Who's Bearish?

Although I would not like to express an overly confident opinion, I suggest discussing two points :

-main indexes vs broad indexes
-interindex analysis


To find a long term pivot in a market, I like to check different indexes of a same kind, for example, to get a view on the French market, I will study first the CAC40, then the SBF80, then the SBF120 and finally the SBF250. (weighted indexes including respectively 40 to 250 stocks).

Usually, the main index (for example cac40) will rally first, and the other indexes will rally progressively.
Hence, timing a top in the cac is usefull but does not allow proper timing for a reversal.
For a reversal, I want all indexes (for example all from the cac40 to the sbf 250) to have topped.
If the main index seems toppish, but the broader indexes are still trending, it might be early for a reversal.
When the CAC40 and the SBF80 and SBF120 looks toppish, and then weakness starts in the SBF250, a reversal might be around the corner.

So, I think watching the relationships between main indexes and broad indexes might relieve of some stress while trying to top a market.


Regarding interindex analysis, I like to keep a view of different indexes.
I use the following (CAC40, SP500, NDX, SMI, FTSE, XDAX, MIBTEL, Nikkei(broad), and accessorily AEX(Amsterdam) and Bel20).

It helps to get a feeling on two points :
-when main indexes are entering a time when they should start forming a top/bottom and not progressing.
-when indexes are ready for the next big trending move, usually this requires most indexes to be either starting a trend or toppish, bottomish. A trend will not start if most indexes still have upside/downside margin to correct.


So, without expressing too loud my opinion, I think the problem with a global reversal as of now is mostly a matter of time, and might take 2-3 additional weeks.


OHLC
 
I don't mean this as a slight to anyone on this board. I'm relatively new (2 years) to index futures. I traded fixed income futures for almost twenty years though. For those of you who think you have a grip on the economy-and I believe many on this board are quite bright and right about the prolonged sluggishness-you should be trading Treasuries because the credit markets do care about your concerns. The stock market could give a shit about most of this babble. Hence the recent disconnect between share prices, rates, and the value of the Greenback. Many of you are fighting the tape in a market that you know, while your valid observations would be allowing you to profit in other financial arenas.
 
We've all seen these types of moves before. Strong move up after a prolonged bear cycle. Elliott would call it a wave 3 and the strongest of all psychological waves of the five in an intermediate move. So, as the 3rd's momentum starts to wane, you can expect a pullback, and this will be a bear trap with all bears expecting a move to much lower levels. That's what wave 4 pullbacks will do to the bears. Then those that turned bullish will have the opportunity to "get in" because they missed the start of the move. Hence, a strong wave 5 to the upside and new highs.
At that point, momentum and "you-name-it" type indicators will be diverging with price highs. This is the classic 5th wave divergence tops that occur at intermediate tops. Of course the bag-holders will be those that just bought the move, the rest of us will be selling to them, right.
Well, I will anyway :)

So, it will be another month or so for all this to play out. The 20 week cycles will be in match with the final wave 5 high, and I will be counting my money made in this fine intermediate move.

Stay tuned.
 
Quote from vhehn:

too many funds\people on the outside looking in hoping for a pullback so they can get in on this big rally they missed. any sizeable pulback will be bought.
it will take something big to get sentiment negitive enough to get anywhere near new lows.imho the market doesnt trade on pe or the present economy or valuations. it trades on sentiment of future prospects and right now the market thinks things are going to get better and big money wants to buy stocks.
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Generally agree. About two weeks ago had dumb investor friends say they are putting IRA back into the market because "things are just starting to feel better." The comment pushed me to add to long position.

That being said, my daughter's school year was cancelled last week due to a SARS scare in Taiwan. In this terrible job market I'm also seeing a surprising number of executive level opportunities opening up in China - people are simply running from this bug. My antenna are up Big Time for a resurgence of SARS during the fall flu season - and it won't just be China next time. Now I'm moderately long but at the first sign of SARS bloom in the fall and I'll be short like there is no tomorrow ... 14% death rate adds up to a lot of FEAR.

The prospect for global SARS epidemic next flu season merits an independent thread ... sooner or later I'll get around to it. Flu season would put the next major market selloff into the August-September timeframe ...
 
Quote from marketsurfer:

remember the ocean is huge and the tides are very strong. stronger than anyone of us----

surfer wisdom.... staying long here
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remember the sun is bright, and there isn't much ozone left, so surfers had better wear sunblock PSF 50+

777 wisdom..... all or nothing means all or nothing.
 
The only downside risk I see is Event Risk. As Pabst states, the bonds are worrisome - this is another real concern _to_me_ to the downside. However, I have seen the spoos/bond relation go off kilter for MONTHS.

No one knows what is going to happen six minutes from now, let alone 2 weeks or 6 months.

You payz your money, you get to play.

Good luck to all in long term positions - you'll need it.

nitro
 
I agree with Nitro that it is hard to predict the future for market direction either way. However many people make all their money holding intermediate trends so I guess they are paid to make educated guesses on market direction. That being said I don't know how much weight I would put with all the economists projections that have been brought. It seems they have been on the wrong side too most of the time. I remember the talk about picking up in the second quarter, revised to the 3rd quarter, revised to first half of next year type predictions for the last three years. It is funny because with all the media coverage, analyst comments, and market professionals claiming to have the experience to predict the future sure makes it tough for the average investor type to figure out what the hell to do. They get 20 opinions all building cases for the opposite scenario.
 
Quote from nitro:

The only downside risk I see is Event Risk. As Pabst states, the bonds are worrisome - this is another real concern _to_me_ to the downside. However, I have seen the spoos/bond relation go off kilter for MONTHS.

No one knows what is going to happen six minutes from now, let alone 2 weeks or 6 months.

You payz your money, you get to play.

Good luck to all in long term positions - you'll need it.

nitro
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Event risk? You mean like earnings, unemployment, GDP, industrial production, the dollar?
 
NEWS FLASH.....SISYPHUS HAS JUST TURNED BULLISH!!!!

sisy.jpg
 
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