Global Market Bearish Call

[shawFund]

My Interpretation about the NASDAQ market:

If you invested in NASDAQ Index in Jan 2002 and hold it,
the 3-year and 8-month return on the investment is ZERO.

The low of 1,120 was reached in October 2002.

2003 is a bull year and reachd a high of 2,150 in Jan 2004.

Since then, it is  flat but has higher lows.

From weekyl chart, it formed ascending trendline and it tried to break out 2,200 few times but all failed.

Most likely the next try will succeed. From weekyl chart, both KD(18,5) and RSI(14) are down but have not reached oversold.

Look at the history, whenever KD reached oversold, it will bounce back.

So, my take is that the next few weeks will be down and may test 2,000.

But the end-year rally will start when KD(18,5) reached oversold condition and the 2,200 will be broken and the bull market will start from there.




Any comments?

[AussieTrader]

Hurricane Katrina no doubt will put big selling pressure on the markets come the open on Monday. Likely to be a lot of panic selling from the herd that will push indices down to test support. Watch for oil, commodities, alternatve energies and extreme weather related stocks (not that that is a recognised industry term!!) to get active at the same time.

Not that you want to profit from peoples misfortune, but need to be alert to the fact that the market does what it does and we are in the market and it reacts to world events.

I hope the damage from Katrina is as minimal as possible.

http://news.bbc.co.uk/2/hi/americas/4192218.stm

[Ramsburg]

Hurricane Katrina no doubt will put big selling pressure on the markets come the open on Monday. Likely to be a lot of panic selling from the herd that will push indices down to test support. Watch for oil, commodities, alternatve energies and extreme weather related stocks (not that that is a recognised industry term!!) to get active at the same time.

Not that you want to profit from peoples misfortune, but need to be alert to the fact that the market does what it does and we are in the market and it reacts to world events.

I hope the damage from Katrina is as minimal as possible.

http://news.bbc.co.uk/2/hi/americas/4192218.stm

OIL already above $70 / barrel in overnight trading:
http://biz.yahoo.com/ap/050828/hurricane_katrina_oil.html?.v=9

[robt]

The media makes it seem tomorrow will bring the worst market day since 9/11/01, and that may prove to be the case.

I can't entirely condemn "panic selling," as I will be out of my insurance holdings asap. When the market bottoms, it would be nice to have cash available for re-investment.

[David Randolph]

I've changed my mind, I was wrong on this Bearish Call, at least on the short term.

I see a lot of bearish news and conditions and the market held and rocketed higher today. I'm short term bullish now and tomorrow will start putting the 3 Stocks on Fire Portfolio back into almost full invested stage.

I'm very used to change my mind quickly, that's the only way to survive in these fast moving and ever changing markets. The market is always right and it always knows better.

Doesn't mean my long term reasoning wasn't right, I probably was just too soon on this bearish call. Back in bullish mode for me, back to buying stocks in force.

[stocky]

A big juicy applaud

[valueseeker]

The president of Phili Fed maybe signalling interest rate increase may come to an end, due to Katrina:

http://biz.yahoo.com/ap/050831/wall_street.html?.v=35

[stout7735]

Economic slowdowns in combination with interest rate  hikes and runaway deficit spending are a leading cause of death among aging bulls...Greenpan administered the  coup-de-grace today...

[David Randolph]

Yesterday we've had an important ascending trendline break on the S&P500. I see a double top unfolding with a projection to 1160 points over the short term 

Also, with RITA unfortunately striking main land over the weekend, we can get somekind of panic selling today and tomorrow. So beware bulls, rough times are probably coming.

[saffeysite1]

I just wanted to add this article to this thread.   I find it very interesting.

Burk's Technical Market Report

Mike Burk
September 24, 2005

The good news is:

The current decline should end soon leaving the market at a good point from which to advance.
NYSE breadth data has not been reliably useful since 1999.

For many years there has been a rule of thumb that there was little to worry about until NYSE new lows exceeded 40 for several days. Many trading systems of the 1990's used a 10% trend of NYSE new highs as a "no sell filter". No selling allowed would come into effect when the 10% trend of NYSE new highs exceeded 100 - 130 depending on how aggressive or conservative the system.

Last week the 10% trend of NYSE new highs finished the week at its low with a value of 142, keeping even the most conservative no sell filters long.

The lowest number of NYSE new lows for the week was 67, reported on Monday. The highest number of NYSE new lows for the week was 165 reported on Thursday and the 10% trend of NYSE new lows is 64. The new low numbers suggest you should be flat or short.

The above is an illustration of the problems using NYSE data.

The build up of new lows suggests we are seeing the end of the cycle that began in late April. The cycle will be complete when new lows begin to diminish rapidly.

The NASDAQ new low indicator (OTC NL) is a 10% trend (19 day EMA) of NASDAQ new lows. OTC NL does a good job of tracing out market cycles and it is the best indicator I know of for identifying market bottoms. The chart below covers this calendar year showing the NASDAQ composite (OTC) in red and OTC NL in blue, dashed vertical lines are drawn on the first trading day of each month. OTC NL is plotted on an inverted Y axis so an increasing number of new lows move the indicator downward. OTC NL turned sharply downward last week. The value of the indicator is 42 so any number of NASDAQ new lows greater than 42 will keep the indicator moving downward. Rallies will sometimes turn the indicator upward for a short time so it is prudent to wait until the indicator has been moving upward for at least 5 consecutive days before taking long positions.




Net Field Trend (NFT) is the percentage of issues with a downward trend subtracted from those with an upward trend. The trend is positive if there have been two consecutive higher highs and two consecutive higher lows in On Balance Volume (OBV). The trend is negative if there have been two consecutive lower highs and two consecutive lower lows in OBV. OBV is a running total of volume with volume added to the total on up days and subtracted from the total on down days. NFT usually leads prices both up and down.

The chart below shows the S&P 500 (SPX) in red and NFT calculated from the component issues of the SPX in blue, the dashed line in the middle of the chart is neutral or 0 for NFT. NFT hit its low for the period Friday in spite of prices rising for 2 days.




The chart below shows the OTC in red and an indicator calculated by subtracting momentum of new lows from momentum of new highs in purple. The indicator is binary, i.e., it moves to the top of the screen when the market is strong and to the bottom of the screen when the market is weak. It is sitting near the bottom of the screen.




The table below shows daily returns for the last 5 trading days of September during the 1st year of the Presidential cycle. Data for SPX covers the period from 1929 and for OTC from 1965. There are summaries for all years 1963 - 2004 for the OTC and 1928 - 2004 for the S&P500 (SPX).

The 1st year of the Presidential cycle is a little better than the average of all years, but the end of September is not as strong as most other months.




A cycle ending decline appears to have begun, and it will not be over until new lows begin diminishing rapidly.

I expect the major indices to be lower on Friday September 30 than they were on Friday September 23.


THey're graphs wich will depict this article a lot better.  Than didn
t come out when I pasted this. 

http://www.gold-eagle.com/editorials_05/burk092405.html