I'll return to blogging next week. For now, there is kind of a mix. On the one hand, KJ is still in on the negative side, although only partially in, not all in. On the other hand, the Nasdaq 100 keeps slowly but surely getting more positive. Today it was up over 3.00.
Rob
Wednesday, August 31, 2011
Tuesday, August 30, 2011
August 30, 2011
The big news today is that KJ threw most of his money in on the negative side. And we had an up day. Not a giant up day, but an up day. As long as he's on the negative side, I don't think we can have a down day of any significance. The market does seem to want to do a little correcting. So whenever he gets out of that down position, I think we'll have a little correction. The longer-term indicator of the Nasdaq 100 remained pretty much the same.
The S&P 500 numbers so far this week:
Monday, August 29: 76.49/164.20
Tuesday, August 30: 81.56/241.83
Notwithstanding any brief correction, we remain in good position to keep moving up from here.
Rob
Sunday, August 28, 2011
August 28, 2011 (Critical Week Coming Up)
It was heartening to see the big up day on Friday. Overall, I still think we've reached a bottom of sorts and are starting a nice move up, one that could last as much as a year. But I could easily be wrong. Either way, whether we go marching upward for a while or if we suddenly turn down, I do think the crash is coming. I say that for two reasons. One is the giant head and shoulders pattern from 2000 to the present which probably representats the mother of all tops. Second is how high we got on the positive side this past April, up to 7.25 times the money on the positive side versus the money on the negative side, when we had never gotten above 3.00 before this year. So I'm very, very curious how this coming week will go.
Things are still plenty negative in the S&P 500 numbers. The numbers at the end of this past week were:
Wednesday: 66.39/163.04
Thursday: 68.90/165.10
Friday: 69.44/164.85
So KJ is out of the market, and the rest are not budging from their positions, which are very negative. This is potentially very good.
My longer-term indicator, the Nasdaq 100 numbers, are above 2.00, but obviously nothing like the positive numbers we were seeing earlier in the year. The Nasdaq numbers since last Friday, when we had the lowest number of the year (dividing the positive number by the negative number equals):
Friday, August 19: 1.39 (lowest number of the year, coming right on the low for the year)
Monday, August 22: 1.45
Tuesday, August 23: 2.53
Wednesday, August 24: 2.53
Thursday, August 25: 2.22
Friday, August 26: 2.36
So overall, things are looking good for a continuation of the move up we have started. People are still going crazy over gold, all the radio talk shows are talking gloom and doom, etc. My only concern here is that I've learned that a pattern trumps my volume numbers. And it's possible that what I'm seeing as a three peaks pattern so far this year in the markets, which is the early part of the three peaks and domed house pattern, is actually a head and shoulders pattern, marking a final high of some sort. We'll see what happens.
I started my blog back up around a month ago talking about how I blamed the Fed for letting the volume numbers get so high by its "quantitative easing" program by basically spending trillions of dollars that we don't really have in buying back U.S. Treasurys, where that money made its way to the stock market and induced false confidence. There are other reasons to despise the Fed. I recommend that you go to You Tube and check out a fascinating video about the Fed called "Quantitative Easing Explained." It's a cartoon. I learned a lot from it. Now I hate the Fed even more, along with Goldman Sachs. Check it out.
Rob
Things are still plenty negative in the S&P 500 numbers. The numbers at the end of this past week were:
Wednesday: 66.39/163.04
Thursday: 68.90/165.10
Friday: 69.44/164.85
So KJ is out of the market, and the rest are not budging from their positions, which are very negative. This is potentially very good.
My longer-term indicator, the Nasdaq 100 numbers, are above 2.00, but obviously nothing like the positive numbers we were seeing earlier in the year. The Nasdaq numbers since last Friday, when we had the lowest number of the year (dividing the positive number by the negative number equals):
Friday, August 19: 1.39 (lowest number of the year, coming right on the low for the year)
Monday, August 22: 1.45
Tuesday, August 23: 2.53
Wednesday, August 24: 2.53
Thursday, August 25: 2.22
Friday, August 26: 2.36
So overall, things are looking good for a continuation of the move up we have started. People are still going crazy over gold, all the radio talk shows are talking gloom and doom, etc. My only concern here is that I've learned that a pattern trumps my volume numbers. And it's possible that what I'm seeing as a three peaks pattern so far this year in the markets, which is the early part of the three peaks and domed house pattern, is actually a head and shoulders pattern, marking a final high of some sort. We'll see what happens.
I started my blog back up around a month ago talking about how I blamed the Fed for letting the volume numbers get so high by its "quantitative easing" program by basically spending trillions of dollars that we don't really have in buying back U.S. Treasurys, where that money made its way to the stock market and induced false confidence. There are other reasons to despise the Fed. I recommend that you go to You Tube and check out a fascinating video about the Fed called "Quantitative Easing Explained." It's a cartoon. I learned a lot from it. Now I hate the Fed even more, along with Goldman Sachs. Check it out.
Rob
Wednesday, August 24, 2011
August 24, 2011 (KJ Exits Stage Left)
Darn. KJ got out today. But we still managed to have an up day without him. That's good. The S&P 500 positive/negative numbers so far this week:
Monday, August 22: 65.81/264.69
Tuesday, August 23: 63.60/255.57
Today, Wednesday, August 24: 66.39/163.04
That negative number of 163.04 is right where it was last week before he got in for a couple days. So things are still very negative in the S&P 500, my short-term indicator, which is good.
My long-term indicator, the Nasdaq 100, stayed exactly the same today. So far this week:
Monday, August 22: 110.76/76.16 = 1.45
Tuesday, August 23: 135.94/53.75 = 2.53
Today, Wednesday, August 24: 140.39/55.44 = 2.53
I am expecting a down day coming right up as people jump on the bandwagon. If the Nasdaq 100 had not gotten so high so quickly, I'd say any down day would definitely be a good buying opportunity. But since it has gotten so high so quickly, which still troubles me a bit, I'll say it's probably a good buying opportunity, with some possible danger of a severe drop.
So what do you think KJ will do next? It's kind of fun trying to figure out his next move. Is he thinking we're going to have another large move down like the last time we had a few big up days? Or is he thinking maybe this rally is different, that it's time for him to jump in on the up side? Probably the latter, unfortunately. But that's just a guess. You never know with KJ.
Rob
Tuesday, August 23, 2011
August 23, 2011 (Up, Up and Away?)
Have we reached bottom and are now starting up? Or was today just another head fake? Most likely we are starting up, but I wouldn't be surprised if this rally fails. But even if it does fail, we are near the bottom.
KJ came through and stayed on the down side big time today. Basically the same numbers as yesterday in the S&P 500. So he lost over 15% a week or two ago when we had those large up days and he was on the down side. Now today he lost over 6%. Don't you feel sorry for him? No! What is he going to do now, do you think? Those three large up days followed by the move back down recently certain was a training exercise. Will he stay in no matter what for a few days, figuring it's going to turn back down, since all the conservative radio talk show hosts are saying we're doomed and we should all buy gold? Or will he just say screw this and get out? Or would he actually figure there will be another large up day or two and get on the up side? I doubt that, but you never know.
The numbers were not good to see in the Nasdaq 100 though. There was a very large move to the positive side. The numbers in the Nasdaq 100 for the last four days, giving just the result of dividing the larger number, which is the positive number, by the smaller number, the negative number:
Thursday, August 18: 1.57
Friday, August 19: 1.39
Monday, August 22: 1.45
Today, Tuesday, August 23: 2.53
Wow. That's quite a jump to the positive side, all the way up to near what was then the record highest number I had seen when we had the top in 2007. So that worries me. But that could fall back down quickly. I wouldn't be surprised if many of them on the positive side were just looking for a bounce and will quickly take profits and get back out of that positive position. I hope. The usual pattern for the start of a big move up is two or three large up days, followed by a down day as people jump in on the positive side, which scares them off, and then we continue moving up. Since today was such a large up day, we could get that down day quickly, like tomorrow. That would probably scare off a lot of the positive money in the Nasdaq 100.
What will KJ do going into Wednesday? Will he stay on the negative side, or get out? Will the money on the positive side in the Nasdaq 100 take profits or get even more positive? Wednesday should be interesting.
Rob
KJ came through and stayed on the down side big time today. Basically the same numbers as yesterday in the S&P 500. So he lost over 15% a week or two ago when we had those large up days and he was on the down side. Now today he lost over 6%. Don't you feel sorry for him? No! What is he going to do now, do you think? Those three large up days followed by the move back down recently certain was a training exercise. Will he stay in no matter what for a few days, figuring it's going to turn back down, since all the conservative radio talk show hosts are saying we're doomed and we should all buy gold? Or will he just say screw this and get out? Or would he actually figure there will be another large up day or two and get on the up side? I doubt that, but you never know.
The numbers were not good to see in the Nasdaq 100 though. There was a very large move to the positive side. The numbers in the Nasdaq 100 for the last four days, giving just the result of dividing the larger number, which is the positive number, by the smaller number, the negative number:
Thursday, August 18: 1.57
Friday, August 19: 1.39
Monday, August 22: 1.45
Today, Tuesday, August 23: 2.53
Wow. That's quite a jump to the positive side, all the way up to near what was then the record highest number I had seen when we had the top in 2007. So that worries me. But that could fall back down quickly. I wouldn't be surprised if many of them on the positive side were just looking for a bounce and will quickly take profits and get back out of that positive position. I hope. The usual pattern for the start of a big move up is two or three large up days, followed by a down day as people jump in on the positive side, which scares them off, and then we continue moving up. Since today was such a large up day, we could get that down day quickly, like tomorrow. That would probably scare off a lot of the positive money in the Nasdaq 100.
What will KJ do going into Wednesday? Will he stay on the negative side, or get out? Will the money on the positive side in the Nasdaq 100 take profits or get even more positive? Wednesday should be interesting.
Rob
Monday, August 22, 2011
August 22, 2011 (This Is What We Want to See)
Very good news, although we could still be a few days to a week from the low. The good news is that KJ threw the kitchen sink in on the down side. Yes, I am mildly surprised we didn't have a giant up day as a result. But as I've said, when we get to an important low, the short side will win for a little while. Yes, even KJ could win for a while. But just having him all in on the short side is very important. You may recall that we had a giant move up for several days while he was all in on the short side a week or so ago. This time, no giant up day, although it started up, but then fell back to the zero line. This even though today was the most negative day we've had this entire year in the S&P 500. The last three days in the S&P 500:
Thursday, August 18: 68.48/173.49
Friday, August 19: 68.93/163.21
Today, Monday, August 22: 65.81/264.69
The Nasdaq 100 numbers stayed pretty much the same. It was at 1.39 on Friday, up slightly to 1.45 today.
Best-case scenario is we're at the bottom and we start up tomorrow. That wouldn't surprise me with a day like today, where a big rally fizzled and people think, oh, look, the rally couldn't hold, we must be going down some more. Worst-case scenario is we have a heart-thumping drop for a few days to a week, KJ makes some money for a few days, the Nasdaq 100 number finally goes negative, and then that's the low. But I still say we're at or near an important low.
Rob
Thursday, August 18: 68.48/173.49
Friday, August 19: 68.93/163.21
Today, Monday, August 22: 65.81/264.69
The Nasdaq 100 numbers stayed pretty much the same. It was at 1.39 on Friday, up slightly to 1.45 today.
Best-case scenario is we're at the bottom and we start up tomorrow. That wouldn't surprise me with a day like today, where a big rally fizzled and people think, oh, look, the rally couldn't hold, we must be going down some more. Worst-case scenario is we have a heart-thumping drop for a few days to a week, KJ makes some money for a few days, the Nasdaq 100 number finally goes negative, and then that's the low. But I still say we're at or near an important low.
Rob
Saturday, August 20, 2011
August 20, 2011 (Looking for the Low)
I'm sticking to my previous statement, that I think we are hitting a major low here. However, I wouldn't be surprised if we have to plunge for a few more days before we're there. Or maybe not. KJ is still out, everything is very negative, yet we had another fairly large down day. As I said before, this is a classic sign of a low, from what I've seen in the past. It may be that the Nasdaq 100 numbers do have to go negative. We're still not there. The Nasdaq 100 numbers for the past week:
Monday: 2.16
Tuesday: 2.78
Wednesday: 3.05
Thursday: 1.57
Friday: 1.39
That 1.39 number is the lowest number so far this year. But again, maybe it has to go negative. That could happen in a couple days to a week. So there could be some scary days just ahead. Or maybe not. Maybe we're at that low already.
Rob
Monday: 2.16
Tuesday: 2.78
Wednesday: 3.05
Thursday: 1.57
Friday: 1.39
That 1.39 number is the lowest number so far this year. But again, maybe it has to go negative. That could happen in a couple days to a week. So there could be some scary days just ahead. Or maybe not. Maybe we're at that low already.
Rob
Thursday, August 18, 2011
August 18, 2011 (Fascinating, Said Spock)
I've been wondering the last few days how the market was going to turn back down with so much negativity. I couldn't quite see just turning down and going down little by little with the numbers as negative as they are in the S&P 500. So I was thinking we might have a rally for a while to get things less negative. Another possibility was a giant down day. I've mentioned in the past how that can freeze the people who might go short because, hey, it could turn right back up and your short money would get killed. But to have a giant down day, I figured KJ (Knee-Jerk) would have to throw his money on the positive side. And I figured with all the negative talk lately, people talking about the death cross in the S&P 500, where it crosses below the 200-day moving average, European markets tanking, KJ wouldn't be throwing his money on the positive side, would he?? The numbers in the S&P 500 for this week:
Monday: 71.80/252.54
Tuesday: 71.64/158.49
Wednesday: 68.44/166.09
Today, Thursday: 68.48/173.49
He didn't jump in on the positive side!! I'm stunned. Knowing what the market did today, I would have bet $1,000 that he had. I really mean that, not just for effect, I really would have bet someone $1,000. Glad I didn't. So what the heck is going on?
I've also mentioned previously that when you get a big up or down day and KJ isn't involved, and/or it goes down when things are very negative, or vice versa, something is up, like a low or a high of some sort. Here are the Nasdaq 100 numbers for this week, just showing the result of dividing the positive number by the smaller negative number:
Monday: 2.16
Tuesday: 2.78
Wednesday: 3.05
Today, Thursday: 1.57
No, we haven't gone negative, but that is a much less positive number than we've had for a long time. So again, what's up?
I've been staring at the charting for this year lately, thinking it might not be the head and shoulders that I was assuming it was, that it could possibly be the three peaks of "three peaks and a domed house" fame, from Jerry Favors, that I used to talk about a lot. Below is the charting for this year so far. And below that is the basic three peaks and domed house pattern. More blogging below ...
Could it be that we're only at point 10, which you see falls below the lows of the three peaks? Or maybe the smaller three peaks at 15 through 20? Either way, it would imply a long period of rallying before we reach the final high and head down big time.If KJ had gotten in on the positive side, I'd be saying we're going to continue down. But because he didn't, and because things were so negative and yet we still went down, and since the Nasdaq 100 number got down below where it was at the lows back in June, which was I believe 1.71, I'm really thinking right now an extended rally is in the making, probably starting tomorrow. I could easily be wrong. Like I said, when the shorts win, something is up. And that's what I think is up.
Just to argue with myself a little though, we did get up to a never-before-seen number of around 7.5 at the high back in April. How could that not resolve by going down to negative numbers? I've got to believe it will resolve eventually, but we could go even higher first. I've had some money on the short side for a while. I'm covering my shorts tomorrow. If I'm wrong and we continue to plummet, sorry about that. If we do go marching upward, be on the lookout for a head-and-shoulders pattern, otherwise known as the domed house.
Rob
Wednesday, August 17, 2011
August 17, 2011
Not much change at all in the numbers today. The S&P 500 numbers remain very negative. I'm wondering if KJ left behind some money on the down side rather than get completely out. The numbers so far this week:
Monday: 71.80/252.54
Tuesday: 71.64/158.49
Today: 68.44/166.09
I've said the S&P 500 is my short-term indicator. It's probably more accurate to say KJ is my short-term indicator. So this negativity that's left without him may or may not result in a move up. I still am thinking we will have another large up day or two to get things less negative. Or, since things are so negative, maybe even a week or two to the up side. That would definitely do it.
The Nasdaq 100 numbers keep creeping upward. So far this week, just showing the result of dividing the positive number by the negative number:
Monday: 2.16
Tuesday: 2.78
Today: 3.05
I wonder what KJ is thinking now. I would guess he still thinks we'll turn back down. But you never know with KJ.
Rob
Monday: 71.80/252.54
Tuesday: 71.64/158.49
Today: 68.44/166.09
I've said the S&P 500 is my short-term indicator. It's probably more accurate to say KJ is my short-term indicator. So this negativity that's left without him may or may not result in a move up. I still am thinking we will have another large up day or two to get things less negative. Or, since things are so negative, maybe even a week or two to the up side. That would definitely do it.
The Nasdaq 100 numbers keep creeping upward. So far this week, just showing the result of dividing the positive number by the negative number:
Monday: 2.16
Tuesday: 2.78
Today: 3.05
I wonder what KJ is thinking now. I would guess he still thinks we'll turn back down. But you never know with KJ.
Rob
Tuesday, August 16, 2011
August 16, 2011
The press was saying the market was going down today because investors' thoughts are turning back to Europe. Actually, yes, KJ got out of his short position. That's why we were able to go down. The S&P 500 numbers for yesterday and today:
Monday: 71.80/252.54
Today: 71.64/158.49
That's still a pretty large negative number though, even without KJ. I think that explains why what was a pretty large down day at mid-day turned into a modest down day as the market almost got back to the even line but turned down at the end.
So what will KJ do now? I think he'll stay out for at least a couple days. Wednesday should be interesting. I could see it going either way. On the one hand, I could see us moving back up strongly for still one or two or three more days since there is still obviously a pretty negative sentiment. That was a nasty drop we had. People will probably remain cautious here for a little while until greed eventually takes over. On the other hand, I've seen days like today lead to a big down day the next day. People see that we were way down and then came back from the dead and go, oh, see, it could have tanked but it didn't, must be we're going up.
It's fun to guess. My volume numbers are rarely wrong, but I am frequently wrong when I'm just guessing. So it's just for fun. But I think we'll go up for a couple more days and maybe even get KJ to move to the positive side, whereupon the bottom would fall out.
My long-term indicator, the Nasdaq 100, was more positive today. The last two days:
Monday: 125.38/58.17 = 2.16
Today: 150.11/54.02 = 2.78
My long-term indicator has never failed me. We have not reached bottom. The market just needs to do a little more lulling people to sleep, there-there, that nasty drop is all over, everything's okay, come on back, everything's okay.
Rob
Monday: 71.80/252.54
Today: 71.64/158.49
That's still a pretty large negative number though, even without KJ. I think that explains why what was a pretty large down day at mid-day turned into a modest down day as the market almost got back to the even line but turned down at the end.
So what will KJ do now? I think he'll stay out for at least a couple days. Wednesday should be interesting. I could see it going either way. On the one hand, I could see us moving back up strongly for still one or two or three more days since there is still obviously a pretty negative sentiment. That was a nasty drop we had. People will probably remain cautious here for a little while until greed eventually takes over. On the other hand, I've seen days like today lead to a big down day the next day. People see that we were way down and then came back from the dead and go, oh, see, it could have tanked but it didn't, must be we're going up.
It's fun to guess. My volume numbers are rarely wrong, but I am frequently wrong when I'm just guessing. So it's just for fun. But I think we'll go up for a couple more days and maybe even get KJ to move to the positive side, whereupon the bottom would fall out.
My long-term indicator, the Nasdaq 100, was more positive today. The last two days:
Monday: 125.38/58.17 = 2.16
Today: 150.11/54.02 = 2.78
My long-term indicator has never failed me. We have not reached bottom. The market just needs to do a little more lulling people to sleep, there-there, that nasty drop is all over, everything's okay, come on back, everything's okay.
Rob
Monday, August 15, 2011
August 15, 2011 (Big Up Day Means ...)
Very large up day. The press says it's because people liked the Google deal with Motorola. Actually the reason was because KJ, and many people thinking the same way, stayed short, big time.
The numbers from the last three trading days in my short-term indicator, the S&P 500:
Thursday: 69.96/262.77
Friday: 68.44/258.30
Today: 71.80/252.54
So in just three trading days, this guy is down 15.18%. That's based on the fund value going into Thursday compared with its value at the end of today, not the difference between today's red number compared to Thursday's. You could certainly see this coming with all of the negative talk in the press this past week. He's pretty convinced we're going down. But how much can he take? These funds that move two times the index they are based on, like I said, force your hand. Will he throw in the towel, stay short another day or two? We shall see.
The Nasdaq 100 stayed pretty much the same today, at 2.16. I still say there's no way we've reached a bottom when the Nasdaq 100 numbers haven't even fallen below 2.00. No way. We'll head back down when KJ gives up. My personal guess is he stays short another day or two. Just a guess though, that's for sure.
Rob
Friday, August 12, 2011
August 12, 2011
Just for fun, I'll put the S&P 500 numbers at the bottom. See if you can guess what happened with today's numbers. If you'll recall, yesterday KJ (Knee-Jerk) threw the kitchen sink in on the down side and we had a large up day. Today, the Dow had a pretty good up day, but the S&P 500 was only up a small amount.
Things were much less positive in the Nasdaq 100 today. This week's positive/negative numbers:
Monday, 8/8: 121.12/50.67 = 2.39
Tuesday, 8/9: 143.14/53.19 = 2.69
Wednesday, 8/10: 132.41/51.93 = 2.55
Thursday, 8/11: 135.57/51.24 = 2.65
Today, Friday, 8/12: 117.36/55.54 = 2.11
So a number of traders took some profits after Thursday's big up day. But 2.11 is still a historically large positive number from what I've seen over the years. It's not large compared to what I've seen this past year. But before this past year, I used to figure anything over 2.00 was looking like some sort of top. So there could be some rallying to go in the next few market days, but my blog still says we will turn back down and go lower. I still think that we have to have more money on the negative side then the positive side before this move down will be even temporarily over.
The answer for what KJ did was a bit of a shock to me. He kept the large amount in on the negative side, and yet we didn't have a large up day, except the Dow had a fairly good day. I won't bother with the numbers. They were basically the same as Thursday's numbers. I could easily be misreading things here, but to me this says we have a market that really, really wants to go down, otherwise we would have had a much larger up day. We'll see what next week brings. Will he switch to the up side which could lead to a large down day, or leave it all on the down side and let us move up some more?
Rob
Things were much less positive in the Nasdaq 100 today. This week's positive/negative numbers:
Monday, 8/8: 121.12/50.67 = 2.39
Tuesday, 8/9: 143.14/53.19 = 2.69
Wednesday, 8/10: 132.41/51.93 = 2.55
Thursday, 8/11: 135.57/51.24 = 2.65
Today, Friday, 8/12: 117.36/55.54 = 2.11
So a number of traders took some profits after Thursday's big up day. But 2.11 is still a historically large positive number from what I've seen over the years. It's not large compared to what I've seen this past year. But before this past year, I used to figure anything over 2.00 was looking like some sort of top. So there could be some rallying to go in the next few market days, but my blog still says we will turn back down and go lower. I still think that we have to have more money on the negative side then the positive side before this move down will be even temporarily over.
The answer for what KJ did was a bit of a shock to me. He kept the large amount in on the negative side, and yet we didn't have a large up day, except the Dow had a fairly good day. I won't bother with the numbers. They were basically the same as Thursday's numbers. I could easily be misreading things here, but to me this says we have a market that really, really wants to go down, otherwise we would have had a much larger up day. We'll see what next week brings. Will he switch to the up side which could lead to a large down day, or leave it all on the down side and let us move up some more?
Rob
Thursday, August 11, 2011
August 11, 2011 (You Guessed It)
I actually was thinking of not commenting on the movements of this one person or entity who plays the S&P 500 just to save some time, since the numbers of the Nasdaq 100 are what's really important as far as looking for important lows or highs. But it's just so hysterical, I have to continue. So we had another giant up day today, after yesterday's giant down day coming after this guy (I'll call him Mr. Knee-Jerk from now on) reduced his down money. And, you guessed it, he jumped big-time into the down side. The numbers so far this week for the S&P 500:
Monday: 70.23/145.18 (he might be totally out here or maybe a little on the down side, and we have a modest down day, relatively speaking)
Tuesday: 64.97/231.50 (he jumps in on the down side, and we have a huge up day)
Wednesday: 70.24/181.59 (looks like he sells some of his down position, just in time to miss a huge down day)
Today, Thursday: 69.96/262.77 (this time he throws the kitchen sink at the down side, and of course we have another monster up day)
How much abuse can this guy take? Will he keep his down position into tomorrow after losing 7-1/2% today? We shall see.
And for the all-important Nasdaq 100 numbers, they once again remained about the same today, even slightly more positive, after Wednesday's big down day. Just showing the final number when you divide the larger number by the smaller number for the Nasdaq 100:
Monday: 2.39
Tuesday: 2.69
Wednesday: 2.55
Today, Thursday: 2.65
So once again showing no fear, even after the big move down in the markets we've had. I say this is very bad news for the markets. Again, there is no way we've reached a bottom with these numbers, even a temporary bottom, let alone an important bottom. And I should define what I mean by temporary bottom. By temporary bottom, I mean a low where, if you look at a charting for the year, this low would stand out, although not a very, very important low like we had in 2008 or 2009, whatever it was, after the last big drop. We can have rallies at any time lasting days to even a week or two, but I'm not calling that a temporary bottom. So I'm saying even if we continue to rally for the next day or two or three, or even a week or two, which I doubt, but it's possible, we will turn back down and continue down to lower lows. My blog guarantees it. (Always remember, I could be wrong. Judge for yourself.)
By the way, I heard in Europe they're thinking of banning short selling. I hope I'm showing that that would be an extremely poor idea. I remember they did it in our last big move down, in parts of the markets. It's the shorts jumping on the bandwagon that stops a big move down.
Rob
Monday: 70.23/145.18 (he might be totally out here or maybe a little on the down side, and we have a modest down day, relatively speaking)
Tuesday: 64.97/231.50 (he jumps in on the down side, and we have a huge up day)
Wednesday: 70.24/181.59 (looks like he sells some of his down position, just in time to miss a huge down day)
Today, Thursday: 69.96/262.77 (this time he throws the kitchen sink at the down side, and of course we have another monster up day)
How much abuse can this guy take? Will he keep his down position into tomorrow after losing 7-1/2% today? We shall see.
And for the all-important Nasdaq 100 numbers, they once again remained about the same today, even slightly more positive, after Wednesday's big down day. Just showing the final number when you divide the larger number by the smaller number for the Nasdaq 100:
Monday: 2.39
Tuesday: 2.69
Wednesday: 2.55
Today, Thursday: 2.65
So once again showing no fear, even after the big move down in the markets we've had. I say this is very bad news for the markets. Again, there is no way we've reached a bottom with these numbers, even a temporary bottom, let alone an important bottom. And I should define what I mean by temporary bottom. By temporary bottom, I mean a low where, if you look at a charting for the year, this low would stand out, although not a very, very important low like we had in 2008 or 2009, whatever it was, after the last big drop. We can have rallies at any time lasting days to even a week or two, but I'm not calling that a temporary bottom. So I'm saying even if we continue to rally for the next day or two or three, or even a week or two, which I doubt, but it's possible, we will turn back down and continue down to lower lows. My blog guarantees it. (Always remember, I could be wrong. Judge for yourself.)
By the way, I heard in Europe they're thinking of banning short selling. I hope I'm showing that that would be an extremely poor idea. I remember they did it in our last big move down, in parts of the markets. It's the shorts jumping on the bandwagon that stops a big move down.
Rob
Wednesday, August 10, 2011
August 10, 2011
And the beat goes on. The S&P 500 guy pulled back somewhat, but I still think he's in on the negative side, and we still went down. Not good. The S&P 500 stuff is interesting, but nothing you could ever hand your hat on. I talk about the S&P 500 numbers because it generally shows how the market goes the opposite of where the money goes, but certainly not always, and especially when we are in crash mode, which we seem to be in now. It's the Nasdaq 100 numbers that are important to show where we're going.
In the all-important Nasdaq 100 numbers, things were relatively the same, which is not good. The numbers so far this week in the Nasdaq 100:
Monday, 8/8: 121.12/50.57 = 2.39
Tuesday, 8/9: 143.14/53.19 = 2.69
Wednesday, 8/10: 132.41/51.93 = 2.55
Still way, way too positive for any kind of bottom, even a temporary bottom. Long way to go, I'm afraid.
Rob
Tuesday, August 9, 2011
August 9, 2011 ("He" Goes Negative, and ...)
My almost perfect short-term representative sample did jump in big-time on the negative side today, and you see what happens. I'm speaking of the person or entity who plays the S&P 500 and is almost always wrong. It is truly amazing to watch. I suspect he won't stay there long, as he jumped in and lost nearly 10% today, since these are double funds that I watch. These funds I watch move twice as much as the index they are based on. They force your hand, is what they do. I suspect this will be a one-day affair for this guy, making us vulnerable to resuming the move down on Wednesday. Or maybe not. You never know with this guy. It's very obvious that this is one person or entity making these moves because you can the money move in lumps. And he's almost always wrong. If he's not wrong, something is usually up, like an important bottom or top.
The positive/negative numbers for the S&P 500 last week and so far this week:
Monday, August 1: 166.57/101.41 (S&P 500 down just a modest amount as we await the debt ceiling settlement and market takeoff, he's thinking -- I'm surprised we weren't down more as he's on the positive side)
Tuesday, August 2: 176.68/99.74 (markets down a large amount as he remains on the positive side)
Wednesday, August 3: 130.72/140.09 (he does some selling but keeps a fair amount of money on the positive side as the market rallies a little)
Thursday, August 4: 75.76/125.83 (he gets out totally and we have a very large down day, which surprises me -- showing my short-term indicator of this guy is not perfect)
Friday, August 5: 77.64/164.25 (he remains out, and we have a modest down day)
Monday, August 8: 70.23/145.18 (still out, and we have a monster down day, which surprises me a bit since without him things are very negative -- this could just be market really, really wants to go down)
Today, Tuesday, August 9: 64.97/231.50 (so here he obviously jumps in on the negative side and gets killed as we have a huge up day)
So will he stay on the negative side, which would lead to more rallying? Or will he get out, leaving us vulnerable to more downward movement? Or will he go, wow, how stupid of me, we're obviously heading up now, and switch from negative to positive, which I can guarantee you would lead to a large down day?
But longer term, the Nasdaq 100 numbers were still at 2.69 times the money on the positive side versus the negative side today. So even if he stays negative and we rally some more, my blog guarantees that the move down is not over. That 2.69 number is a number you'd see at a major top, not a bottom.
Rob
The positive/negative numbers for the S&P 500 last week and so far this week:
Monday, August 1: 166.57/101.41 (S&P 500 down just a modest amount as we await the debt ceiling settlement and market takeoff, he's thinking -- I'm surprised we weren't down more as he's on the positive side)
Tuesday, August 2: 176.68/99.74 (markets down a large amount as he remains on the positive side)
Wednesday, August 3: 130.72/140.09 (he does some selling but keeps a fair amount of money on the positive side as the market rallies a little)
Thursday, August 4: 75.76/125.83 (he gets out totally and we have a very large down day, which surprises me -- showing my short-term indicator of this guy is not perfect)
Friday, August 5: 77.64/164.25 (he remains out, and we have a modest down day)
Monday, August 8: 70.23/145.18 (still out, and we have a monster down day, which surprises me a bit since without him things are very negative -- this could just be market really, really wants to go down)
Today, Tuesday, August 9: 64.97/231.50 (so here he obviously jumps in on the negative side and gets killed as we have a huge up day)
So will he stay on the negative side, which would lead to more rallying? Or will he get out, leaving us vulnerable to more downward movement? Or will he go, wow, how stupid of me, we're obviously heading up now, and switch from negative to positive, which I can guarantee you would lead to a large down day?
But longer term, the Nasdaq 100 numbers were still at 2.69 times the money on the positive side versus the negative side today. So even if he stays negative and we rally some more, my blog guarantees that the move down is not over. That 2.69 number is a number you'd see at a major top, not a bottom.
Rob
Monday, August 8, 2011
August 8, 2011 (part 2)
The volume numbers are in. As I suspected, the negative number remained close to what it was. The positive/negative numbers for this past week and today:
Monday, August 1: 222.01/53.26
Tuesday, August 2: 240.34/52.81
Wednesday, August 3: 240.41/46.94
Thursday, August 4: 155.96/51.61
Friday, August 5: 135.21/51.34
Today, Monday, August 8: 121.12/50.67
So we're still well over two times the money on the positive side versus the negative side. Nowhere near even temporary bottom numbers.
By the way, if you want to see that chart more clearly, go to:
stockcharts.com/freecharts/historical/djia1900.html
I say this crash was going to happen regardless of debt ceiling talks, the size of the debt, any of that stuff. We're just playing out a pattern, us against ourselves.
Rob
August 8, 2011 (Charting 101)
They usually have the daily volume numbers posted by now, but not today. I am most curious as to the Nasdaq numbers, of course. My guess is that, when I get the numbers, there will be a huge drop in the positive number but the negative number will remain the same. For us to reach even a temporary bottom, we need people to go short, lots of them. But of course the market did what it had to do to have that not happen by falling so precipitously. What that does is it freezes those who might go short into inaction. They're thinking no way do I want to go short now because there's bound to be a huge rebound, even if it's temporary. So they wait for the rebound that never comes. And down and down we go.
We are in crash mode. This is what Jerry Favors talked about for years. Below is a chart I've posted before on my blog. I first noticed the huge head-and-shoulders pattern that stretches from 2000 to the present about a year ago. I was stunned. I've only heard this pattern mentioned once on everything I've read in the last year, even though it's the most basic of charting patterns. This pattern usually means you're at a major top. You see them all over the place. For example, if you look at the Dow or really any of the major indexes for this year, you'll see the same pattern. We will crash down until we get to some strong support. And if you look at the chart, you'll see the last time before 2000 that we were doing anything but going straight up was back in the 1970s, when we basically went sideways for years. The top of that area is around the 1,000 mark, the bottom down to like 600, I think it is. So that's where I got the 1,000 number that I tossed out there as where this all could be heading.
The head-and-shoulders pattern is basically a training period. You go up to a high, then a steep drop, causing many to panic sell. Then when they do, we head back up to an even higher high, that high coming at the all-time high in 2007. Then we had another steep drop, more panic selling at the bottom, even though the so-called experts were saying to "stay the course." And then once again we turn back up, making anyone who got out feel very stupid. Never again, they say. No matter what happens, I'm staying the course. So now we came up yet again to our high this past April, and now we're crashing downward. This time, unfortunately, will be different. For this thing to stop, people have to panic sell. But this time the long-term investors will go, no, no, I've seen this before a couple times, I'm not getting out this time. And down and down we go.
Jerry did have a positive message, although it won't help us for a while. That message was that when we finally reach a bottom of this greatest of all crashes, we will turn up and go up for years and years and years, probably decades. That is of course because we will only reach that bottom when the last of the long-term investors finally throw in the towel and say they are never, ever getting in the market again for as long as they live. And up we'll go. If you're a long-term investor, you may be saying you'll never throw in the towel. Sadly, everyone has their breaking point. You will, eventually.
Again, I'm not giving advice. As soon as you get out, millions of other people probably will on the same day, and we'll head up, making you feel stupid, at least temporarily. It may be impossible to beat this thing no matter how you play it. I continue to pray that I'm totally wrong on all this stuff.
Saturday, August 6, 2011
The Downgrade
I'm obviously very curious to see what happens in the markets on Monday after the downgrade of the U.S. credit Friday evening. It could go either way, I think. On the one hand, we've already started a big move down that didn't appear to be finished. On the other hand, if there is a huge move to the negative side, we could actually go up. The commentators would say it's already priced in. Things are getting very racial on the Yahoo posts this morning, as I feared, which made me start my blog in the first place as to why a crash might happen.
My blog is definitely not an advice column. I don't have a clue on what you or I should do about all of this as far as investments. This is a blog to get the true story out about why a crash would happen. It's not what everyone thinks.
Rob
My blog is definitely not an advice column. I don't have a clue on what you or I should do about all of this as far as investments. This is a blog to get the true story out about why a crash would happen. It's not what everyone thinks.
Rob
Friday, August 5, 2011
August 5, 2011
When I talk about the S&P 500, I'm really talking about one person or entity, because if you watch the numbers daily, you can see it's really one hunk of money getting moved around. I used to call this person the $200 million man, but it's much less than that now that he's moving around. But generally the idea remains the same. Whatever this guy does, the market usually goes the other way. Certainly not always, but most of the time.
Today, after being on the positive side all through that debt ceiling stuff, and the big drop, he jumped on the negative side. This would usually mean a move up. There was a little move up in the Dow, but the S&P 500 actually fell a little more. So that surprises me. The numbers for this week in the S&P 500:
Monday: 166.57/101.41
Tuesday: 176.68/99.74
Wednesday: 130.72/140.09 (almost looks like he moved some money to the negative side here)
Thursday: 75.76/125.83 (he gets totally out of the market)
Friday, today: 77.64/164.25 (he goes in on the negative side)
Interesting. I would have thought he'd stay out a while. When you have such a large drop as we had, most people would be looking for some kind of relief rally. So I guess he's convinced this is very serious. This could be very good for the markets if he stays there.
I'm not saying this guy's money affects the markets. I'm saying this guy is the perfect representative sample of what many people are doing. You can never make a market move based on what this guy is doing because he can easily change from day to day.
But anyway, the important number I look at is the Nasdaq 100. The Nasdaq 100 numbers for this week, and I'll just show the final result of dividing the larger number by the smaller number:
Monday: 4.17
Tuesday: 4.55
Wednesday: 5.12
Thursday: 3.02 (fear finally sets in)
Friday, today: 2.63
I can tell you the negative number has remained pretty much the same through this, which is what I would expect with such a large drop. The market is due for a strong relief rally, and you'd hate to go short and get nailed with a big move up. But I can tell you that that 2.63 number means we have definitely not reached the bottom of this decline yet, although we could be getting there, maybe. Also keep in mind that until the last year, that 2.63 number was equal to the highest number I had ever seen, which came at the all-time market high in 2007. So notwithstanding any rally early next week, no matter how strong, we will turn back down and go lower. I'll put my blog's reputation on the line here. At a bare minimum, it has to get down to 1.70, which was what it got down to at the previous two major lows of this year. But those lows came as the Fed was doing its thing to prop up the market, and that program is now over, at least for now. So I still think we probably have to go negative in this number before reaching a low for this move down.
Rob
Today, after being on the positive side all through that debt ceiling stuff, and the big drop, he jumped on the negative side. This would usually mean a move up. There was a little move up in the Dow, but the S&P 500 actually fell a little more. So that surprises me. The numbers for this week in the S&P 500:
Monday: 166.57/101.41
Tuesday: 176.68/99.74
Wednesday: 130.72/140.09 (almost looks like he moved some money to the negative side here)
Thursday: 75.76/125.83 (he gets totally out of the market)
Friday, today: 77.64/164.25 (he goes in on the negative side)
Interesting. I would have thought he'd stay out a while. When you have such a large drop as we had, most people would be looking for some kind of relief rally. So I guess he's convinced this is very serious. This could be very good for the markets if he stays there.
I'm not saying this guy's money affects the markets. I'm saying this guy is the perfect representative sample of what many people are doing. You can never make a market move based on what this guy is doing because he can easily change from day to day.
But anyway, the important number I look at is the Nasdaq 100. The Nasdaq 100 numbers for this week, and I'll just show the final result of dividing the larger number by the smaller number:
Monday: 4.17
Tuesday: 4.55
Wednesday: 5.12
Thursday: 3.02 (fear finally sets in)
Friday, today: 2.63
I can tell you the negative number has remained pretty much the same through this, which is what I would expect with such a large drop. The market is due for a strong relief rally, and you'd hate to go short and get nailed with a big move up. But I can tell you that that 2.63 number means we have definitely not reached the bottom of this decline yet, although we could be getting there, maybe. Also keep in mind that until the last year, that 2.63 number was equal to the highest number I had ever seen, which came at the all-time market high in 2007. So notwithstanding any rally early next week, no matter how strong, we will turn back down and go lower. I'll put my blog's reputation on the line here. At a bare minimum, it has to get down to 1.70, which was what it got down to at the previous two major lows of this year. But those lows came as the Fed was doing its thing to prop up the market, and that program is now over, at least for now. So I still think we probably have to go negative in this number before reaching a low for this move down.
Rob
Thursday, August 4, 2011
August 4, 2011 (part 2)
I just got the volume numbers for today, and I am a bit surprised. With such a monster down day, I thought they would be just as positive as yesterday, but in fact there was a huge move to the negative side, especially in the S&P 500. The positive/negative numbers for last week and so far this week:
Monday, 7/25: 112.93/87.27
Tuesday, 7/26: 102.83/96.73
Wednesday, 7/27: 193.49/139.50
Thursday, 7/28: 183.48/135.11
Friday, 7/29: 184.26/141.02
Monday, 8/1: 166.57/101.41
Tuesday, 8/2: 176.68/99.74
Wednesday, 8/3: 130.72/140.09
Today, Thursday, 8/4: 75.76/125.83
That to me is a shockingly large move to the negative side in just one day. I'm not really sure when they take their volume numbers, whether it's going into the day, or possibly after the morning, since you can make a trade on these funds once in the morning. But with such a large down day, I would have expected these numbers to remain positive. I have found in the past when something like this happens, where the numbers move to the negative side and we keep going down, that something is up, some sort of turning point. Just speculating, but it appears we could have a relief rally, probably very strong, for a day or two or three.
But for long term I look at the Nasdaq 100 numbers, and they were much less positive today, which is again a little surprising, but still way too positive for a bottom to this decline. The positive/negative numbers for the Nasdaq 100 for this week:
Monday, 8/1: 222.01/53.26 = 4.17
Tuesday, 8/2: 240.34/52.81 = 4.55
Wednesday, 8/3: 240.41/46.94 = 5.12
Today, Thursday, 8/4: 155.96/51.61 = 3.02
So this was people exiting the positive side but not jumping on the negative side. For such a strong decline, I still say the above numbers have to be more negative than positive before we reach at least a temporary bottom. That doesn't mean straight down by any means. There will be rallies along the way, probably not more than a few days, but then we will head back down again until the Nasdaq 100 numbers go negative, meaning the red number is larger than the green number.
By the way, when I talk about the market crashing down to at least 1,000, I certainly don't mean straight down at all. It could take years to get there. There will be rallies along the way.
Rob
Monday, 7/25: 112.93/87.27
Tuesday, 7/26: 102.83/96.73
Wednesday, 7/27: 193.49/139.50
Thursday, 7/28: 183.48/135.11
Friday, 7/29: 184.26/141.02
Monday, 8/1: 166.57/101.41
Tuesday, 8/2: 176.68/99.74
Wednesday, 8/3: 130.72/140.09
Today, Thursday, 8/4: 75.76/125.83
That to me is a shockingly large move to the negative side in just one day. I'm not really sure when they take their volume numbers, whether it's going into the day, or possibly after the morning, since you can make a trade on these funds once in the morning. But with such a large down day, I would have expected these numbers to remain positive. I have found in the past when something like this happens, where the numbers move to the negative side and we keep going down, that something is up, some sort of turning point. Just speculating, but it appears we could have a relief rally, probably very strong, for a day or two or three.
But for long term I look at the Nasdaq 100 numbers, and they were much less positive today, which is again a little surprising, but still way too positive for a bottom to this decline. The positive/negative numbers for the Nasdaq 100 for this week:
Monday, 8/1: 222.01/53.26 = 4.17
Tuesday, 8/2: 240.34/52.81 = 4.55
Wednesday, 8/3: 240.41/46.94 = 5.12
Today, Thursday, 8/4: 155.96/51.61 = 3.02
So this was people exiting the positive side but not jumping on the negative side. For such a strong decline, I still say the above numbers have to be more negative than positive before we reach at least a temporary bottom. That doesn't mean straight down by any means. There will be rallies along the way, probably not more than a few days, but then we will head back down again until the Nasdaq 100 numbers go negative, meaning the red number is larger than the green number.
By the way, when I talk about the market crashing down to at least 1,000, I certainly don't mean straight down at all. It could take years to get there. There will be rallies along the way.
Rob
August 4, 2011
I see I haven't posted since March. Just got too busy, plus I was feeling a bit stupid. I was predicting a crash because of the numbers I look at, but it just wasn't happening. But, unfortunately, I think the crash has begun.
You may recall if you've read my earlier posts that I am mainly relying on two sets of numbers. The S&P 500 does an amazing job of showing why things are happening short term, and the Nasdaq 100 does an amazing job of showing why things are happening longer term. Short term, it's almost a daily thing that if there is more money on the positive side versus money on the negative side in the S&P 500 funds I watch, we go down, and vice versa.
More important is the longer term numbers. I started watching these numbers over a decade ago, figuring these people that trade both sides probably know what they're doing. Actually, I found just the opposite. Longer term, we could move up in a nice bull market if the numbers stayed less than 2.0 money on the positive side versus the negative side. If we got above 2.0, we would generally reach some sort of high, and then the markets would correct until that number would get down near zero or go negative, meaning more money on the negative side than on the positive side. When I say negative and positive, these are funds where you can play either direction. You can have your money in the positive funds, where you make money if the index they're based on go up, or you can play the dark side and have your money in inverse funds, where you make money if the market goes down and lose money if it goes up.
We reached the all-time high in the Dow in late 2007 with the highest positive/negative number I had ever seen, around 2.6 times the money on the positive side versus the negative side. And we went down, of course, pretty hard, which you would expect with such a high number. We reached our low when that number finally went negative. Then we started up again. Around this time, I happened to see a chart of the Dow from 1900 to the present, which scared me to death because I could see we had formed an incredibly large head-and-shoulders pattern stretching all the way from 2000 to the present. A head-and-shoulders pattern is generally a top. I think the Fed saw that pattern too. More on that later.
Our numbers in 2010 started getting higher than I've ever seen. I started this blog, talking about that 2.6 number in 2007, that we had this head-and-shoulders pattern, and now the numbers were getting even higher than that 2.6. In fact, it got up to 4 and even over 5 in late 2010. I was telling people this is it. But it wasn't. We kept going up, making me look stupid and leaving me wondering about my numbers theory. We reached a temporary high in the markets in mid-January with the positive/negative number up to an astounding 6.45 times money on the positive side versus the negative. There was a little correction, not a whole lot, and then we continued up, with the positive/negative numbers still very high. Up to 6.26 on February 22. We corrected down to mid-march, with the positive/negative numbers plummeting all the way down to 1.71 on March 16. But then we started up strong again, with those volume numbers climbing quickly. We had a high on April 27 with the positive/negative numbers at a new high of 6.88! Then we broke 7, up to 7.01 on May 3, and finally up to the highest volume numbers ever on May 11 of 7.25. And then we corrected down into mid-June, with those volume numbers plummeting again to 1.71.
How could we not correct more with such large numbers? How could we keep coming back to such high positive/negative numbers so quickly? That's about when I stopped blogging as things weren't making a whole lot of sense. But I think I now know what was going on. Mom was sending me some reports from this guy named Dennis Slothower, who was ranting and raving about the Fed propping up the market with its Treasury buy-back program, also known as "quantitative easing." I believe it was the Fed's moves that were acting like an invisible hand to hold up the markets, keeping them from going way, way down. People got used to a certain amount of correction, raising their confidence, causing the outrageously large positive/numbers that we have seen this year in 2011. That quantitative easing program ended on July 1 of this year. No more invisible hand.
The debt ceiling debates I think led to kind of a perfect psychological situation to get this crash going. The S&P 500 numbers went very positive early last week. I know the traders were thinking we'll get that debt ceiling agreement any day now, and when we do, the markets will rejoice. We started down, with the kind of drop that usually would get the S&P 500 number to go negative and thus reach a short-term bottom. But this time, the S&P 500 numbers didn't budge, even as we dropped all last week. Again, I'm sure it was because they were now thinking it would be like the NFL negotiations, where they waited until the last possible day to reach a deal. So we finally get the debt ceiling deal at the start of this week, and that S&P 500 number was still way positive. And down we go. Even after the large down day on Tuesday, I was amazed to see that number not budging on Wednesday. And now we have today, a monster down day. I think they are now thinking, well, we've come down so far, this is where there is usually some sort of bottom, or at least that's the way it's been so far this year, I don't want to miss that rally.
So I think the crash I've feared for so long has finally gotten going in earnest. I think it technically started at the highs back in late April with that super-high positive/negative number. While there will certainly be rallies along the way as we move down, I think we have to continue down longer term until the Nasdaq 100 numbers turn negative. That number was still at a ridiculously high 5.12 just yesterday (which by the way was higher than the day before, so the traders actually saw Tuesday's large down day as a buying opportunity). So will that 5.12 number shrink quickly or not, is the big question. Remember, no more invisible hand to prop up the market, at least for now. I've heard the Fed has said it's ready to do some more quantitative easing if necessary. If they do, it will only put off the inevitable, while throwing billions and billions of dollars away at a time when we're hopelessly in debt.
Where might this be headed? Just from a charting standpoint, I think we're headed down to a minimum of below 1,000 in the Dow. That's 1,000, not 10,000. I say that because that appears to be the last level of strong support, if you look at a chart of the Dow from 1900 to the present.
Once again, I hope I look totally stupid on this. Imagine all the retirement and pension funds that are way over-invested in the stock markets losing so much. How are they going to pay? Government is responsible for paying many of those funds. Go further in debt to pay them, I suppose. Print money, I suppose, making dollars worth less and less. I'm personally going to stock up on food as much as I can, while I can. It's going to be the era of looking out for your family and neighbors.
What to do? I wish I could answer that. I'm thinking of slowly but surely buying a government bond fund. This tracks the price of the bonds, not the yield. The more the market goes down, the more this fund would ordinarily go up. But what if the government defaults and the bonds become worthless? So I don't know, I really don't. Gold is probably good, but it's so high already.
I'm taking the time to do this blog because I think history is going to get this story wrong. Already people are blaming Obama big time. The "N" word will make a comeback, as in "see what happens when we elect a n_________"? I was so proud of our country for looking past the color of a person's skin, but now I'm afraid everything bad in this country in terms of racism and pointing fingers will come bubbling to the surface. I insist the villain, besides our own greed, is the Fed.
I hope I'm wrong, I hope I'm wrong, I hope I'm wrong.
Rob
You may recall if you've read my earlier posts that I am mainly relying on two sets of numbers. The S&P 500 does an amazing job of showing why things are happening short term, and the Nasdaq 100 does an amazing job of showing why things are happening longer term. Short term, it's almost a daily thing that if there is more money on the positive side versus money on the negative side in the S&P 500 funds I watch, we go down, and vice versa.
More important is the longer term numbers. I started watching these numbers over a decade ago, figuring these people that trade both sides probably know what they're doing. Actually, I found just the opposite. Longer term, we could move up in a nice bull market if the numbers stayed less than 2.0 money on the positive side versus the negative side. If we got above 2.0, we would generally reach some sort of high, and then the markets would correct until that number would get down near zero or go negative, meaning more money on the negative side than on the positive side. When I say negative and positive, these are funds where you can play either direction. You can have your money in the positive funds, where you make money if the index they're based on go up, or you can play the dark side and have your money in inverse funds, where you make money if the market goes down and lose money if it goes up.
We reached the all-time high in the Dow in late 2007 with the highest positive/negative number I had ever seen, around 2.6 times the money on the positive side versus the negative side. And we went down, of course, pretty hard, which you would expect with such a high number. We reached our low when that number finally went negative. Then we started up again. Around this time, I happened to see a chart of the Dow from 1900 to the present, which scared me to death because I could see we had formed an incredibly large head-and-shoulders pattern stretching all the way from 2000 to the present. A head-and-shoulders pattern is generally a top. I think the Fed saw that pattern too. More on that later.
Our numbers in 2010 started getting higher than I've ever seen. I started this blog, talking about that 2.6 number in 2007, that we had this head-and-shoulders pattern, and now the numbers were getting even higher than that 2.6. In fact, it got up to 4 and even over 5 in late 2010. I was telling people this is it. But it wasn't. We kept going up, making me look stupid and leaving me wondering about my numbers theory. We reached a temporary high in the markets in mid-January with the positive/negative number up to an astounding 6.45 times money on the positive side versus the negative. There was a little correction, not a whole lot, and then we continued up, with the positive/negative numbers still very high. Up to 6.26 on February 22. We corrected down to mid-march, with the positive/negative numbers plummeting all the way down to 1.71 on March 16. But then we started up strong again, with those volume numbers climbing quickly. We had a high on April 27 with the positive/negative numbers at a new high of 6.88! Then we broke 7, up to 7.01 on May 3, and finally up to the highest volume numbers ever on May 11 of 7.25. And then we corrected down into mid-June, with those volume numbers plummeting again to 1.71.
How could we not correct more with such large numbers? How could we keep coming back to such high positive/negative numbers so quickly? That's about when I stopped blogging as things weren't making a whole lot of sense. But I think I now know what was going on. Mom was sending me some reports from this guy named Dennis Slothower, who was ranting and raving about the Fed propping up the market with its Treasury buy-back program, also known as "quantitative easing." I believe it was the Fed's moves that were acting like an invisible hand to hold up the markets, keeping them from going way, way down. People got used to a certain amount of correction, raising their confidence, causing the outrageously large positive/numbers that we have seen this year in 2011. That quantitative easing program ended on July 1 of this year. No more invisible hand.
The debt ceiling debates I think led to kind of a perfect psychological situation to get this crash going. The S&P 500 numbers went very positive early last week. I know the traders were thinking we'll get that debt ceiling agreement any day now, and when we do, the markets will rejoice. We started down, with the kind of drop that usually would get the S&P 500 number to go negative and thus reach a short-term bottom. But this time, the S&P 500 numbers didn't budge, even as we dropped all last week. Again, I'm sure it was because they were now thinking it would be like the NFL negotiations, where they waited until the last possible day to reach a deal. So we finally get the debt ceiling deal at the start of this week, and that S&P 500 number was still way positive. And down we go. Even after the large down day on Tuesday, I was amazed to see that number not budging on Wednesday. And now we have today, a monster down day. I think they are now thinking, well, we've come down so far, this is where there is usually some sort of bottom, or at least that's the way it's been so far this year, I don't want to miss that rally.
So I think the crash I've feared for so long has finally gotten going in earnest. I think it technically started at the highs back in late April with that super-high positive/negative number. While there will certainly be rallies along the way as we move down, I think we have to continue down longer term until the Nasdaq 100 numbers turn negative. That number was still at a ridiculously high 5.12 just yesterday (which by the way was higher than the day before, so the traders actually saw Tuesday's large down day as a buying opportunity). So will that 5.12 number shrink quickly or not, is the big question. Remember, no more invisible hand to prop up the market, at least for now. I've heard the Fed has said it's ready to do some more quantitative easing if necessary. If they do, it will only put off the inevitable, while throwing billions and billions of dollars away at a time when we're hopelessly in debt.
Where might this be headed? Just from a charting standpoint, I think we're headed down to a minimum of below 1,000 in the Dow. That's 1,000, not 10,000. I say that because that appears to be the last level of strong support, if you look at a chart of the Dow from 1900 to the present.
Once again, I hope I look totally stupid on this. Imagine all the retirement and pension funds that are way over-invested in the stock markets losing so much. How are they going to pay? Government is responsible for paying many of those funds. Go further in debt to pay them, I suppose. Print money, I suppose, making dollars worth less and less. I'm personally going to stock up on food as much as I can, while I can. It's going to be the era of looking out for your family and neighbors.
What to do? I wish I could answer that. I'm thinking of slowly but surely buying a government bond fund. This tracks the price of the bonds, not the yield. The more the market goes down, the more this fund would ordinarily go up. But what if the government defaults and the bonds become worthless? So I don't know, I really don't. Gold is probably good, but it's so high already.
I'm taking the time to do this blog because I think history is going to get this story wrong. Already people are blaming Obama big time. The "N" word will make a comeback, as in "see what happens when we elect a n_________"? I was so proud of our country for looking past the color of a person's skin, but now I'm afraid everything bad in this country in terms of racism and pointing fingers will come bubbling to the surface. I insist the villain, besides our own greed, is the Fed.
I hope I'm wrong, I hope I'm wrong, I hope I'm wrong.
Rob
Subscribe to:
Comments (Atom)