Thread: Market Talk / March 4th - 10th

Hmm...I might have found the answer to my question. Did 1340 come from the 200 day moving average?

Originally Posted by Aspiration

Hmm...I might have found the answer to my question. Did 1340 come from the 200 day moving average?

Possibly. 200-day simple moving average is 1344. Exponential moving average is closer to 1365.

Originally Posted by Aspiration

Robo,

Definitely not intended as a criticism, as I have very much appreciated reading this and other insights into how you view the markets, but how did you decide on 1340 as a potential support for the S&P? I see why you chose 1360. It is a pretty clear support from the daily and weekly charts. However, I cannot see why you chose 1340. I would definitely appreciate any insight you can (and are willing) to provide into your decisionmaking process.

Again, not intended as a flame, but rather as an educational enrichment opportunity for myself.

Aspiration,

I can't give you the details of Fibonacci numbers, but many trade by them. Many books and web sites available to you if you want to spend the time on the theory and how to use these numbers trading. However, you could also throw darts, use crystal balls, moving averages, and many other models to try and figure out MR. MARKET. I can say this for sure, one of the TA's I follow uses this theory and performs very well agaisnt the indexes.


Many TA's use different models to try and find support levels and resistance levels. The 1340 is used from Fibonacci numbers calculating retracement patterns. 1340 is a 50% retracement. 50% is the most popular retracement amount used.

QUOTE FROM WEB SITE BELOW:

" Meaning, if on its latest move, a stock went from 50 to 100 and then started backing off, a 50% retracement would bring it to $75 before it turns around and continues its upward march."

Fibtimer and Fibcount use these numbers. I following the moving averages myself, but find it very interesting how these TA's use these numbers.

Read Fibcounts blog daily and you will get a better understanding. (Forecasts for the Dow, Sp500, Nasdaq, Gold and Silver using TD combo, Elliott Wave and Fibonacci concepts.)

I don't use the math, but I do read comments from these Fib number and Elliott Wave TA's. I can't post others because they are paid services.


Current SPX analysis: Support levels at SPX ( 1341 50% retracement ) and then ( 1313 61.8% retracement )


http://daytrading.about.com/cs/charts/a/fibonacci_2.htm

http://fibo-count.blogspot.com/


My opinion is that around 1360 200 DMA should hold. The same numbers you and Tom were pointing out. I have already started scaled buying and will continue. I don't know if 1360 will hold, but I'm a buyer if we hit it. I don't know were the bottom is, but stocks are getting cheaper everyday.

25% long and adding on weakness. However, again I think 1360 will hold. If it doesn't I will not sell until I get a gain. No matter how painful. That's why I have only 25% invested. Those that think they can pick a bottom are just lucky if they do. Most wait to see that the trend is starting back up.
The short-term trend is down for now, the longer-term trend in my opinion is still up. So I'm a scaled buyer during this sell-off. I said scaled buyer!

Good trading/investing.


Again, I don't think we will hit 1340, but that is only an opinion. Heck, we could go lower, but I'm trying to pick the bottom.

I'll let the market tell me when the short-term trend is back up.

Robo

Some Market comments:


The Fox news ( Bulls and Bears Crew ) are telling folks to short the Markets on Monday. Many are convinced that we are headed for a 10% correction. The CNBC crew all changed from Big Bulls to Big Bears in two days. They did this after they talked many investors into buying at the top. Could so many be wrong ? They are crying and shouting this is it, a 10% correction! What say you? Just the start or almost over?

I'm currently 25% long after Friday's buys. All long positions. A mix of Internationals and small caps. I might feel the pain next week, but plenty of powder left for scaled buying. I have to many sell-signals to add additional positions for now. For those that are long good luck next week. This sell-off is fear driven and could turn quickly. Looking forward to Bob's and Henry's news-letters by Monday for their opinions on the over-all health of the market.

Most of the Timers I follow are out or shorting the Market. Keep in mind I said Timers. Longer-term investment guys are buyers here. We could just as easily rally next week as see more selling.

Two TA's are sticking with a hold on small-caps or S Fund. If support fails they will be forced to issue sells next week. FundSurfer commented on support for small-caps and we could see a bounce here. We are very close to critical support levels and in my opinion they should hold and we will get a bounce. High risk trade and that is why I'm only 25% long. Again, my opinion only.

Good Investing/Trading I lost money in my brokerage accounts last week and positions in the I Fund. I'm holding for now and will not add additional money. Put me back to around 1% YTD. However, plenty of time left and stocks are getting cheaper. What say you Birchtree?

Timing is everything!!!

Spaf,
Could you do a poll to see how many TSPTALK folks think we will get a 10% or greater correction. I haven't seen this many Bears in sometime!

My plan is to buy all the way down until I hit water - the bottom of the well. Lower priced stocks mean larger percentages on dividend payouts which means more income for retirement. My saving grace will be my DCA and various dividend reinvestments. I've done this so many times it's almost second nature - providing I'm on the right side of the curve. I can always get more cash to buy on the rebound - have to peek inside the Mrs check book for possible additional reserves - she's my local banker you know.

Robo,

I really appreciate the explanation. I am thinking of doing something similar to your 25%. I am currently 100% G. Thinking about going 20% C if we hit 1365. Another 20% if we hit just above 1340. Another 20% if we hit just above 1325. Another 20% if we hit just above 1290.

If we successfully break 1290, I will be seriously reevaluating my decision to have a presence in the market.

Thanks again for the explanation of the 1340 number!

Again, I don't think we will hit 1340, but that is only an opinion. Heck, we could go lower, but I'm trying to pick the bottom.

I'll let the market tell me when the short-term trend is back up.

Robo


Should have read ( NOT TRYING TO PICK THE BOTTOM), left out the (NOT).

Only luck if you can pick the bottom. The dart I threw hit 1378.40 and then we rally. Should hit it interday Monday or Tuesday. However, we could sell off again and test the lows after this next rally.

YA RIGHT! I'll check the crystal balls tonight. I wish I knew, all just opinions!!!!
If I did know I would not be posting here and I would be a very rich man.

Avoid Timers that tell you they know for sure and listen and follow long-term advice from folks with good track records.

Robo

Originally Posted by Aspiration

Robo,

I really appreciate the explanation. I am thinking of doing something similar to your 25%. I am currently 100% G. Thinking about going 20% C if we hit 1365. Another 20% if we hit just above 1340. Another 20% if we hit just above 1325. Another 20% if we hit just above 1290.

If we successfully break 1290, I will be seriously reevaluating my decision to have a presence in the market.

Thanks again for the explanation of the 1340 number!

Aspiration,

Think about what you will do if we rally from here. We could head back up Monday and rally to new highs from here. I think scaled buying is the way to go until we get clear buy signals again. Your approach works nicely if you are are Bullish and a longer-term investor. Talk about a sweet way to dollar cost average. However, in my opinion WAY TOO much cash on the sidelines to get to 1290. That would complete a 10% correction so it's possible, but I think we rally before 10% down. I hope Spaf does the poll. I wonder just how Bearish the board is. Many think we will get a 10% correction and that could be why we will not. Anyway, we need to let things settle down some and not bet the farm on short-term trades.

Take Care!

robo

The market could do only a few things in the coming weeks. 1. Go down some more, 2. go up some more, 3. go up then down, or 4. go down and go up.

If you buy your way down, scenario 1 and 4 would benefit you. If scenario 2 or 3 happens, you may get hurt. In scenario 2, you'd only be in the market 20% during an up cycle. In scenario 3, you be 20% in during the up cycle, but more % in during the down cycle.

Originally Posted by VirginiaBob

The market could do only a few things in the coming weeks. 1. Go down some more, 2. go up some more, 3. go up then down, or 4. go down and go up.

If you buy your way down, scenario 1 and 4 would benefit you. If scenario 2 or 3 happens, you may get hurt. In scenario 2, you'd only be in the market 20% during an up cycle. In scenario 3, you be 20% in during the up cycle, but more % in during the down cycle.

Well said! Now what to do? I'm going to let the Market show me the way and try and catch the next up trend before it gets away from me. I'm Bullish longer-term and Bearish short-term. The Market looks like it will not be so easy this year. Careful if your a Timer or a dipper. I do agree with Birchtree for the long-term investor. Get you shopping list out. Things are on sale and getting cheaper everyday!

I appreciate the critical analysis, and I agree that if the market takes off on a rally Monday it would really throw off my strategy. I think we will know tonight if we are going to see a real rally tomorrow. Just my novice intuition, but I do not see this downturn ending until the yen stops gaining against the dollar and the Nikkei has an up day. I think that is likely to be the sign that the bears are about to lose some ground.

My novice intuition also says we see a W on this downturn, and, if we do, I am betting that the middle of the W only takes us up 33% of the ground we dropped from the top. I guess my thoughts are that I would rather miss out on the possibility of getting that gain if it is only from here up than take on the risk of a much larger downside - but I am admittedly very risk averse. My hunch is that we will see 1365. I feel there is a good chance we might see 1340. I think there is a low chance we see 1325. I will be surprised if we see 1290. I will be shocked (at a loss for words) if we go below that. To me, if the market goes below 1290, it would be as if someone pulled the floor out from under the market.