Main Room: I think traders are numb
2008-10-07 19:57:34 [Message] fib_1618 -> Main Room: this happens at the epicenter
2008-10-07 19:57:43 [Message] fib_1618 -> Main Room: while others try to catch a falling knife
2008-10-07 19:57:47 [Message] scottzman -> Main Room: yep i agree
2008-10-07 19:58:02 [Message] fib_1618 -> Main Room: first it was this bailout and everything would be fine
2008-10-07 19:58:05 [Message] fib_1618 -> Main Room: nope
2008-10-07 19:58:13 [Message] fib_1618 -> Main Room: then it was this bailout...nope again
2008-10-07 19:58:43 [Message] fib_1618 -> Main Room: and then we were told that we "needed" to spend 800 billion to bail out firms that were only following what the government told them to do
2008-10-07 19:59:04 [Message] scottzman -> Main Room: so is all this destruction due to credit and housing
2008-10-07 19:59:05 [Message] fib_1618 -> Main Room: so the numbness factor is high
2008-10-07 19:59:21 [Message] fib_1618 -> Main Room: it's due to two words..."social engineering"
2008-10-07 19:59:33 [Message] mojave -> Main Room: 2 words: buy and hold
2008-10-07 19:59:48 [Message] fib_1618 -> Main Room: in order for capitalism to work efficiently, the government must not be involved
2008-10-07 19:59:54 [Message] fib_1618 -> Main Room: but this has been going on for years, decades
2008-10-07 19:59:57 [Message] scottzman -> Main Room: yeah that buy and hold always bothered me
2008-10-07 20:00:09 [Message] fib_1618 -> Main Room: I don't believe buy and hold is warranted - this is a sales gimmick to get people to buy stocks
2008-10-07 20:00:26 [Message] dave -> Main Room: more like sell and hold
2008-10-07 20:00:29 [Message] mojave -> Main Room: 2 other dangerous words: "too late" to buy a bull, sell a bear
2008-10-07 20:00:43 [Message] fib_1618 -> Main Room: yes...always too late, and then there are times in which you're "too early"
2008-10-07 20:01:06 [Message] fib_1618 -> Main Room: here's the bottom line
2008-10-07 20:01:19 [Message] fib_1618 -> Main Room: what we try to do in here is to identify prevailing trends of market
2008-10-07 20:01:47 [Message] fib_1618 -> Main Room: we do this with price, but we dig a little bit deeper looking for the fuel that actually makes prices move in one direction or the other...the internals
2008-10-07 20:01:56 [Message] fib_1618 -> Main Room: the internals are slow and methodical
2008-10-07 20:02:28 [Message] dave -> Main Room: should we expect the worst sectors to be small and mid caps? tech? is this a liquidity issue? or should we expect the large caps to lead down?
2008-10-07 20:02:46 [Message] fib_1618 -> Main Room: and in this case, if one were to have followed the internals specifically over the last couple of years, it would have been a hard sell
2008-10-07 20:03:02 [Message] fib_1618 -> Main Room: Dave - bear markets take no prisoners...the key is knowing which will bleed the most
2008-10-07 20:03:41 [Message] fib_1618 -> Main Room: as far as downside leadership, we'll address this as we have done over the last 4 years in the chat
2008-10-07 20:03:57 [Message] fib_1618 -> Main Room: for now...we're in the midst of a crash where everything will be taken with it
2008-10-07 20:04:27 [Message] fib_1618 -> Main Room: until we find a floor, there is no use to find "pearls in the sand"
2008-10-07 20:04:53 [Message] fib_1618 -> Main Room: and why, up until yesterday, the best way to trade the market was to sit on your hands
2008-10-07 20:05:05 [Message] fib_1618 -> Main Room: it's unfortunate, but we have to deal with it, and hopefully, profit by it
2008-10-07 20:05:27 [Message] dave -> Main Room: should we "not" expect a capitulation type event? like just down days most days and ending with a trough? a rounded bottom, or do you think this will end with a big reversal?
2008-10-07 20:05:43 [Message] fib_1618 -> Main Room: stocks tend to have spike bottoms, but since this is a third wave, the real capitulation won't take place until wave 5 of various degrees
2008-10-07 20:06:21 [Message] denleo -> Main Room: I have to run, but before I go, I will give you one indicator on NDX: there are 0 stocks trading above 200 DMA, 0 above 50 DMA and yes 0 above 20 DMA. This has never happened before.
2008-10-07 20:06:42 [Message] fib_1618 -> Main Room: and we haven't seen this level of decay in price before either
2008-10-07 20:06:56 [Message] fib_1618 -> Main Room: which means we can stay at 0 for a while
2008-10-07 20:07:00 [Message] fib_1618 -> Main Room: again...this is a bear market
2008-10-07 20:07:08 [Message] denleo -> Main Room: of course it is
2008-10-07 20:07:10 [Message] fib_1618 -> Main Room: people will tend to panic more than embrace and this will keep the pressure on
2008-10-07 20:07:22 [Message] dave -> Main Room: dave, don't wave 4's tend to be vicious?
2008-10-07 20:07:28 [Message] fib_1618 -> Main Room: they can be - they come out of the blue
2008-10-07 20:07:47 [Message] fib_1618 -> Main Room: now, I haven't done and Fib calculations here, but somewhere around the first gap objective is where I would look for the first fourth wave
2008-10-07 20:08:38 [Message] fib_1618 -> Main Room: OK...3 year charts we go
2008-10-07 20:08:47 [Message] dave -> Main Room: great stuff dave
2008-10-07 20:09:12 [Message] fib_1618 -> Main Room: the first thing I would like to look at is the price pattern chart of the NYA, and here you can see the crash in action - basically the price movement is a straight down (or parabolic) event
2008-10-07 20:09:50 [Message] fib_1618 -> Main Room: now, fortunately for everyone, if we look at the CO NYSE breadth MCSUM, you will see that we are already "oversold"
2008-10-07 20:10:48 [Message] fib_1618 -> Main Room: because of this, any further decline from here will tend to be choppy in scope
2008-10-07 20:10:51 [Message] fib_1618 -> Main Room: for example, Monday's action, where we moved to extremes, and then saw a rally attempt
2008-10-07 20:11:16 [Message] fib_1618 -> Main Room: as I told everyone I spoke to yesterday is that the good news was we rallied 400 points into the close, and the bad news is that we rallied 400 points into the close
2008-10-07 20:12:10 [Message] fib_1618 -> Main Room: all great bottoms are usually seen with a high degree of anxiety
2008-10-07 20:12:33 [Message] fib_1618 -> Main Room: where we get a sell off...close at the lows, and then open lower the next day, and then reverse hard (usually) after lunch
2008-10-07 20:12:45 [Message] fib_1618 -> Main Room: this was one of the ideas we talked about last Thursday and all seemed to be going according to plan
2008-10-07 20:13:10 [Message] fib_1618 -> Main Room: with Friday opening higher, and then losing all of the advance, and then closing at the lows of the session
2008-10-07 20:13:42 [Message] fib_1618 -> Main Room: we then opened sharply lower on Monday, rallied a bit into lunch, and then saw the Dow move to a 800 point decline before rallying in the last hour
2008-10-07 20:14:09 [Message] fib_1618 -> Main Room: as long as there are bottom feeders on these declines, the shake out is not done
2008-10-07 20:14:16 [Message] fib_1618 -> Main Room: think of it this way
2008-10-07 20:14:41 [Message] fib_1618 -> Main Room: the only way you're going to get Aunt Minnie and Uncle Charley to sell the market is if the market has a bad day and closes that way
2008-10-07 20:14:48 [Message] fib_1618 -> Main Room: this way the media can ring the bell
2008-10-07 20:15:30 [Message] fib_1618 -> Main Room: but if the market moves down 800 points, and then gives 1/2 of it back before the close, then our Aunt and Uncle are going to figure that they don't have to sell - and if they do, it would be near the bottom
2008-10-07 20:15:35 [Message] fib_1618 -> Main Room: so you keep them guessing
2008-10-07 20:15:40 [Message] fib_1618 -> Main Room: while at the same time
2008-10-07 20:15:48 [Message] fib_1618 -> Main Room: their capital continues to erode
2008-10-07 20:15:48 [Message] geosing -> Main Room: today should qualify then, if we gap down tomorrow and rally in the pm session
2008-10-07 20:15:53 [Message] fib_1618 -> Main Room: we could - especially IF the market moves towards our first gap objective areas of Dow 8917
2008-10-07 20:16:42 [Message] fib_1618 -> Main Room: which is only 530 points from here
2008-10-07 20:17:03 [Message] geosing -> Main Room: hour's worth of work these days
2008-10-07 20:17:10 [Message] fib_1618 -> Main Room: makes you wonder how anybody will be able to trade the market when it stops making these large moves in price [smile]
2008-10-07 20:17:14 [Message] fib_1618 -> Main Room: correct
2008-10-07 20:17:23 [Message] fib_1618 -> Main Room: so this is something to look for - but keep in mind that this would only be part of an "over-extended" price bounce which will be news related
2008-10-07 20:17:48 [Message] dave -> Main Room: dave, i have to give it to you, this is great advice for everyone here, this is something that all should pay attention, great point on the aunt and uncle not selling b/c of the snap back.......
2008-10-07 20:18:06 [Message] fib_1618 -> Main Room: it's all matter of merchandising
2008-10-07 20:18:48 [Message] fib_1618 -> Main Room: it's a akin to Pavlov and his dogs - you ring the bell, and they come running - don't ring the bell...and they wait
2008-10-07 20:19:32 [Message] fib_1618 -> Main Room: we also have to remember that we are being "promised" that everything is going to be OK in Washington - whether now, or with the "change" that's coming
2008-10-07 20:19:54 [Message] fib_1618 -> Main Room: this keeps average folks on the fence
2008-10-07 20:20:09 [Message] fib_1618 -> Main Room: and for those who don't care...they still don't
2008-10-07 20:20:37 [Message] fib_1618 -> Main Room: OK...back to DP
2008-10-07 20:20:49 [Message] fib_1618 -> Main Room: notice that we have now broken below the CO NYSE MCO lows of last year now
2008-10-07 20:21:03 [Message] fib_1618 -> Main Room: and this now confirms that lower price lows are still to come
2008-10-07 20:21:13 [Message] TradeMark -> Main Room: and every other year...
2008-10-07 20:21:32 [Message] fib_1618 -> Main Room: so even if we do stop here, and rally, it's going to take time to back and fill the crater left by the falling debris
2008-10-07 20:21:45 [Message] fib_1618 -> Main Room: again...this is a back breaking move, which provides the necessary energy to move a lot lower, and this is all we have to know
2008-10-07 20:22:17 [Message] fib_1618 -> Main Room: the longer term trend is now lower - this is no longer a correction
2008-10-07 20:22:57 [Message] fib_1618 -> Main Room: and where the next item on the agenda is to determine how this all relates in the really big picture - that being of decades
2008-10-07 20:23:46 [Message] fib_1618 -> Main Room: after all, the downside price objectives, given by the measuring gap, still allow a longer term correctional pattern in the areas of Elliott
2008-10-07 20:23:51 [Message] fib_1618 -> Main Room: but Elliott aside, the trend is down, and we have to utilize this in our own trading strategies
2008-10-07 20:24:54 [Message] fib_1618 -> Main Room: moving down to the components, and here we see that the 10% component is highly "oversold"
2008-10-07 20:25:22 [Message] fib_1618 -> Main Room: and this can't go on too much longer without some sort of "boing" effect
2008-10-07 20:26:03 [Message] fib_1618 -> Main Room: but the "wonders" of true third waves is that these kind of extremes can hold on for a longer period of time than what is usual and customary
2008-10-07 20:26:09 [Message] fib_1618 -> Main Room: but at the same time, this also tells us that any short positions, and especially in the put option area, need to be watched closely for exits
2008-10-07 20:29:02 [Message] fib_1618 -> Main Room: on the subject of options, remember that your greatest premiums will be seen during third waves
2008-10-07 20:29:33 [Message] fib_1618 -> Main Room: the highest of which is during these kind of events
2008-10-07 20:30:03 [Message] TradeMark -> Main Room: maybe that why vix is at 55
2008-10-07 20:30:04 [Message] fib_1618 -> Main Room: one could wait for the completion of the price structure (wave 5), but the panic (in this case) won't be as acute as it is right now
2008-10-07 20:30:23 [Message] fib_1618 -> Main Room: yes...the VIX is measuring this premium extreme
2008-10-07 20:30:34 [Message] fib_1618 -> Main Room: and why something like the VIX will diverge with wave 5
2008-10-07 20:30:45 [Message] fib_1618 -> Main Room: right now, it's setting a flag
2008-10-07 20:31:13 [Message] fib_1618 -> Main Room: and it should be noted that with the VIX at "all time highs", this degree of trend is therefore higher (in theory) than that of the previous "all time high"
2008-10-07 20:31:42 [Message] fib_1618 -> Main Room: this then helps us in identifying the correct degree of trend
2008-10-07 20:31:57 [Message] fib_1618 -> Main Room: whether it can hit a target - like SPX 588 - or not...or even more
2008-10-07 20:32:40 [Message] fib_1618 -> Main Room: again...all of these measures are important as to their daily context
2008-10-07 20:33:10 [Message] fib_1618 -> Main Room: and this can help us in identifying what we should eventually look for well before the rest of the masses will acknowledge it
2008-10-07 20:33:15 [Message] fib_1618 -> Main Room: or....accept it
2008-10-07 20:33:33 [Message] fib_1618 -> Main Room: back to the CO NYSE breadth MCSUM
2008-10-07 20:33:54 [Message] fib_1618 -> Main Room: you will see a series of declining tops continuing to control the pattern for some time now
2008-10-07 20:34:06 [Message] fib_1618 -> Main Room: and with the MCO moving to new lows, the current expectation would be to see the same thing with the MCSUM
2008-10-07 20:34:32 [Message] fib_1618 -> Main Room: where longer term implications can then be discussed
2008-10-07 20:34:53 [Message] fib_1618 -> Main Room: for now...we're highly "oversold" and due for a bounce
2008-10-07 20:35:20 [Message] fib_1618 -> Main Room: but the panic might be too acute for the physics of this to take over
2008-10-07 20:35:33 [Message] fib_1618 -> Main Room: not only the panic from here in the US, but globally as well, as traders start to unwind losing positions
2008-10-07 20:36:02 [Message] TradeMark -> Main Room: how long would a bounce be expected to last? hours? days? weeks?
2008-10-07 20:36:06 [Message] fib_1618 -> Main Room: this has the real possibility of turning into a real snowball effect
2008-10-07 20:36:23 [Message] fib_1618 -> Main Room: it depends on the stability it brings
2008-10-07 20:36:29 [Message] fib_1618 -> Main Room: for example
2008-10-07 20:36:46 [Message] fib_1618 -> Main Room: Friday we saw breadth of market at 26:4 at the open, and it held OK...up until the bill was passed
2008-10-07 20:37:24 [Message] fib_1618 -> Main Room: and then we saw the old adage at work..."buy the rumor, sell the fact"
2008-10-07 20:37:27 [Message] oextrader -> Main Room: do you believe we may not see a '87 type panic due to trading curbs/more global market but continue to bleed 2-3% on average each never get the flush everyone expects
2008-10-07 20:37:53 [Message] fib_1618 -> Main Room: and then there wasn't anyone going to hold a position over the weekend
2008-10-07 20:38:13 [Message] fib_1618 -> Main Room: circuit breakers only delay the inevitable - the market will move the way it wants to...there will always be order
2008-10-07 20:38:39 [Message] fib_1618 -> Main Room: based on yesterday's action
2008-10-07 20:38:46 [Message] fib_1618 -> Main Room: in relation to circuit breakers
2008-10-07 20:38:52 [Message] fib_1618 -> Main Room: it is my belief - for now - that the market will forgo setting off any circuit breakers until we are close to the actual bottom
2008-10-07 20:39:21 [Message] fib_1618 -> Main Room: the rally on Monday told a story here
2008-10-07 20:39:52 [Message] fib_1618 -> Main Room: if the market can decline by 800 points, and then rally, then there are buyers stepping up to find "perceived" bargains
2008-10-07 20:40:09 [Message] fib_1618 -> Main Room: whether they are fundamental or technically oriented...doesn't matter
2008-10-07 20:40:25 [Message] fib_1618 -> Main Room: but if the market loses enough points where trading has to stop, and this gets reported on the news
2008-10-07 20:40:59 [Message] fib_1618 -> Main Room: although there would be a sigh of relief if the market rallies after a breaker is hit, it would be "run for the hills" time if a breaker is hit, and then the market continues to sell off
2008-10-07 20:42:00 [Message] fib_1618 -> Main Room: again...the market will do everything in its power to get every last seller (or buyer) out (or in) of the market just when things look the most extreme
2008-10-07 20:42:09 [Message] oextrader -> Main Room: it already feels like "run for the hills that fell off a cliff".......
2008-10-07 20:42:13 [Message] scottzman -> Main Room: you answered this question a bit ago concerning funds/401k, my wife is a trustee and the acct. is worth about 2.5 mil right now..can she put that in a money fund also, and should she
2008-10-07 20:42:21 [Message] fib_1618 -> Main Room: this why the public buys at the top, and sells at the lows
2008-10-07 20:42:40 [Message] fib_1618 -> Main Room: OEX...not yet, just wait
2008-10-07 20:42:59 [Message] oextrader -> Main Room: I'm mostly in cash and getting itchy....
2008-10-07 20:43:02 [Message] fib_1618 -> Main Room: remember...everything was supposed to be OK once the bailout was passed, and look what the bail out has accomplished...
2008-10-07 20:43:37 [Message] fib_1618 -> Main Room: but then we have Ben coming to the rescue of the commercial paper market
2008-10-07 20:43:41 [Message] fib_1618 -> Main Room: once again, the market rallies, but there is no one to carry the torch further
2008-10-07 20:44:17 [Message] fib_1618 -> Main Room: and we'll probably see something like this happen on the impending rate cute whenever that occurs
2008-10-07 20:44:44 [Message] fib_1618 -> Main Room: scottzman - my suggestion is to look at all of your options and use your best judgment
2008-10-07 20:44:46 [Message] fib_1618 -> Main Room: try this - if someone came up to you and asked you the same question, what would you objectively suggest to him knowing what you know?
2008-10-07 20:45:22 [Message] fib_1618 -> Main Room: and then follow your suggestion
2008-10-07 20:45:46 [Message] fib_1618 -> Main Room: given that it's a whole lot of money that needs to be there for your retirement, and you'll have to find a job if it isn't there when you planned to have it, your decision should then become clearer
2008-10-07 20:45:55 [Message] scottzman -> Main Room: i was thinking we were close to a i see the projections and say cash
2008-10-07 20:46:12 [Message] fib_1618 -> Main Room: cash is a position
2008-10-07 20:46:36 [Message] scottzman -> Main Room: k, thanks and sorry for interrupting
2008-10-07 20:47:05 [Message] fib_1618 -> Main Room: it's far better to wait for the market to prove itself of your parting with your hard earned cash then to hope that the bleeding will stop
2008-10-07 20:47:21 [Message] scottzman -> Main Room: actually my first time here i saw ur post in traders talk..glad i found you [smile]
2008-10-07 20:47:25 [Message] fib_1618 -> Main Room: the idea here is to be able to come back another day
2008-10-07 20:47:37 [Message] fib_1618 -> Main Room: welcome
2008-10-07 20:47:50 [Message] scottzman -> Main Room: u bet, thks
2008-10-07 20:48:07 [Message] fib_1618 -> Main Room: moving on to the composite NYSE breadth MCO, and we can see that last summer's bottom is now being fully challenged, if not violated
2008-10-07 20:48:49 [Message] fib_1618 -> Main Room: since this data is our keystone to what may lie ahead for the broad measure of the stock kingdom, this challenge is indicating that lower prices lie ahead
2008-10-07 20:49:33 [Message] fib_1618 -> Main Room: for even if we stop here, and bounce higher, we will certainly have to build a new foundational support platform from which prices can once again move higher
2008-10-07 20:49:52 [Message] fib_1618 -> Main Room: and this, in and of itself, tells us that we will get lower prices in the future
2008-10-07 20:50:22 [Message] fib_1618 -> Main Room: and knowing this, those funds that are "core", should be safely tucked away for future decision making

(Continued in Part 2)

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