ES Journal Archive (2006 - 2008)

[JSHINV]

I hesitate to comment on this because it is primarily TA on the ES, the purpose of this forum. But, I will anyway. Problem is the American consumer which drives 70 percent of the US economy is broke and deeply in debt. And therin lies the rub.

Quote from smilingsynic:

Bull markets climb a wall of worry. And bull markets are built on maximum pessimism, just like bear markets are built on excessive optimism.

At some point, the market is going to have discounted bad news in the future.

Bad news will still come out, and some really bad news might come out, but the market won't care.

Fundamentalists and permabears will short rallies, arguing that the news is bad and will get worse.

They'll claim that they market is ignoring the bad news, and that the other shoe is going to drop soon, and the market will fall back down. You betcha.

But the market will keep climbing nonetheless, up and up that wall of worry.

Bear markets in general do not last long. This one is about to end.


What is the evidence for my assertion that a bull is about to begin?

In terms of market technicals, the market is more oversold than ever.

The closest comparisons include July 23, 2002, October 3, 1974, and May 26, 1970.

Within three months after those days, the market had risen at least 19.90% (highest was 23.26%).

Within six months, the market had gone up 27.90% (1970), 41.23% (1974), and 21.21% (2002).

If history is any precedent, the bear is about to go into hibernation any day now.

 

[Spectre2007]

given the nature of the pessimism, and the historical intensity, a new bull has the foundations to start.

1). money supply figures in the economy are going through the roof only as of late.(2-3 weeks)

2). 30 year bond yields made a double bottom.

3).VIX in the stratosphere...

 

[JSHINV]

I am not sure.

I question whether the current situation has a historical precedent in the last 40 years.

#1. Yes, there is plenty of liquidity; just nobody wants to lend it out, simply because they are concerned about being paid back. Also, turned our backs on the Volker doctrine, in part is the reason we are in this mess imo. Money supply has never really been a problem in the last 25 years. Never has been since Greenspan and Bernake took over.

#2. Bond yields are low, I agree. They'll be going up, especially long treasuries. Quite a bit.

#3. Yes the "fear index" is it an all time high.

Quote from Spectre2007:

given the nature of the pessimism, and the historical intensity, a new bull has the foundations to start.

1). money supply figures in the economy are going through the roof only as of late.(2-3 weeks)

2). 30 year bond yields made a double bottom.

3).VIX in the stratosphere...

 

[Pekelo]

Here is my early Christmas present for B1S2 and any position traders:

Please count how many points you would have made just by blindly folowing the little arrows, no thinking involved!

 

[Lawrence Chan]

Quote from BoyBrutus:

I guess they were asking the same question in 98, and every other low. How is anyone to know, just follow the big boys.

The rally back then and now are done for the same purpose.

Both are designed to curb extreme bearishness so that further fund redemption is slowed down or stopped some point down the road.

Thus, the market is allowed to go even lower, just not at maximum panic fear mode sell off, that's all.

Why panic mode sell off are not allowed?

Auction market are not designed to handle extreme imbalance in supply and demand. The average daily volume of the stock market is a very small % of the total flow out there. A simple act of liquidation of positions by a medium sized hedge fund can bring down ES 50 pts in a day, as we have already witnessed that several months ago.

Now, the week we just go through has regular funds raising cash to meet redemption. That drives the indices to new low level, in turn inducing more fear, and more redemption are requested ...

This process can continue until nothing is left. That's why it is not allowed.

 

[ggoyal]

i think i mportant levels for now to pay attention are 827 and 835 as support. if those get broken, then we have to re-evaluate.

those new numbers could be 770 or 790.

Resistance can be expected at 930 region. even 915.

anyone with me?

 

[JSSPMK]

Quote from Pekelo:

Here is my early Christmas present for B1S2 and any position traders:

Please count how many points you would have made just by blindly folowing the little arrows, no thinking involved!

You wish to buy us subscriptions to Metastock for Christmas?

 

[Specterx]

IMO the bottoming action on Friday was significant, in that we saw a higher low in the afternoon followed by breaking the previous highs at 920, then ended above 880 for the day. We saw a similar pattern on the 8th, except ES failed to break the highs and ended below the previous low. The 15 min ES chart looks quite bullish to me. The major issue will be how many people are cashing out their 401(k)s this weekend...

 

[ggoyal]

Quote from Specterx:

IMO the bottoming action on Friday was significant, in that we saw a higher low in the afternoon followed by breaking the previous highs at 920, then ended above 880 for the day. We saw a similar pattern on the 8th, except ES failed to break the highs and ended below the previous low. The 15 min ES chart looks quite bullish to me. The major issue will be how many people are cashing out their 401(k)s this weekend...

i don't know if i can agree with that. in my opinion, 930 region was important. if it would have closed above that resistance level, we could have seen support from that level.

I think we might fade the bounce from the 840 region and head to test the 770-790 region.

but ofcourse, i could be dead wrong about this. thats why i take it day by day.

or another possibility is we trade between the 835 and 930 region. congestion and then break out.

lets see, i hate the weekends.

 

[Jahajee]

It would help the bullish case and the bottom-picking crowd if marekt retests the low made on Friday (Ok, I also want it to go lower so that I can pick up 20 to 40 points profit).

But, as always, time tells and I think the G7 meeting ended with a whimper rather than a resoundingly confident set of proposals. I expect initial decline from Sunday Globex opening to about noon on Monday then a robust rally and an up week - this is also expiration week. Too many puts out there... all below equivalent SPX 975 or 1000 will be worthless by Friday's close.