Thread: Market Talk / February 25th - March 3rd

This is a guy that Robo has posted a link to in the past. I highly recommend watching his Friday Roundup segment. Very good points that we have all talked about, but when it comes from a 24 year commodities trader it seems to carry more weight.

Are all traders ADHD? LOL I already know the answer to that.

http://www.youtube.com:80/futuresanalysts

If you are on a slower connection. I select the pause button and walk away for a few minutes while the video downloads. That way you don't miss anything.

Good luck and good trading.

February 24th, 2007
Predictive Model Output - Feb 23, 2007
By Bill
My vote to the Blogger Sentiment Poll by TickerSense is “bullish.”

This market has been very friendly, with clear signs for the simple chart-watcher. Breakthrough to new highs, pullback to support, some weakness that gets a lot of attention, fear, and anticipation of “correction,” and then another breakthrough to new highs. Throw in a six-week consolidation period for variety, and ever since the exit from the “W” bottom last summer, it’s been a good ride.

I still view any index price action near the 26 ema to be a low-risk buying opportunity, and in this environment any index-tracker (or double-leveraged index tracker, like the DDM) with a 2-day RSI below 10 presents opportunity to me, as well. It’ll work ’til it stops working. The Redskins never stopped running the counter tre in anticipation that opponents would learn how to deal with it, and back in the day, the opposition would see the Packers’ pulling-guard sweep until they managed to stop it consistently. They weren’t smart enough to know when it would stop working, so they let the situation prove that it didn’t work anymore. Similarly, I don’t know when it’ll stop working, so I will let the situation where it doesn’t work unfold, rather than pretending I know ahead of time just when it’ll stop working. It’s about the odds, and the odds favor initiating new longs in my opinion. Given that the S&P 500 is closer to support than to new highs, and given that the chart places the obvious stop loss so close to the entry, I view risk of new longs as low compared to the payoff potential.

The only potential fly in the ointment is the variety of GDP data released pre-market on Wednesday. I don’t anticipate economic data or events. I will see what happens and respond if I feel it’s necessary.


The monthly model output for potential has moved up to the 6th decile, the highest it’s been since Jan 5th. I was bullish then, too. This output is indicative of average returns for the next month, approximately 4/5ths of a percentage gain 21 sessions from now. The potential model provides a measurement of the odds for a 5% or greater correction from the last close, over the next 21 sessions. The 6th decile of potential puts the correction odds at about 6%, and such corrections actually happen 7.4% of the time.

The monthly model for safety is better at predicting corrections during a month, but not as good at predicting returns at the end of a month. Monthly safety has generally been in the 8th or 9th decile since the 20th of November, with three closes in the 7th decile, but it’s been in the 8th decile for 39 of the last 45 closes and in the 9th decile for three of the last four closes, including Friday’s. This puts the odds of a 5% or higher correction from closing, during the next 21 sessions, at about 1.2%.

The combination of the two monthly models makes me very bullish on the direction of the S&P 500 index.

The annual model puts potential return in the 9th decile, and puts safety in the 5th decile. 9th decile potential implies average and median returns of 15% and 17%, with 90% odds of finishing the year above where it’s at today. The potential model places the odds of a 10% correction from this point, over the next year, at about 4%.

However, the potential model doesn’t do as good a job at predicting corrections as the safety model does. The safety model is in the 5th decile for the next year, placing the odds of a 10% or more correction at about 11%, and such corrections occur, on average, 13% of the time. Note this is the odds calculation for a 10% correction from Friday’s close, not from the previous intraday high.

I’m still in development on the integration of longer-term data in the models, but I haven’t had a lot of spare time recently.

Summarizing: Very bullish for the next month. If the market gets a data bomb, I’ll respond to it, but I’m not second-guessing it either way.


http://billakanodoodahs.com/

Oscar's new website and new market indicator/ system. I'm not promoting it. I just find it interesting and possible a cross reference of sorts.

http://www.futurestraders.com/index.php

Briefing.com

08:00 am : S&P futures vs fair value: +4.5. Nasdaq futures vs fair value: +8.2. Early indications, due in large part to some Monday-morning deal making, suggest stocks will kick off a fresh week on an upbeat note. TXU Corp. (TXU) has agreed to be taken private for $45 bln, including debt. Reports that Dow Chemical (DOW) could get a leveraged buyout bid worth up to $54 bln and Station Casinos (STN) going private for $8.8 bln are also contributing to the bullish disposition.

Looks like we are going to get a 3rd consecutive gap open for the SOX. This is unprecedented. I wrote about what has happened in the past after 2 consecutive gap opens...

Courtesy of www.sentimentrader.com - This [on Friday] is only the fourth time in the history of the Philadelphia Semiconductor Index (SOX) that it has shown consecutive days where the low is higher than the prior day's high (i.e. two gaps up in a row that didn't close). The others were 5/23/95, 2/6/96 and 1/27/06 and a week later the SOX was lower all three times by an average of a whopping -6.7%.

Big change in the Leaders Analysis this morning. 5 IFTs for socks. Now standing 93% bullish, 8% bearish.

Had to join the bunny hoppers! It must be carrot chasing time!!

Cool Carrot.gif

Dow Transports are being crushed today, down 2.5%. There must have been some negative news on the economy front. That would explain why bonds are up nicely again today.

It might have been Greenspin. He was throwing words like the big 'R' (recession) today. Can somebody arrest him for tampering with the market?

The Kingdom of TSP
Daily Edition
February 26, 2007 Closing

Yak, Le Charts, Doodles, Tea Leaves & The Bunny Cage

Kingdom Yak:
Pro-Yak....................................The SPX is bearish below the 13 day moving average, but bullish above the 50 day average. Bollinger bands still register a normal market condition. The SAR remains bullish, but would change to bearish below 1440.

Con-Yak...................................The SPX MACD is currrently a weak bearish, and momentum has been slowing

Jester-Yak................................The SPX RSI was at 55.54 indicating neither overbought or oversold.

Le Charts
Moved a little closer to the support level.

Charts courtesy of www.stockcharts.com

Doodles:
Stops.......................................Alert (-1&#37....Trail (-2%)
.....SPX........1449.37 -1.82.........1445.............1431

Dollar........................................83.9 4 -0.10 for the day.

Lube (NYMEX) Closed at...............61.39 +0.25 for the day.
Oil Markers.................................<60= ok, 60-65= worry, >65= panic.

Tea Leaves:
Yakndoodles................................Yellow.

Bunny Cage
Bunny Hoppers / Top 10 ................0.8 ......0.0 ......2.1 .....4.5 ......2.7
TSP Funds...................................G-fund, F-fund, C-fund, S-fund, I-fund.

US or Israeli Military Strike against Iran Hinges on Secret Saudi Diplomacy

http://www.debka.com/article.php?aid=1258

MSNBC (Keith Olbermann) reported tonite that 5 generals or admirals are ready to resign if we attack Iran.

What do you think the domestic response will be if we actually attack? Constitutional crisis or support for the President? What will the military do? What will Congress do? Will people take to the streets?

What do you think of the reports that we're supporting Al-Qeada operatives in a struggle against the Shites and that we're ready to cross the Pakistani border in pursuit of Al-Qeada?

This is a mess!