You Can Pick Your Nose And Your History 2/19/03

[DrStool]

You Can Pick Your Nose And Your History 2/19/03

 

Last night Doc showed correlations between the length of the period of bubble unwinding and big rallies. Wasn't too good for the bear case. Fortunately history does not always repeat in the same way. What those markets had, which this one hasn't had, is massive waves of panic selling.

 

Doc discusses the importance of liquidation and as usual examines the Feed, chronicles the market cycles, and tells us where this shipwreck is heading, with hot pictures of naked stock charts, the Long Bong Hit, Uncle Buck and the Golden Stool. Will Uncle Buck ever get out of his sick bed? Will the Golden Stool ever recover, or is the move over now that Cramer is on board? Drop by your stock proctologist's office, and get the inside picture, all in the Anals tonight.

 

Stoolies, log one in. If you're not a stoolie already, become one Now! And don't forget to join Doc during the market day in Stooltrading Beta as he plots the market's twists and turns for you, in advance yet!

[MaxxPain]

Excellent anals. I agree with you 200% on margin about needing a high volume selloff before any significant rally will occur. Today's volume was a joke.

 

I believe that the PPT has operated to remove fear from the markets (except gold). When you consider how high and overvalued the Nasdaq was there should and would have been a spectacular crash if normal forces/emotions were allowed to play out. Instead, the PPT rushed in to cushion the fall so the poor sheeple will lose far more than if they would have been scared out years ago. The PPT should be praised for extending the window for insider distribution to extremes never seen before.

[FauxCaster]

If the sheeple won't sell at a loss, surely there is enough overhead resistance to keep a lid on any rally for the next 20 years. I know many who are "waiting for it to come back". Then they will repent and never be so reckless as to be 100% in stocks.

[mjkst27]

Doc - technically speaking, isn't that a 5-month contracting triangle of sorts on the 10-year T-bond yield chart? It seems close to an APEx...wouldn't that portend an explosive move dead ahead, in one direction or another?

[Guest yobob1]

It's a buildup of cash that investors don't actually need for some other purpose. It takes heavy volume selling to get that, and this market is going in the opposite direction volume wise.  

 

What if the heavy volume is precipitated by the sheeple gettting out; initially on need and then a self fullfilling vicous cycle of fear? I suspect we may be approaching that. There is an old adage about people and habits that may have some application. If you want to make something a habit repeat it 7 times. Well by my count people's emotions have been "cycled" 5-6 times already and the increasing number of unemployed is going to begin pressuring withdrawls even from 401's. So maybe not this cycle but the next later in the year?

[DrStool]

27- According to what Edwards and Magee wrote 70 years ago, no. It's the opposite.

 

From the standpoint of cycle analysis, and indicator configuration, I see no basis for a big move.

 

I don't pay much attention to chart patterns. They are generally a waste of time, although triangle breakouts within the context of a rising or declining cycle tend to give the best moves. That's only when they have traversed less than 2/3 of the distance across. The wave containing them still has directional energy. When price goes out toward the apex, it tells you that the wave is too flat to sling prices upward or downward.

 

Pattern analysis without cycle overlay or concurrent indicator analysis is worthless in my opinion. The odds of a pattern breaking one way or another are too low to be of much assistance.