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#61

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Posted 31 October 2003 - 08:48 PM

To Pop Or Not To Pop

That is the question. From reading the board this afternoon, we all seem to be seeing the same thing, coming from many points of view.

Excellent Anals; I just finished reading it. Bottom line is that both short term direction and intermediate trend are sitting right on the fulcrum -- exactly right now. A few months back, I did a lot of mathematical work and found each cycle (in days) is a Fibonacci number of days. Of note, I did not go into this work assuming this. I did a lot of curve fits for no other reason than just to see what happened, and I left the period parameter wide open. That is, I allowed the math program to fit it anywhere it wanted to. I noticed the same periods, plus or minus one day, kept coming up over and over again. I finally noticed that these number, when put in order, forms the Fibonacci series. Two of those numbers are 34 and 55. I believe these are two of the cycles discussed in the anals, called the 6-7 week and 10-13 week. Note that 34 market days is (6*5) +4, or 6 to 7 weeks on a calendar. Likewise, 55 market days is 11*5, or 11 calendar weeks.

Further, I experimented with equations from anywhere between only 1 up to 6 sinusoids, and found the above result in most cases. One exception is that I also found that two cycles might merge, and from there apparently disappear while a cycle that averges the two emerges. On further investigation, I found, as it appears on the surface, such an occurrence is the two cycles forming a linear combination that produces constructive interference that takes the appearance of a cycle with a period the average of the two from which it is formed. Such pseudocycles have a lot of oomph to them.

The reason for all of this rambling is that Doc found one in his work today, that combines the 6-7 week and 10-13 week. These two cycles are extremely important, if not the most important, regarding intermediate term direction, and often trend. When analyzing these two, as a linear combination, the combo appears to be sitting right at a top, perhaps peaking today. As I posted above, the important short term direction cycles are doing exactly the same thing at exactly the same time.

I'm now looking for some real fireworks next week. The odds finally suggest down, and seriously down. However, as Gruff posted, if this does not happen, than I see a massive boner instead. Oh well, at least things don't look to be dull next week, and finally down looks more probable than up. We shall see.

#62 dozer

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Posted 31 October 2003 - 08:49 PM

It's a gas:


AO, thanks for the gas chart. looks like there are a couple of gaps to be filled hmmm??? and with cold weather coming on, that might happen pretty soon...

under 20 deg F here this morning....and I woke up to find that the water-line coming down the mountain from the spring to the cabin had frozen. spent part of the day covering the exposed sections to try and prevent a repeat.

when I was back in MN packing up my shop, i was shocked to see that propane was only $1.20 there....it's around 2 bucks a gallon in SW oregon !! don't understand the huge disparity, but i can tell you that i'm hard at work on a WOOD-fired hot-water heater! :o :o

#63 gruff

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Posted 31 October 2003 - 08:49 PM

FowlJ -

According to the years covered in your work (great effort by the way) an SPX gain in the "unfavorable" season has about an 80% chance of being followed by gains the the following "favorable season".

I once did a similar exercise (no where near as detailed as yours) going back to 1980 and came up with a similar result. Gains in the may-oct period are likely to be followed by gains in the nov-apr period.

Of course the market was in a secular bull during most of the period from 1980 so perhaps the data set is questionable to begin with.

Fowl and Bart,

Tanks for great work.

SeveRal years ago, Yale Hirsch Stock Traders' Almanac discovered that the equity markets tend to be bi-cyclic, meaning that there are essentially two periods to the broader market's performance. He found that the market returns between November 1 and April 30, far exceeded the performance of the market between May 1 and October 31. Continual tracking of this observation has shown it to have robust regularity (esp. for Nasdog). SeveRal years later, Sy Harding Riding The Bear, made some further analysis of this phenomenon and determined that by being long during the Nov~Apr period and short during the May~Oct period, leads to some astonishing differences in portfolio returns (100's of percent).

I suppose this time it will be different :unsure: May~Oct 2003 certainly was :shocked

Success!
gruff

#64 Hairy_Dent

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Posted 31 October 2003 - 08:54 PM

Thanks for your work and analysis, Fowl. It correlates with Ag's point in IDS that the current rally has probably fully discounted the economic improvement to date. And for those of us who are anxiously awaiting a "reversion to the mean", it just builds anticipation.

But I'll remain more-or-less neutral until we actually detect the expected "reckoning".

#65 DrStool

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Posted 31 October 2003 - 08:56 PM

I note that everyone thinks if they don't turn down next week, they're going massively higher. I don't see that. If they don't turn down next week, I think they go a little higher at best. 3-4% tops but mostly sideways.

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#66 DrStool

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Posted 31 October 2003 - 08:57 PM

Don;'t get me started on discounting. :lol: :lol: :lol:

One of the biggest fallacies of them all.

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#67 brian4

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Posted 31 October 2003 - 09:00 PM

Gruff and Fowl-now if you really want to get spooky after all it is Halloween. take a chart of the Dow from the end of 86 to the 87 high and overlay this rally from March to present and then count the days of each as an analog its more than SPOOKY and we all know what happened after the 87 high if the analog holds Nov.6 is lights out. Trade Safe!

#68 wndysrf

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Posted 31 October 2003 - 09:09 PM

Machinehead:

No comment from you today on the explosion in energy futures, and the possible rally off a bottom for the OSX stocks.

CRB was down a hair, but I think a continuation of the energy futures strength combined with new strength in gold and silver next week would be enough to blow the CRB highs out like butter.....
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#69 Hairy_Dent

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Posted 31 October 2003 - 09:11 PM

Don;'t get me started on discounting. :lol: :lol: :lol:

So you're discounting discounting?

#70 gruff

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Posted 31 October 2003 - 09:13 PM

Gruff and Fowl-now if you really want to get spooky after all it is Halloween.  take a chart of the Dow from the end of 86 to the 87 high and overlay this rally from March to present and then count the days of each as an analog its more than SPOOKY and we all know what happened after the 87 high if the analog holds Nov.6 is lights out.  Trade Safe!

Bri,

I did some S&P analysis/commentary on 24-Aug in Talking Stool (subscribers only). This stuff portended a rapid spike to 1070 followed by an equally rapid drop (a la 1998), possibully to 850~863... which would be bought hand-over-fist to lead to new highs at year end.

So, I agree, a retracement is imminent. Whether that will be The End (where is he, anyhow?) of this second-ever largest 'bear mkt rally' (Nasdog - percentage basis), I have no clue.

Edit: Forgot to mention - de spike and drop would occur in November :mellow:

Success!
gruff

#71

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Posted 31 October 2003 - 09:13 PM

I note that everyone thinks if they don't turn down next week, they're going massively higher. I don't see that. If they don't turn down next week, I think they go a little higher at best. 3-4% tops but mostly sideways.

In my case, it's not based on anything to sophisticated. I just note that if the 13-day does not turn down soon, we have to assume its down phase has been squelched, possibly by the 4-week (21-day). I've noticed, simply by looking at daily candles of the Dow, that when this happens, it portends a robust move, with staying power, in the direction of the 4-week cycle. In this case, that would be up, and if this does occur, I have to concede that the up-trend is alive and well, and that the longer cycles are "on hold."

Of course, I don't want this to happen, especially since I entered short today. B) I just have to note that it may, and this is why I fear that, if not down, then it goes convincingly up rather than sideways.

#72 dozer

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Posted 31 October 2003 - 09:14 PM

gruff and n-ron, excellent posts....tanks.


Putnam update: now add Iowa to the list too... :P



Pension funds in Pennsylvania, Iowa and Rhode Island fired Putnam Investments on Friday, joining a growing exodus of customers abandoning the embattled fund company.

They joined Massachusetts, New York and Vermont pension officials, as well as some universities, who are taking their business away from Putnam following accusations by regulators that four of its fund managers engaged in personal short-term investing at clients' expense.

In just two days, public pension funds have announced plans to pull at least $4.4 billion out of the company, which lists $272 billion in assets under management.

New England Pension Consultants, a firm that advises 190 pension plans with $150 billion in assets, has recommended clients get out of Putnam international stock funds.

It's been a devastating year at Putnam: underperforming funds, then scandal, and now a struggle to retain customers with the company's future potentially on the line.

State and federal filings Tuesday accused the country's No. 5 mutual fund company of turning a blind eye to market timing trades, or moving quickly in and out of funds. The practice is not illegal but regulators say it hurt other investors and should have been disclosed.

Financial experts say dropping Putnam funds may be unwise; other fund companies could soon be ensnared in the scandal, and if Putnam is forced to sell securities it could deflate their price, denying the sellers fair market value.

But the latest developments highlight a potential nightmare scenario for the Boston-based fund company: customers pull their money, prompting fund values to fall, prompting more customers to leave.

"It does raise the prospect people could become frightened and panic and start liquidating Putnam mutual funds," said Michael Ryan, a Westerly, R.I., financial planner who said he is generally advising clients to stay in Putnam funds, at least until it becomes clear if other fund companies engaged in similar practices. "If it got to large enough numbers, it could force Putnam to start liquidating their holdings, which could have an adverse effect on the value."

Customers had already pulled $8.8 billion from Putnam accounts this year through September, the worst figure among the top 25 mutual funds, according to Financial Research Corp.

Shares of Putnam's parent company, Marsh & McLennan, fell $1.75, or nearly 4 percent, to close at $42.75 in trading Friday on the New York Stock Exchange.

Fund companies keep cushions of cash and lines of credit so they can redeem money to customers without selling assets.

But eventually, if enough of Putnam's 12 million customers redeem shares, the company could have to dip into assets, said Edward O'Neal, a finance expert at Wake Forest University's Babcock Graduate School of Management.

Putnam is big enough that a sell-off could deplete the value of some of the underlying assets, particularly small-cap stocks. That would affect anyone who owns those stocks, but Putnam funds would be hit disproportionately.

"I am not aware of any previous case where a mutual fund family was facing the level of redemptions it appears Putnam is facing," O'Neal said.

more....


from:

http://seattlepi.nws...310&slug=Putnam

#73 gruff

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Posted 31 October 2003 - 09:15 PM

CRB was down a hair, but I think a continuation of the energy futures strength combined with new strength in gold and silver next week would be enough to blow the CRB highs out like butter.....

Marky,

What's the symbol for butter? And where can I trade it? I wouldn't mind a pat of dat :P

LOL, gruff

#74 dozer

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Posted 31 October 2003 - 09:18 PM

Machinehead:

No comment from you today on the explosion in energy futures, and the possible rally off a bottom for the OSX stocks.

CRB was down a hair, but I think a continuation of the energy futures strength combined with new strength in gold and silver next week would be enough to blow the CRB highs out like butter.....


wndy; some foodstuffs were down slightly today...soybeans and maybe others....so perhaps that was the bulk of the slight decline in CRB today.

like you, I see it exploding to the upside very soon...driven by energy and metals.

#75 alex

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Posted 31 October 2003 - 09:20 PM

re Putnam story: I don't see this triggering the long-awaited 10sigma.
These pension funds are not liquidating their holdings, as much as changing asset managers. They will hold the same stuff, but at a different brokerage. Industry-wide, it would seem to net out.





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