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Thread: A little bit of a warning from Trader Fred

  1. #1

    Default A little bit of a warning from Trader Fred

    With all due respect to Trader Fred subscribers, I thought this was rather important and wanted to share it here.

    Fred's daily market strength chart has always been so intriguing to me but it is not as easy to use as it might look at times.

    The strength chart (blue line) can lead the market (black line) by one to two weeks, but can be a lot less during a volatile market.

    Fred showed this current rally on the chart a few weeks ago but asking him about it, he said that since it never made it above -0-, that it is not a measure of coming strength, just weakness subsiding. Well, that turned out to be an understatement and I did not take advantage of the rally.



    Now we see that, in the area of weakness (below -0-) the strength line is moving right back down. I would think that would start sometime next week, although the blue line did move higher for two weeks before peaking, and this rally is only one week long.


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  3. #2

    Join Date
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    Default Re: A little bit of a warning from Trader Fred

    Tom, for whatever it's worth, I'm a Trader Fred subscriber and I've got no problem with a heads-up like this. In these market times we're all in the same stranded lifeboat. I'd rather we shared the rations while we wait for higher water.

    Lady

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  5. #3

    Default Re: A little bit of a warning from Trader Fred

    Thanks Lady!

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  7. #4

    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by tsptalk View Post


    Now we see that, in the area of weakness (below -0-) the strength line is moving right back down. I would think that would start sometime next week, although the blue line did move higher for two weeks before peaking, and this rally is only one week long.
    Are you interpreting this chart as saying that the blue line (strength line) looks like its going to make another upward move beginning next week?

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  9. #5

    Default Re: A little bit of a warning from Trader Fred

    It's possible, but that is the problem with this indicator. It is not precise from a timeline perspective. The only thing I get out of it is that the rally will run out of steam and the market should pull back again (and -3 is not good). Whether that happens this afternoon, next week, or the week after, I'm not sure (nor is Fred), but based on the chart it "should" be within two weeks of the beginning of March, which is now.

    Fred posts this chart every day and you can get a feel for it, but because its consistency seems to depend on volatility, it is a moving target (time-wise).

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  11. #6

    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by XL-entLady View Post
    Tom, for whatever it's worth, I'm a Trader Fred subscriber and I've got no problem with a heads-up like this. In these market times we're all in the same stranded lifeboat. I'd rather we shared the rations while we wait for higher water.

    Lady
    Tom,

    I agree with Lady on this as a Fred subscriber.
    I bought into the stock funds just a little early on the rally and obviously sold a few days too quick. I have been getting conflicting signals from several different sources....myself included

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  13. #7

    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by XL-entLady View Post
    Tom, for whatever it's worth, I'm a Trader Fred subscriber and I've got no problem with a heads-up like this. In these market times we're all in the same stranded lifeboat. I'd rather we shared the rations while we wait for higher water.

    Lady
    That's a wonder attitude to have - and nothing could more strongly represent your character.

    Quote Originally Posted by Gumby View Post
    Tom,

    I agree with Lady on this as a Fred subscriber.
    My message to Lady - equally applies to you

    Quote Originally Posted by tsptalk View Post
    Thanks Lady!
    Tom - this is an outstanding response from you!

    This would have been a very tough call - and you went with your heart.

    THANK YOU !!

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  15. #8

    Join Date
    Apr 2005
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    Default Re: A little bit of a warning from Trader Fred

    The fear is that we could have another 600 point down draft and null and void this rally in one full wooosh. I don't think the power is there to do it. But it's OK to be afraid.

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  17. #9

    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by Steadygain View Post
    Tom - this is an outstanding response from you!

    This would have been a very tough call - and you went with your heart.

    THANK YOU !!
    SteadyG -You never let an opportunity to compliment someone, get by, do you? That's a great personality trait. Let's hope it is contagious.


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  19. #10

    Join Date
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    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by tsptalk View Post
    With all due respect to Trader Fred subscribers, I thought this was rather important and wanted to share it here.

    Fred's daily market strength chart has always been so intriguing to me but it is not as easy to use as it might look at times.

    The strength chart (blue line) can lead the market (black line) by one to two weeks, but can be a lot less during a volatile market.

    Fred showed this current rally on the chart a few weeks ago but asking him about it, he said that since it never made it above -0-, that it is not a measure of coming strength, just weakness subsiding. Well, that turned out to be an understatement and I did not take advantage of the rally.



    Now we see that, in the area of weakness (below -0-) the strength line is moving right back down. I would think that would start sometime next week, although the blue line did move higher for two weeks before peaking, and this rally is only one week long.
    Thanks for the warning Tom. We had an MACD crossover Friday, which should be a fade sometime next week. OPEX will also contribute to any volatility next week. And that ridiculous P/C ratio makes for an even more confusing read. Normally, that reading by itself is scary enough to steer clear of the markets. But do we have enough bearishness to push higher? I think we do, but getting through next week without falling apart is critical. If buyers disappear in the face of any serious selling pressure, we may be in trouble again.

    I may decide to bail if we have more strength early next week. Whether that means a full cash position or something less I'll have to decide based on how things play out. I'll have to make that decision Monday or Tuesday.

    I have to say, I'm impressed with Trader Fred's system overall. You've got some very talented folks available to help us TSPers. They're all top notch.

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  21. #11

    Join Date
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    Default Re: A little bit of a warning from Trader Fred

    Thanks for the update. This market has managed to challenge many a trading systems and it would be quite a feat for Fred's system to be one of the last one's standing.

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  23. #12

    Default Re: A little bit of a warning from Trader Fred

    Quote Originally Posted by coolhand View Post
    I have to say, I'm impressed with Trader Fred's system overall. You've got some very talented folks available to help us TSPers. They're all top notch.
    Thanks coolhand. That includes the talent here on the board as well!

  24.  
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