In April of 2001 I posted this message showing where I thought the major support lurked for the Dow. We are there, and will test these levels with the market very oversold. This is going to be fun!
-Bo
Here is the post link, I'll copy and paste the text.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15608775
<PASTE>
Where do we go from here?
I have been looking at some big picture charts recently, and they are NOT pretty. Indexes are such a deep representation of the crowds actions. They Fib particularly well. I have been using Fibonacci retracement studies to find support levels in the indexes for some time. I caught the QQQ's at the lows on a few of those -400-500 days we had in the nazwhack as we topped and broke down. My friends will remember me frothing at the mouth about Fibs after those trades
Those trades really helped me build trust in the predictive ability of these simple calculations.
Let's take a look at the Dow with our Fibonacci studies at the ready.
http://www.realitytrader.com/ta/letter/DJIAmonthly.gif
First a monthly look at where we are. Two 50% bounces and a deep retracement to the 62% fib which was our last bottom.
In my experience 62% fibs DO NOT double bottom. Any retest is a shortable event. In my opinion we will lose the Dow 9k area.
So where does that put us?
http://www.realitytrader.com/ta/letter/DJIA.gif
A look at the quarterly Dow chart shows us a number of possible bottoms to use for the Fib studies. If you draw them all, you will see how the lines converge around the 7,600 and 6,750 areas. After we lose the 9,000 area, I would not even consider putting any long term money into Dow stocks until we test the 7,600 area.
Timeframe?
You can Fib time as well as price, these predictions can get hazy and are only something I use as a guideline.
Fib time-wise, we will see our possible bottom in 3 1/2 to 4 years from the top. (1st quarter 2000) This puts our target out there in early 2003 to late 2004.
Sooo, if in the winter of 2002 we hit 7,600 in the Dow and form a reversal pattern... I'll load the boat. But until them I'm very happy as a short term trader short MO.
Moral of the story? We are in for a much longer selldown then anybody is talking about. Learn to trade on the short side, we will still find all kinds of short term trading opportunities on the long side, but our market is changing. We will need to learn to trade in a big picture bear market if we are to survive and make a living.
Good luck and good trading!
-Bo Yoder
-Bo
Here is the post link, I'll copy and paste the text.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15608775
<PASTE>
Where do we go from here?
I have been looking at some big picture charts recently, and they are NOT pretty. Indexes are such a deep representation of the crowds actions. They Fib particularly well. I have been using Fibonacci retracement studies to find support levels in the indexes for some time. I caught the QQQ's at the lows on a few of those -400-500 days we had in the nazwhack as we topped and broke down. My friends will remember me frothing at the mouth about Fibs after those trades
Those trades really helped me build trust in the predictive ability of these simple calculations.Let's take a look at the Dow with our Fibonacci studies at the ready.
http://www.realitytrader.com/ta/letter/DJIAmonthly.gif
First a monthly look at where we are. Two 50% bounces and a deep retracement to the 62% fib which was our last bottom.
In my experience 62% fibs DO NOT double bottom. Any retest is a shortable event. In my opinion we will lose the Dow 9k area.
So where does that put us?
http://www.realitytrader.com/ta/letter/DJIA.gif
A look at the quarterly Dow chart shows us a number of possible bottoms to use for the Fib studies. If you draw them all, you will see how the lines converge around the 7,600 and 6,750 areas. After we lose the 9,000 area, I would not even consider putting any long term money into Dow stocks until we test the 7,600 area.
Timeframe?
You can Fib time as well as price, these predictions can get hazy and are only something I use as a guideline.
Fib time-wise, we will see our possible bottom in 3 1/2 to 4 years from the top. (1st quarter 2000) This puts our target out there in early 2003 to late 2004.
Sooo, if in the winter of 2002 we hit 7,600 in the Dow and form a reversal pattern... I'll load the boat. But until them I'm very happy as a short term trader short MO.
Moral of the story? We are in for a much longer selldown then anybody is talking about. Learn to trade on the short side, we will still find all kinds of short term trading opportunities on the long side, but our market is changing. We will need to learn to trade in a big picture bear market if we are to survive and make a living.
Good luck and good trading!
-Bo Yoder
