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#1 richmtn


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Posted 10 December 2002 - 08:32 PM

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#2 richmtn


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Posted 10 December 2002 - 08:33 PM

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#3 richmtn


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Posted 10 December 2002 - 08:39 PM

Intermediate-term trading project recap

Night Stool has begun intermediate-term analysis and trading. We hope this will be educational. As in we will learn together.
Remember we are all supposed to be big boys and girls here. Do you own homework. Your trades are your responsibility.
Please add your ideas, questions and input.

Over the next few days we will slowly get warmed up . This is going to be a top down approach. Emphasis will be on price based indicators although secondary indicators will be used for fine tuning and to give heads up.

This chart is from last night's thread. It is an attempt at the 5, 6, 7 and 10 year ROC's. I want to get comfortable with this to place us in time and space.
They seem to peak in 1999 and 2000. As we go along I will try to isolate the actual peaks. Of course with longer term cycles peaks can last for months or even years.
This is a weekly chart. I am using the S&P as it is easier to isolate the cycles. The Nasty is more difficult. In general these two indices move in sync so the S&P can be used as a proxy for the Nasty.
Check out that 10 year (250 ROC). Beautiful smooth curve and top. Check out the right side. Now starting to move below the zero line.
In case you are keeping score and think my math is whacked I use lengths approximately half of the desired period.

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Now I want to try to isolate the tops on each of these.

The ten year put in an extended top from first quarter 1999 to first quarter 2000. The last peak was 03/13/00, and 07/12/99 was the highest

The seven year had a double peak second quarter of 1998 with the highest on 04/13/98 and then another peak on 07/13/98 coinciding with a peak in the cash index.

The six year made a series of peaks, 10/06/97 thru 07/12/99 with 07/12/99 being the highest and coinciding with a major peak in the cash index. One peak occured 07/13/98 just prior to the '98 crash.

The five year also made a series of peaks with the last and highest on 01/25/99.

All of these peaked prior to the ultimate top of the cash index.

This is what I see using the ROC. When I get my new Metastock going I'll redo this exercise with the stochastics and other tools available. :lol:

#4 richmtn


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Posted 10 December 2002 - 09:04 PM

Patterns can often fail. What distinquishes one from another? It is the cycle charts.
Cycle charts
Without them you can't accurately predict which way any pattern will resolve. I believe Doc and Hurst back me up on that statement.
If you do not subscribe to Doc's Anal's you are going into battle without a very valuable weapon. If you do not subscribe to Doc's Anal's you are missing the most important thing on this site by an order of magnitute. The saying "penny wise and pound foolish" was never more apt.
For nothing you get me and I'm an idiot. :P
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Candlesticks are formed using the open, high, low and close. Without opening prices, candlestick charts are impossible to draw. If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn. If the close is below the open, then a filled candlestick (usually displayed as black) is drawn. The hollow or filled portion of the candlestick is called the body (also referred to as the "real body"). The long thin lines above and below the body represent the high/low range and are called shadows (also referred to as wicks and tails). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow.

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When the ADX Indicator is selected, SharpCharts plots the Positive Directional Indicator (+DI), Negative Directional Indicator (-DI) and Average Directional Index (ADX).

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Glossary of term from Stochcharts dot com

Investopia another good source

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#5 EasyAl


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Posted 10 December 2002 - 09:28 PM

Rich's picture of the day

BastardCard--Priceless, by Capital One

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#6 richmtn


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Posted 10 December 2002 - 11:11 PM

EasyAl I am shocked. :rolleyes:


Let's take a look at the Ten Year Treasury. Intermediate-term it has been going sideways after a monster run-up.
This is the yield (think interest rate) and moves inversely to the price.
Right now the yield is moving lower (price higher). This should be no surprise as the yields have been moving in the same direction as the equity prices. Seems to be useful in confirming what you see in equities. This relationship is not normal. Traditionally the equity prices moved opposite the yields since high interest rates are bad for business. This is a large part of the dysfunctional economy. At some point it's thought yields will go up. When they go up enough it will put a big hurt equity prices.

Ten year treasury yield. Short-term bearish. Long term bullish?

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#7 richmtn


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Posted 10 December 2002 - 11:18 PM

Gold has been on a tear but got tagged trying to steal third today.
There are powers that don't like gold rising too much. Can they hold back the yellow stuff?
For everything you ever wanted to know about gold see.

Stool's gold with Dr. Au

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#8 richmtn


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Posted 10 December 2002 - 11:34 PM

Dr. Bonchev one the greatest chartists in the western hemisphere has posted a wealth of valuable information and it's free.

Dr. B's TA Forum

IMPORTANT: Hot Linking To Charts
How to post a chart with long url DrStool 2 54 8th December 2002 - 11:55 AM
Last Post by: DrStool

IMPORTANT: Volume-related Indicators
of intermediate-term tops and bottoms bontchev 2 83 8th December 2002 - 11:46 AM
Last Post by: bontchev

IMPORTANT: Sector Bullish Percentage Indexes
using them for detecting intermediate-term tops and bottoms bontchev 11 70 8th December 2002 - 11:41 AM
Last Post by: bontchev

IMPORTANT: Main Bullish Percentage Indexes
using them for detecting intermediate-term tops and bottoms bontchev 6 54 8th December 2002 - 11:32 AM
Last Post by: bontchev

IMPORTANT: The Cboe Put/call Ratio
using it for detecting intermediate-term tops and bottoms bontchev 3 40 8th December 2002 - 11:22 AM
Last Post by: bontchev

IMPORTANT: Other Indicators
of intermediate-term tops and bottoms bontchev 2 41 8th December 2002 - 11:12 AM
Last Post by: bontchev

IMPORTANT: Stocks Above Their Significant Moving Average
indicators for detecting intermediate-term tops and bottoms bontchev 11 43 8th December 2002 - 11:03 AM
Last Post by: bontchev

IMPORTANT: Market Breadth Related Indicators
for detecting intermediate-term tops and bottoms bontchev 6 40 8th December 2002 - 10:45 AM
Last Post by: bontchev

IMPORTANT: Volatility-related Indicators
of intermediate-term tops and bottoms bontchev 4 37 8th December 2002 - 10:29 AM
Last Post by: bontchev

#9 Rockhead


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Posted 10 December 2002 - 11:42 PM

Rich...I've got three words for you.......

Damn good job!

#10 sweefraapp


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Posted 10 December 2002 - 11:48 PM


Market Stage (12/10/2002) :
Based on the index's performance in late November and early December, and the fact that on November 21 there was a large resistive VMA spike to the upside we believe the market is now in a resistance corridor. If the market is in a resistance corridor that would explain why there have been relatively low amounts of supportive volume during any downturn.

MarketVolume defines the Market Stage as the prevailing trend of the index. This trend can be broken up as an Uptrend, Downtrend, Resistance Corridor, or a Support Corridor. Our members get notified through the market commentary in advance of a change in trend.

Market Status (12/10/2002) :
Today the S&P 500 and Nasdaq 100 indexes showed some strength as they reacted to the supportive volume we saw yesterday. As the market moved higher today there was some resistive volume, but that was countered by the supportive VMA spikes we saw later in the afternoon to the downside. We believe that the cumulative effects of supportive volume may move the market higher in the mid-term with a chance of a short-term retracement to the downside.

#11 richmtn


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Posted 10 December 2002 - 11:55 PM

I've been working with this chart. It shows the relationship of the Bullish Percentage Index versus the price of the S&P 100.
It gave a nice sell signal at the recent downturn. Notice the crossovers and indicators turning down. Still on sell signal.

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#12 Charmin


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Posted 11 December 2002 - 12:23 AM

New book out - wonder if it's in Doc's bookstore

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on another note...
cycles are still mystifying

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I'm expecting this to be the right shoulder of a head and shoulders, but Tim Ord pointed out on the Naz will have difficulty breaking 1425 resistance. Something like a complex B wave - but after January goodbye. He will take a bear position at the 1425 down to 1190.
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Posted 11 December 2002 - 01:44 AM

Great cover Charmin!!
Reminds me of what Lucky Lucciano said after being taken on a tour of the New York Stock Exchange, "I got into the wrong racket."


I second Rockhead. This is a great site and as I told you earlier today (actually, yesteday now), I plan on spending a lot of time on this site on weekends when I have the time and energy to concentrate on the cornucopia of information and you have set down here.

Be ready for questions! :P

#14 ThorAss


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Posted 11 December 2002 - 04:53 AM

I had a nightmare last night. I went heavily short the market the day before a major crash. For some reason I was in NY. I went down to the NYSE on Wall Street to watch the drama unfold. There was screaming and pain. There was truly blood in the street. By the market close I'd made millions. As I walked out of the bourse to savour the afternoon glow, I was hit by the body of a falling investor and killed ... then I woke up.
I have many opinions; but I strive not to act on them.

#15 DrStool


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Posted 11 December 2002 - 08:56 AM

Hotlinking images is usually a a copyright violation. We should get the publisher's permission, although it's not always practical. So at least give credit where due. Include a link to the source and attribution.

In the case of the bookcover, I could swear that it may be the work of our very own pretzelogic or fauxcaster, posted here first. Then it was stolen of course. My suggestion to our creative stoolies who come up with original stuff like this is to include a copyright notice prominently on the work if you want to protect your intellectual property. The internet has turned even formerly honest people into a bunch of slimy thieves. :lol:

It's important to understand the relationship between interest rates and stock prices. It can reverse poles. True, rising interest rates can be bad for business, but oinly if they get high enough. That however isn't what's relevant. Has nothing to do with stock prices. What does have to do with stock prices is that yields are the denominator in the portfolio sphincter's treasured (worthless) valuation model. At some point yield will get high enough to cause them to think stocks are overvalued relative to bonds, and they will sell. This is the historically normal relationship. The poles have been reversed for the last 3 years or so.

They will reverse again, but probably not until 10 year yields are back above 4.5%. That's equivalent to a PE ratio of 22. At 5% it's 20, and at 6% its 16.7 etc. As yields rise, the sphincters are forced to conclude by their dcf's that their stocks are worth less. Fixed income begins to look more attractive, relative to stock earnings. They can always then change their earnings growth assumptions to offset that. But in this environment, it would be patently absurd to do so. Of course, that never stopped them before.

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