# Trading the Bounce



## ducati916

So this thread is switching the emphasis from trying to (find) trade the bottom of a big move down (assuming it is the bottom) to trading the bounce.

jog on
duc


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## tech/a

Don't think its a bounce.
A few Trillion into the world markets 
Definitely qualifies as an outlier
Outliers move markets.


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## ducati916

tech/a said:


> Don't think its a bounce.
> A few Trillion into the world markets
> Definitely qualifies as an outlier
> Outliers move markets.




That is true and I largely agree.

However I like to plan for negative eventualities, even though they may never occur. I would like to the markets to resume the trend in a perfect 'V' shape. If they don't, then I'd prefer the option of being prepared with a plan to capitalise if possible. Of course, possibly the best plan is to simply sit and do nothing currently (assuming of course that you bought near the bottom) and let the market shake out, but hold onto those new positions. Sometimes trying to be too clever and micro-manage, leads to you f***ing up your good-work in grabbing the bottom in the first place.

However for those that didn't buy and don't have a mechanised way of re-entering the market, catching the bottom of a bounce which could be near the initial lows, would be beneficial and profitable as a first entry back into the market.

jog on
duc


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## ducati916

So the closest market conditions that we have (except 1987 which is a very interesting one) is 2008.







Below is another bear market rally, this one 25% at the end of 2008. The market turned around and fell 27% until finding a bottom in March 2009.

Had you “chased” this rally in 2008/2009, and picked up the S&P index at say 925 in early January, then in a year, you would have *earned 25% in returns going out to January 2010*. Had you waited until the recession ended in nine months, and not purchased the index until say September 2009, then *you would have only made 11%*.

That is a buy and do nothing further.

What if: you bought the 2008 decline, pocketed 'some' of the profit and then recycled those profits into the 2009 opportunity? Obviously, your profits would have increased. Sounds a bit like fairy land.

Taking Mr Tech/A's point re. deficit spending:

Deficit spending 1929-1971






From 1970-2020






As already indicated, this is an outlier.






The Fed is essentially flooding the market with liquidity. The Fed in a just a couple of weeks has already added over $1.5T in assets to its balance sheet: Treasuries, commercial paper, muni’s, Agencies. Under their old QE regime, the Fed typically purchased $60BB to $80BB of bonds per month. In just days, the Fed has literally pumped almost two years of normal QE buying into the bond market.

My position would therefore be: we have bottomed, but we are not immune to a profit taking exercise on this current bounce. Profit taking can quickly push markets lower, not to new lows, but lower enough to give people a good scare and revive the perma-bears to a new lease of life.

Mr Skate has programmed a mechanical indicator that will (I'm betting) pick (near) the top of the bounce. Check out his thread. I'll have to (try) and do it long-hand, we'll see.

As this post is already a bit long, just timing a turn (unless you are deadly accurate) isn't the only way to play the bounce.

jog on
duc


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## ducati916

So, I am starting to get signals that this bounce is starting to run out of steam and that we will get a correction that is a little more than just chop.

I don't mind chop, chop is normal. I don't like big declines when I have open profits on the table. Therefore, as my signals are starting to turn, I'll be taking a defensive posture tomorrow and trimming positions.

The risk of course is, if the market just powers on up, I have lost (partial) positions, which, means I lose potential profits. Psychologically, I can deal better with the loss of potential profits than open profits.

In addition, I may open a hedge. Probably not tomorrow. A hedge will cost money. Unless the fall (is more or less guaranteed or underway) a fact, it will cost additional potential profits.

jog on
duc


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## Skate

ducati916 said:


> So the closest market conditions that we have (except 1987 which is a very interesting one) is 2008.




*"The Ducati Stop & Go Indicator"*
How would "The Ducati Stop & Go Indicator" handled the GFC period 2007/2008 

*"The Ducati Stop & Go Indicator" *
This indicator is so versatile the periodicity of your trading strategy is insequential, meaning it works in all time periods. I'll post two charts one Daily & one Weekly. 

*Recap *
"The Ducati Stop & Go Indicator" lets you buy green bars & prevents you buying red bars.

*"The Ducati Stop & Go Indicator" *(applied to a DAILY Strategy)









*"The Ducati Stop & Go Indicator" *(applied to a WEEKLY Strategy)






*In the next post* 
Let's see when "The Ducati blue bar strategy" would have started taking positions during this "virus crisis" 

Skate.


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## Skate

ducati916 said:


> Mr Skate has programmed a mechanical indicator that will (I'm betting) pick (near) the top of the bounce. Check out his thread. I'll have to (try) and do it long-hand, we'll see.




*"The Ducati blue bar strategy"*


ducati916 said:


> So, I am starting to get signals that this bounce is starting to run out of steam and that we will get a correction that is a little more than just chop.



@ducati916 using "The Ducati blue bar strategy" as a guide picked the turn on 24th March & currently steaming ahead.


ducati916 said:


> The risk of course is, if the market just powers on up, I have lost (partial) positions, which, means I lose potential profits. Psychologically, I can deal better with the loss of potential profits than open profits.



"The Ducati blue bar strategy" has the ability to make that decision easier. Meaning don't sell till there is a RED bar - if you see a red bar PANIC & GTFO.






Skate.


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## InsvestoBoy

Skate said:


> *"The Ducati Stop & Go Indicator" *(applied to a DAILY Strategy)




Assuming you wait for EOD, this is wrong @Skate.

The strategy would still be allowing buy signals on 1/11/2007 because you wouldn't know it turned red until the close of the bar on 1/11/2007.

The strategy would not be allowing buy signals until the 28th because you wouldn't know if it turned green until the close of the bar on 27/11/2007.


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## Skate

InsvestoBoy said:


> Assuming you wait for EOD, this is wrong @Skate. The strategy would still be allowing buy signals on 1/11/2007 because you wouldn't know it turned red until the close of the bar on 1/11/2007. The strategy would not be allowing buy signals until the 28th because you wouldn't know if it turned green until the close of the bar on 27/11/2007.




@InsvestoBoy you are correct when it comes to trading. The Ducati Stop & Go Indicator charts were a quick visual reference to the colour coding of the bars whereas "The Ducati blue bar trading strategy" has the one bar delay for all to see. 

Skate.


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## ducati916

I see the topic of timing the bounce via a signal or combination of signals has already addressed. One issue is that the signal is always going to be after markets close and reopen. There is a delay.

There is really only one way to pre-empt that: you take a guess and either act or don't. Sometimes you get a bit lucky, sometimes you don't. Or you follow a mechanised system.

Now I don't really have conclusive evidence for this, but from experience what I have found is: tops in trending markets usually develop over a space of time. Tops in bounces come very quickly.

So I have reduced my positions (profit take) by 25%.

(a) If the bounce continues higher, I still participate; if
(b) The bounce reverses, I look for the turning point, add back that 25% taken off.

jog on
duc


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## ducati916

So developing on the Oil thread: 

The oil market currently going into meltdown. This could be enough to spook markets generally, into a bounce reversal as (while it should not be a complete surprise) the ferocity of the fall in the oil markets is different than just a fall in price.

That type of fall could again cause a short term liquidity crisis across debt markets, which always infect the equity markets.

If it plays out, it will play out pretty quickly.

jog on
duc


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## peter2

Excellent point. Indices have started to fall as news of the oil futures contract hits rock bottom before expiry. This could start the stone rolling down hill.


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## qldfrog

Yeap US markets down today.
What will this oil rout trigger?


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## ducati916

qldfrog said:


> Yeap US markets down today.
> What will this oil rout trigger?




Not sure. But as tech/a mentioned yesterday, outliers can have an effect. I don't think this (oil market) has ever happened before. So that is an outlier. It is an outlier in the 1987 crash type of outlier. After all, everyone and their granny knew that there is an oversupply issue in the oil markets.

Someone had to close out at massive losses or take delivery. Clearly they could not take delivery. This suggests then that it was a Hedge Fund(s) on the wrong side of the trade rather than a consumer (refinery/etc).

(a) Do those losses create a margin or liquidity event for some Hedge Fund? If yes, do they get a bailout? 
(b) If no, then (I guess) no major issues going forward and markets just carry on.

Thing is, if there is an issue at a Fund, it will take a few days or week to come out. I'll be watching for any signal closely. In the meantime, I'm happy to take a little off the table while we wait to find out.

jog on
duc


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## ducati916

Some 'bounce' history:






So taking out Aug 1932 (that was some bounce) we are currently (historically speaking) in the range for a bit of a correction.  Profit taking (the same phenomena creates the bottoms) is fast market action. It does not hang about.

jog on
duc


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## ducati916

Some volatility history:






jog on
duc


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## lusk

ducati916 said:


> Some 'bounce' history:
> 
> View attachment 102507
> 
> 
> So taking out Aug 1932 (that was some bounce) we are currently (historically speaking) in the range for a bit of a correction.  Profit taking (the same phenomena creates the bottoms) is fast market action. It does not hang about.
> 
> jog on
> duc




This bounce will probably keep grinding upwards while everyone scratches their head, each short drop shaking traders out thinking its going down to test the low. It could be because we aren't actually in a bear market.

A few reasons:

1. The descent occurred from a high.
2. Bear markets roll over, corrections come from nowhere.
3. Too many expect a test of the lows.
4. Market goes up while CV-19 infections go up. Keeping people baffled until they finally give up and join in.
5. Trillions of stimulus


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## kahuna1

CV19 ...

One has to love it .... purchased 200,000 barrels of oil and got paid $35- a barrel or $7 million USD ...to take it. I have asked for delivery of 100,000 barrels in the Trump Tower 5th avenue, just pump it into the elevator shaft from the top floor ...  and the other 100,000 barrels on the 5th Hole at Maralago Resort in Florida on the 5th hole.

The EPA under Trump no longer has any enforcement and as such no fear of any fines.
Cost $5- mind you to get it delivered but still $6. million USD profits.

Bounce ?
Trying to pick bottoms ... as they say, all one gets is smelly fingers.

I think any sane look at where Italy went, close to total medical system collapse and NY as well, for USA to even be thinking about going back with 5-10 times infection rates of most other nations, is what it is.

Enjoy the oil Mr Trump.

I note .... WPL ... is nearly not down ... when the NON spot oil price crashed by over 10% ....  possibly its denial, then again delusion ... I never know at times like this whether I am using a broken computer or others are. Seriously ? Flat oi producer ? This when every vacant oil tank in the USA is full. Its not a good sign for the coming months about too much of a rally.

Then again, Trump will likely provoke Iran yet again.


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## ducati916

lusk said:


> This bounce will probably keep grinding upwards while everyone scratches their head, each short drop shaking traders out thinking its going down to test the low. It could be because we aren't actually in a bear market.
> 
> A few reasons:
> 
> 1. The descent occurred from a high.
> 2. Bear markets roll over, corrections come from nowhere.
> 3. Too many expect a test of the lows.
> 4. Market goes up while CV-19 infections go up. Keeping people baffled until they finally give up and join in.
> 5. Trillions of stimulus





1. Surely all bear markets start from a high...the high being the (previously) existing bull market. Re. whether we are in a bear market or not: I agree that this is a cyclical bear in a secular bull, rather than the start of a secular bear and the end of a secular bull.

2. The 'topping process' usually takes time (1987 is an exception). Far easier (usually) to see the top forming. Bottoms and bounces tend to be fast, in part, because they are both subject to profit taking, combined with new positions (longs/shorts) which adds the speed to the move.

3. That is true and why there is an increased chance of profit taking inducing a breakdown of the bounce. A new element also exists in the US markets, viz. the increase of algo trading. If conditions trigger whatever set-up the algo responds to, we get a wave of selling. That selling (or buying) seems to be exacerbated by volatility inputs. The VIX is setting up for (technically) a move back higher for volatility. For every 19% increase in volatility, the range can potentially expand by 1%. This seems to play out that if volatility increases, and the range (potentially could expand) it does, as the algos seem to ramp up their volume and time in the trade, pushing for that expansion of range, which is always lower.






4. Market could care less about COVID-19 infections/death/etc. 






5. Which means that this is simply a pullback rather than a new leg lower. It may retest the lows (assuming it even eventuates of course) but it wouldn't be a market like say 2001 where the initial bounce reverted into another leg lower. This is a more (I believe) 1987 type of market action.

jog on
duc


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## frugal.rock

Well, it's still on the pull back...
Nasdaq and Footsie nearly mirror image open with slippage of over 1 percent and running down.
Choppy bearish days ahead...


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## ducati916

So the VIX 







Now we simply watch for the completion of this up-move and then re-enter the market. Difficult to know how long it might take, possibly days, possibly a week or two.







All that you need do is plan what you want to buy and keep a close eye on it, ready to grab some once the market bottoms out.

jog on
duc


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## ducati916

The oil imbroglio:

Word is that the losses accrued were between US $6B and US$10B. They were incurred by (a) professional arbitrageurs and (b) a handful of SWF (Saudi's).

It remains to be seen if there is any fallout.

jog on
duc


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## ducati916

Always a bit of a tricky one.






The next couple of days will either validate or invalidate the signal. If it does (validate) fall, I'd be looking (along with everyone else) at first the 260+/- level, then the 240+/- level and if that failed, the 220 +/- level.

Of course it could simply take off higher from here, never looking back.

jog on
duc


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## ducati916

So just checked the signal from the up day today: no change. Signal still indicates that there is a (potential) correction of the bounce in the wind.

We'll see how it plays out over the next couple of days.

jog on
duc


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## ducati916

Sentiment surveys:

_In this week's AAII survey, only 24.86% of investors responded as bullish.  That is the lowest level of bullish sentiment since the COVID-19 outbreak began! The last time the bullish reading was this low or lower was on October 10th when it was 20.31%.  The 10 percentage point decline from last week's reading of 34.86% was also the largest weekly decline since February 27th._

_



_

_Whereas bullish sentiment fell, bearish sentiment rose to 50%.  This is the first time since the final week of March that at least half of respondents reported as bearish, and it was the biggest jump in bullish sentiment since March 12th. The inverse moves of bullish and bearish sentiment this week has also sent the bull-bear spread to its widest level in favor of bears since last August. Today, the bull-bear spread is at -25.14. At its widest level back in early August is was slightly wider at -26.54. This week also marked the first time since April of 2013 that bearish sentiment doubled bullish sentiment._

_



_

_Recently, neutral sentiment has been extremely muted. At its low in mid-March, neutral sentiment was only at 14.5%.  Every week since then, neutral sentiment has ground higher reaching over 25% this week for the first time since late February. _

_



_

So the market has had a couple of up days, but still below the bounce high, a little doubt starts to creep in. The oil issue is also creating uncertainty (as evidenced on this forum) in the market. The tone of the market has changed this week. These surveys just confirm (for me) that lean towards risk off.

jog on
duc


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## ducati916

News? Rumour? Noise? Signal?






Responsible for market dropping?

Who knows. Thing is, in a bounce that has a slight decline in prices, no-one waits to find out...they are out. Sell. Had the news (rumour) come out at a different point in time, the market may have just ignored it and carried on carrying on.

Additionally, with the w/e fast approaching, where news can be released, with no ability to react immediately, bulls get very nervous (or bears when the situation is reversed).

jog on
duc


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## rnr

ducati916 said:


> Always a bit of a tricky one.
> 
> View attachment 102542
> 
> 
> The next couple of days will either validate or invalidate the *signal*. If it does (validate) fall, I'd be looking (along with everyone else) at first the 260+/- level, then the 240+/- level and if that failed, the 220 +/- level.
> 
> Of course it could simply take off higher from here, never looking back.
> 
> jog on
> duc




Hi ducati,

Just wondering what generates the "signal" that you refer to in your post and also what is the event that will either validate or invalidate this signal?

Cheers,
Rob


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## qldfrog

what the hell was that??


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## Smurf1976

qldfrog said:


> what the hell was that??



I don't know but I do see it as "interesting" that the fall stopped at the opening price then abruptly reversed from there.

It's as though whoever started buying / stopped selling at that point really wanted today to be an up day.


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## Dona Ferentes

ducati916 said:


> I would like the markets to resume the trend in a perfect 'V' shape.




today's intraday.... got any idea what happened around 3pm  ??


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## Dona Ferentes

the frog beat me! ooops


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## frugal.rock

qldfrog said:


> what the hell was that??
> View attachment 102600



It's the shortened version of a test run, for next week...
What's more interesting is, what were the stocks that were the players in the shenanigans...? 

F.Rock


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## Smurf1976

frugal.rock said:


> What's more interesting is, what were the stocks that were the players in the shenanigans...?



Looking at charts of the 20 largest cap stocks, they all participated in the dip at least to some extent. Some followed it more closely than others but did to some extent. 

I haven't looked at smaller cap stocks to see what they did.


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## ducati916

rnr said:


> Hi ducati,
> 
> Just wondering what generates the "signal" that you refer to in your post and also what is the event that will either validate or invalidate this signal?
> 
> Cheers,
> Rob




I discussed all of my signals in the 'Dump It' thread. I have about 6 in total that I watch. Some are fast, some are slow. It is really just my 'subjective' assessment of them at any given time. Mr Skate has quantified (some of) them into an objective signal.

The 'event' is that either (a) the signal does not actually create a signal or (b) reverses.

jog on
duc


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## ducati916

qldfrog said:


> what the hell was that??
> View attachment 102600





What chart is that?

jog on
duc


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## qldfrog

ducati916 said:


> What chart is that?
> 
> jog on
> duc



Asx200 yesterday,(friday 24/04) with intraday crash-fall to open level around 3pm.


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## ducati916

Dona Ferentes said:


> today's intraday.... got any idea what happened around 3pm  ??
> 
> View attachment 102615




Without knowing which chart it actually is...

However, speaking generally now (if it was US traded): it was likely to be a trading program entering the market. I used to keep an eye on them when I day traded because you could either (a) try and piggyback or (b) trade the pullback once the program ended.

They would work something like this: (a) there would be an event, news, etc and the program would trade in very fast behind that news or (b) it would occur in a low volume part of the day (traditionally the lunch period) but anywhere where volume dropped off.

You could 'see' the program in this way;
(i) have $TICK and $TRIN running on Dow (30 stocks made it easier to see);
(ii) When Dow 30 were either +20 or -20 on $TICK a program was running;
(iii) Wait for $TICK/TRIN to drop back to +/-12 and then either buy or sell as program ended in ES/SPY
(iv) The reason is that the program was self-limiting if it was selling short, it would buy to close (sell to close) so the volume generated worked both ways and you were already watching and ready. When a program starts, it comes out of nowhere and you (I) was usually to slow to follow at the start. But once awake, could follow the counter trade.

I no longer daytrade so I could not tell you whether that was a program. It does however look like a program behind news.

jog on
duc


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## ducati916

qldfrog said:


> Asx200 yesterday,(friday 24/04) with intraday crash-fall to open level around 3pm.





Ok that explains it. I don't follow the ASX at all and I would have been at work yesterday in any case. So you chaps don't really have buy/sell programs, as you cannot sell short, unless that is your futures market?

jog on
duc


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## qldfrog

ducati916 said:


> Ok that explains it. I don't follow the ASX at all and I would have been at work yesterday in any case. So you chaps don't really have buy/sell programs, as you cannot sell short, unless that is your futures market?
> 
> jog on
> duc



Can not comment Duc :
I do not do any intraday trading and very rarely anything other than weekly. Was just puzzled to see this intra day action.maybe timed with the news in the US of that promising medicine not being that good at all?


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## ducati916

That seems to be that. Pullback over. The indicators that I follow have 'normalised' invalidating the original signal.

Come Monday I will reallocate that 25% that I took off.

jog on
duc


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## Skate

ducati916 said:


> That seems to be that. Pullback over. The indicators that I follow have 'normalised' invalidating the original signal. Come Monday I will reallocate that 25% that I took off




*For what's it worth *
"The Ducati Stop & Go Indicator" & "The Ducati blue bar strategy" both confirm a re-entry on the next bar making that decision much easier as far as I'm concerned.







Skate.


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## ducati916

Skate said:


> *For what's it worth *
> "The Ducati Stop & Go Indicator" & "The Ducati blue bar strategy" both confirm a re-entry on the next bar making that decision much easier as far as I'm concerned.
> 
> View attachment 102981
> 
> 
> Skate.





Interesting. Both 'systems' came to the same conclusion independently. Although the inputs are the same/similar, it is good that both the subjective (my assessment) agrees with the objective (coded) assessment.

jog on
duc


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## ducati916

Orders placed into market. Buy DFEN.

jog on
duc


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## fiftyeight

ducati916 said:


> Orders placed into market. Buy DFEN.
> 
> jog on
> duc




This could be interesting, who knows what Trump will do to cause a distraction.

Do you mainly use levered ETFs?


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## ducati916

fiftyeight said:


> This could be interesting, who knows what Trump will do to cause a distraction.
> 
> Do you mainly use levered ETFs?




Yes. I like trading volatile instruments as my strategies are based around volatility.

jog on
duc


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## ducati916

DFEN order filled.

Market trading higher. 

Obviously I'll continue to monitor the market for future signals. But for the moment, all seems well!

jog on
duc


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## qldfrog

Fas 


ducati916 said:


> DFEN order filled.
> 
> Market trading higher.
> 
> Obviously I'll continue to monitor the market for future signals. But for the moment, all seems well!
> 
> jog on
> duc



doing well last night too
A bit scared in dfen by boeing situation, big in defence but big in flopping air raft sales too


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## ducati916

qldfrog said:


> Fas
> 
> doing well last night too
> A bit scared in dfen by boeing situation, big in defence but big in flopping air raft sales too




Re Boeing: true, but with a bailout, they should weather the storm.

jog on
duc


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## ducati916

So NZ is now dropping back to L3. This means my holiday is over. While I have been working on a limited basis, I am now 100% back to work.

I will update my various threads as time permits, or market conditions require, but I will be seen less (again) going forward.

jog on
duc


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## qldfrog

ducati916 said:


> So NZ is now dropping back to L3. This means my holiday is over. While I have been working on a limited basis, I am now 100% back to work.
> 
> I will update my various threads as time permits, or market conditions require, but I will be seen less (again) going forward.
> 
> jog on
> duc



Did not know you were in NZ @duc, a bit easier to trade the end of the US session
All the best for the restart.and please keep us informed


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## peter2

Thanks for your recent increased participation "Duc". Your thoughts on the markets are always welcome. Trade on. 

ps: I hope NZ becomes the first country to completely eradicate CV and Aust the 2nd.


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## ducati916

qldfrog said:


> Did not know you were in NZ @duc, a bit easier to trade the end of the US session
> All the best for the restart.and please keep us informed





I'm not disappearing, just posting less than my current prodigious output! Re. time zone from NZ, yes, slightly easier than Oz.

jog on
duc


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## ducati916

peter2 said:


> Thanks for your recent increased participation "Duc". Your thoughts on the markets are always welcome. Trade on.
> 
> ps: I hope NZ becomes the first country to completely eradicate CV and Aust the 2nd.




Thank-you, feeling the love is always nice. As above, I'm hardly disappearing, just a bit less. Mr Rederob will miss me mostest!

The risk is that it is a bit too soon and we have to re-start the whole process. That would be worse than the first time round.

jog on
duc


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## ducati916

Just keep your eyes open on this bounce as below the surface all is not as it should (or needs) to be:






The S&P 500 is reflecting the bounce in just a number of mega-caps.






The equal weight ETF is lagging.






In 2009, when we had truly bottomed, and the smaller caps were participating, the equal weight outperformed.






Not the case currently.

This is also evidenced via other sectors, Banks, Defence, etc. Tech is leading the charge currently. Therefore narrow leadership makes for a higher risk that we do get a deeper correction from the bounce at some point. Stay nimble.

jog on
duc


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## ducati916

Possibly worth a look if income is attractive:











As a REIT it will pay out I think 90% of its income as a dividend. Prisons, never going out of style and diversified across US/UK/Oz/SA. Lots of bad boys to choose from.

Current price, pretty attractive.

jog on
duc


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## tech/a

Why is this seen as a Bounce

To me its just simply Cause and Effect.
Two Outliers.
(1) World wide Covid 19 Pandemic Markets Tumble.
(2) World wide Stimulus in the Trillions Markets re bound.

Unless the status quo shifts dramatically one way or the other
eg.
(1) Flair ups drag on for ever.
(2) Treatment or Vaccine.

*My view* is that we will reach a new norm and just bumble along.
Trading will be boring and difficult to profit from.


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## Smurf1976

tech/a said:


> Why is this seen as a Bounce




I think there's a perception that the market being down 15% (S&P 500) compared to pre-virus levels doesn't reflect the extent of damage economically and that investors will be spooked in due course.

That's it basically, anything else is just detail. Biggest economic disruption in 90 years and the stock market's down only 15% doesn't seem right.


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## peter2

I'm waiting for the other shoe to drop and you think there's no second shoe?

Advice to trade what we see, which is a slow grind up is worth considering.


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## ducati916

tech/a said:


> Why is this seen as a Bounce
> 
> To me its just simply Cause and Effect.
> Two Outliers.
> (1) World wide Covid 19 Pandemic Markets Tumble.
> (2) World wide Stimulus in the Trillions Markets re bound.
> 
> Unless the status quo shifts dramatically one way or the other
> eg.
> (1) Flair ups drag on for ever.
> (2) Treatment or Vaccine.
> 
> *My view* is that we will reach a new norm and just bumble along.
> Trading will be boring and difficult to profit from.





The short answer is that a 30% drop provides an opportunity to outperform. To do so you would need to have exited near the top (or lightened up) and bought near the bottom (or heavied up).

If it is a bounce and there is a further drop, it allows you to repeat the above again, increasing further (potential) profit.

Otherwise you are just buy and hold or not playing at all.

jog on
duc


----------



## tech/a

Without Trillions Injected into the World Markets there would have been carnage
along the lines of the great depression.

My view is in many parts of the world this will be a long and drawn out process
without a Treatment or Vaccine. The damage longer term to some economies will
be worse than others,again in my View the US are likely to fair very badly.

First trillions then a slow bleed of Billions as they fight to stabilize. Again a treatment
and or Vaccine changes everything.

I agree with Duc
Trade the Extremes (outliers) are a gift to traders. Crashes and Bubbles.
If they aren't evident or have passed their use-by date we search for
local volatility. When the two meet and your ready thats when huge
money can be made. I and many of us have missed many.

And with Peter.



> Advice to trade what we see,





*You only need to catch one and go hard enough for it to be life changing.
Mind you in some cases if your in it and dont do something it too can be
life changing!*


----------



## peter2

Local (Aust) CFD provider has increased their margin requirements on their indices from 0.5% to 5%. They're expecting more high volatility to come. 

EW practitioners seeing this swing (bounce) with 5 waves (incomplete) making it either a wave 1 (bullish) or wave A (bearish). *In either count* the anticipated next swing is down (wave 2 or wave B). 

The current isolation is giving us too much time to think. I should do some gardening instead.


----------



## Student of Gann

SP500 Top is indicated for the  8th May . Market should remain up to this point . This Date is 45 Degrees from 24th March Low and 77 Degrees from 20th February Top both numbers are  at 270 Degrees and 135 Degrees in Longitude from May 6th which is 45 Degrees on The Square


----------



## tech/a

Student of Gann said:


> SP500 Top is indicated for the  8th May . Market should remain up to this point . This Date is 45 Degrees from 24th March Low and 77 Degrees from 20th February Top both numbers are  at 270 Degrees and 135 Degrees in Longitude from May 6th which is 45 Degrees on The Square





So what’s in store for the markets after 8/5?
That’s the top then what? sideways? Drop to?
And over what timeframe.


----------



## Student of Gann

I haven't yet completed a thorough analysis on The SP500 as yet however for those interested I have prepared and presented two CBA Curves on a seperate thread   that outline both minor and Major Turning Points and projected trend direction for that period.


----------



## tech/a

Student of Gann said:


> I haven't yet completed a thorough analysis on The SP500 as yet however for those interested I have prepared and presented two CBA Curves on a seperate thread   that outline both minor and Major Turning Points and projected trend direction for that period.




Cheers

But indexes particularly those under the influence of trillions of dollars of stimulus interest me more!


----------



## ducati916

So news out of the Fed:

_WASHINGTON (AP) — The Federal Reserve signaled Wednesday that it will keep its key short-term interest rate near zero for the foreseeable future as part of its extraordinary efforts to bolster an economy that is sinking into its worst crisis since the 1930s_

_In its statement Wednesday, the Fed said it will also keep buying Treasury and mortgage bonds to help keep rates low and ensure that companies can lend easily to each other amid a near-paralysis of the economy caused by the coronavirus. It did not specify any amounts or timing for its bond purchases._

_Nor did the Fed provide details about the pace of its purchases of Treasurys and mortgage-backed securities. It has tapered those purchases recently as markets have calmed. But earlier this month, it bought as many Treasury securities in a day as it did during an entire month in the 2008-2009 Great Recession._

Stocks lovin it.

jog on
duc


----------



## qldfrog

ducati916 said:


> Just keep your eyes open on this bounce as below the surface all is not as it should (or needs) to be:
> 
> View attachment 103031
> 
> 
> The S&P 500 is reflecting the bounce in just a number of mega-caps.
> 
> View attachment 103032
> 
> 
> The equal weight ETF is lagging.
> 
> View attachment 103033
> 
> 
> In 2009, when we had truly bottomed, and the smaller caps were participating, the equal weight outperformed.
> 
> View attachment 103034
> 
> 
> Not the case currently.
> 
> This is also evidenced via other sectors, Banks, Defence, etc. Tech is leading the charge currently. Therefore narrow leadership makes for a higher risk that we do get a deeper correction from the bounce at some point. Stay nimble.
> 
> jog on
> duc



The disconnect in the US between a few tech and finance companie and what remains the core of the economy is frightening
Was looking at the very same graph first graph.
Be agile and try to catch the tide or go to cash and gold.temporarily, 
I can not believe this will carry smoothly from there.


----------



## gartley

Student of Gann said:


> SP500 Top is indicated for the  8th May . Market should remain up to this point . This Date is 45 Degrees from 24th March Low and 77 Degrees from 20th February Top both numbers are  at 270 Degrees and 135 Degrees in Longitude from May 6th which is 45 Degrees on The Square



Thanks for your thoughts. I see some sort of top as well in that period


----------



## Student of Gann

For Tech : Strategy would be to wait for Time Cycle validation then trade in direction of the trend . over the course of next week I might try and include some Minor turning points within the projected downtrend from the 8th May to 1st June a time period of 24 days and a possible decline of 7.6% approx.


----------



## bluekelah

GDP 1Q -4.8% for USA. American consumer has basically shutdown. This will be a very bad earnings season. I dont think markets will hold up, probably start crashing this weekend as bad numbers come out China side as well.


----------



## aus_trader

qldfrog said:


> The disconnect in the US between a few tech and finance companie and what remains the core of the economy is frightening
> Was looking at the very same graph first graph.
> Be agile and try to catch the tide or go to cash and gold.temporarily,
> I can not believe this will carry smoothly from there.



My analysis yields the same. Tech giants and a few other bulky caps leading the rally without a great deal of wider market participation.


----------



## ducati916

You can just make out the yellow line (at 300) which is the 200SMA. This is (often) cited as the demarcation point 'twixt bull/bear markets. The market is approaching this test. Often (slightly better than 50/50) a market will pullback on the first test. There will (usually) be a re-test.

Yesterday (at least, unsurprisingly) there was no associated signal to exit, even though we were approaching the test zone. Today, maybe there will be. This will depend on how the market closes.

jog on
duc


----------



## qldfrog

ducati916 said:


> View attachment 103118
> 
> 
> You can just make out the yellow line (at 300) which is the 200SMA. This is (often) cited as the demarcation point 'twixt bull/bear markets. The market is approaching this test. Often (slightly better than 50/50) a market will pullback on the first test. There will (usually) be a re-test.
> 
> Yesterday (at least, unsurprisingly) there was no associated signal to exit, even though we were approaching the test zone. Today, maybe there will be. This will depend on how the market closes.
> 
> jog on
> duc



Last night in the US down with the Russel 2000 at -3.5%, as was the FTSE.
confirming the gap with NASDAQ falling less than 0.4pc ..
The unicorns dream is still alive while the rest of us earthlings are not having a great time, yet Australia forges on, producing now only raw materials for some Chinese factories still running and chasing elusive market.
Should i open a company of money incinerators and get a contract with various reserve banks? better i built it virtually,  cloud based, green   house emission friendly and get carbon credits?
We are living in a surreal world.
But that present opportunities
Imho, my weekly system can only do so much unless they get exposed to too much risk 
 Only a daily system can try to profit from what i see as little bounces before future falls


----------



## aus_trader

qldfrog said:


> We are living in a surreal world.
> But that present opportunities
> Imho, my weekly system can only do so much unless they get exposed to too much risk
> Only a daily system can try to profit from what i see as little bounces before future falls




Yes, I have to agree with the comments about active management in these times. I think a weekly system will have too much exposure to any downside risks if the market decides to sell down for 4 or 5 days straight at least for my stocks.

I am also looking for opportunities in the Aussie market, but a lot of prospects I come across present too many unknowns at this stage in terms of how much damage is done to the bottom line. So I'd be happy to wait till at least some results reporting comes out. I have only bought a couple of stocks since liquidating the Speculative Stock Portfolio at the start of March. Even those two are monitored on a daily basis. Will be continuing to research opportunities that present limited downside in terms of that company's current financial position. Normally not this pedantic, but I'll have to be very selective with stock picking at this stage.


----------



## ducati916

There is a signal (sell) triggered after today's close. This however is what makes trading bounces difficult, two signals (to exit) being in very close proximity, turns us all into day-traders and we potentially lose our positions.

The temptation of course, particularly on the previous shallow pullback and quick move higher, is to just sit tight. Problem is, what if it just keeps going down to retest the lows or move even lower. Of course if that were the case you would rather be 100% out.

The alternative is to hold your current positions and hedge: either with Options (Puts) or inverse ETFs. If you choose to hedge with an ETF, use an index Option/ETF (SPY/QQQ/DIA or leveraged ones). A Put is the easiest option in that you have a defined risk trade, which you can just let sit there for a little a period of time until things shake themselves out.

That is essentially my plan: hedge 25% of my exposure.

jog on
duc


----------



## aus_trader

Although I don't use this type of protection, I think this is probably a good time to implement Duc. Volatility has died down and it'll be a lot cheaper to buy that insurance as the premium will be a lot less.


----------



## ducati916

aus_trader said:


> Although I don't use this type of protection, I think this is probably a good time to implement Duc. Volatility has died down and it'll be a lot cheaper to buy that insurance as the premium will be a lot less.




It allows you to protect to the downside without closing out all your positions. Losing your position, if the market doesn't fall will have larger opportunity costs going forward than any losses in closing out (or just letting expire worthless) a Put.

Some charts to peruse:











jog on
duc


----------



## qldfrog

One point I did not see discussed much: SPP.
A lot of companies are raising capital, as they did in the GFC;
This tends to distort pricing severely obviously and present some risk and maybe some advantages;
I got offer from OSH, MTS, IVC so far out of a quite small portfolio...
Should I keep a few shares when I sell just to qualify? Is this something people have tried?


----------



## Dona Ferentes

qldfrog said:


> One point I did not see discussed much: SPP.
> A lot of companies are raising capital, as they did in the GFC;
> This tends to distort pricing severely obviously and present some risk and maybe some advantages;
> I got offer from OSH, MTS, IVC so far out of a quite small portfolio...
> Should I keep a few shares when I sell just to qualify? Is this something people have tried?



Sadly, the SPP is an 'afterthought' and appeasement only, for retail. The investment banks have pulled a swiftie on the boards, and got a capital raise in the form of an emergency action. These have come at an average of 18% below the last traded price (some were to stop companies go under, such as FLT and WEB) while others are taking advantage of cheaper money to expand.

But the placements are to institutions and the SPPs come after for retail. Gone are the institutional bookbuilds that allocate shares to fund managers prepared to pay the most. But these take time, and don't dilute retail as much - average discount is about 9%.

and now, in this current 'crisis', the ASX has increased placement limits from 15 to 25 % of a caompany's shares. So, you're being diddled.

Most SPPs don't even allow for oversubscriptions, whereas an entitlement rights issue often does. And most SPPs, while they offer up to $30,000 from each shareholder, are likely to be wound back. But the board doesn't tell you the formula as to how this will happen. Proportional, a dollar limit, or graded_; Quien sabe?

One of my offers has this








			If the Company chooses to scale back applications it will do so
-on a pro-rata basis (determined either by the number of shareholders participating, and/or
-the size of the Eligible Shareholder’s shareholding at the Record Date, and/or 
-the number of shares an Eligible Shareholder has applied for under the SPP).
		
Click to expand...


_


----------



## Dona Ferentes

answering your Q,


qldfrog said:


> One point I did not see discussed much: SPP.
> 
> Should I keep a few shares when I sell just to qualify? Is this something people have tried?



 you don't know how many shares you'll get, so selling to pay for the new issue can be problematic and may find yourself with fewer shares (and even more diluted) than prior holding. It's a game.

Holding a few shares in every ASX company is a strategy that needs another thread!!!!


----------



## aus_trader

qldfrog said:


> One point I did not see discussed much: SPP.
> A lot of companies are raising capital, as they did in the GFC;
> This tends to distort pricing severely obviously and present some risk and maybe some advantages;
> I got offer from OSH, MTS, IVC so far out of a quite small portfolio...
> Should I keep a few shares when I sell just to qualify? Is this something people have tried?




If these are companies you'd like to hold onto, yes keep a few shares to be eligible. Otherwise it costs extra brokerage to do that and end up with a few shares that makes the portfolio messy to keep.

Few years ago I tried what Dona suggested to keep as many companies on my portfolio as possible by having tiny holdings left when I sold out. For example if I had 500 shares, I will sell out 495 shares and hold the 5 long term to participate in cap raisings. It got so messy and paperwork used to clog the letterbox and drown me. It also took focus off from looking after the current shareholdings or trades. In the end I sold out anything that had a +ve value after the brokerage which weren't many and donated the rest to 'Share Gift Australia' to end the headache and keep a clean portfolio. In terms of raisings it wasn't worth it - it made a bit of money on some capital raisings but lost money on a lot of others.


----------



## ducati916

So hedged by 25%.

jog on
duc


----------



## ducati916

Pretty much the whole market running hot. Typical of bounces. Possibly now it runs a bit cooler.











The old Wall St adage may me apt this year: Sell in May and go away.

jog on
duc


----------



## qldfrog

ducati916 said:


> Pretty much the whole market running hot. Typical of bounces. Possibly now it runs a bit cooler.
> 
> View attachment 103148
> 
> View attachment 103149
> 
> 
> The old Wall St adage may me apt this year: Sell in May and go away.
> 
> jog on
> duc



Looking at last night US market, we could indeed have seen the top of the bounce this week.
Can not manage to insert an image from my phone but looking at the last 3 months DJ, I see an exhausted rise and guess a top this week.
Brain playing pattern matching based on feelings more than knowledge..


----------



## waterbottle

Agreed.


Rising prices with decreasing volumes
The big companies that were meant to lift the rest of the S&P (i.e. Facebook, Tesla, Netflix, Apple, Google, Amazon) have either performed poorly or are expected to do so in the 2nd quarter. Meanwhile, other companies around them are only delivering poor results based on 1st quarter earnings (which only really caught the tail of this crisis!!!!!)
Increasing rhetoric RE: US v. China trade-war, which to be honest has been the case throughout Trump's presidency although for some reason it seems to have easily spooked market participants today
US Fed decreasing the amount of stimulus for the next week, now down to $8 bln/day
All-in-all, its a fragile market that's easily spooked with declining stimulus.... IMO the next leg will be down. 

The question for me is: Does it stop at the March 23rd lows or does it keep going? Personally, the synchronised, global intervention and the introduction of remdesivir detracts from the possibility of a new low being reached.


----------



## ducati916

Just to provide some context: the S&P500 has moved in excess of 2SD deviations higher since the bottom. That is a really massive bounce (particularly when you include the time frame involved) and it was always going to become unstable at some point. That point might be now.

I'm going to watch the (if it continues to sell-off) 2600 level as we had a lot of action there on the way up. It also happens to be the 1SD deviation mark lower (on the initial sell-off) and bounce higher. 

So I would be looking (in a continued sell-off) for a signal circa the 2600 level.

jog on
duc


----------



## aus_trader

qldfrog said:


> Looking at last night US market, we could indeed have seen the top of the bounce this week.
> Can not manage to insert an image from my phone but looking at the last 3 months DJ, I see an exhausted rise and guess a top this week.
> Brain playing pattern matching based on feelings more than knowledge..




Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...


----------



## qldfrog

If we were talking about the virus, i think flattening the curve would be the term we would use but while death or cases do not diseappear, reverse action is possible on the market, the curve can go down

My belief is some people will call it stabilisation before another up period while other will see a peak, we will know more next week


aus_trader said:


> Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...
> 
> View attachment 103162


----------



## aus_trader

qldfrog said:


> If we were talking about the virus, i think flattening the curve would be the term we would use but while death or cases do not diseappear, reverse action is possible on the market, the curve can go down
> 
> My belief is some people will call it stabilisation before another up period while other will see a peak, we will know more next week



I think it will be clearer of the direction as more and more companies report their impact going forward. At the moment a very similar picture in DJ as well...


----------



## Student of Gann

I went back and rechecked the cycles  and it looks like the 29th April Top is connected to the Top 1st May 2019 . So if this Top holds past records indicate a 7.5% decline into either Friday 29th May or Monday 1st June which is in line with the original Forecast


----------



## ducati916

aus_trader said:


> Here it is qldfrog. Looking at it it's not clear if this is just another pull back in the bounce or the start of a leg down...
> 
> View attachment 103162





On current data (indicators that I use) it is simply a pullback, it is not the start of another leg lower. If it were (or I thought it were) I would not be hedged 25%. I would be hedged 150% or completely sold out (100%).

My best guess (and it is a guess) is 2600. Partly that it is a technical support/resistance level, partly it is the location of the 1SD move (both down and up). Someone might want to stick a Fib. analysis on that level and see if it matches up at all. I haven't checked but I wouldn't be surprised to see a 50% mark on a Fib.

jog on
duc


----------



## fiftyeight

ducati916 said:


> Yes. I like trading volatile instruments as my strategies are based around volatility.
> 
> jog on
> duc




Does the below relate to what you were referencing re vol and your strategies?

http://econompicdata.blogspot.com/2016_01_01_archive.html


----------



## Smurf1976

ducati916 said:


> On current data (indicators that I use) it is simply a pullback, it is not the start of another leg lower.



Using a completely different approach I'm thinking the same.

I've gone looking for opinions online, anywhere basically and by that I mean financial sites and non-financial where there's some discussion going on. Most of that focuses in the US markets but bottom line is that public sentiment is predominantly bearish so far as I can determine and I take that as a contrarian indicator.


----------



## ducati916

fiftyeight said:


> Does the below relate to what you were referencing re vol and your strategies?
> 
> http://econompicdata.blogspot.com/2016_01_01_archive.html




No, not really. I'm largely gamma scalping.

jog on
duc


----------



## ducati916

Smurf1976 said:


> Using a completely different approach I'm thinking the same.
> 
> I've gone looking for opinions online, anywhere basically and by that I mean financial sites and non-financial where there's some discussion going on. Most of that focuses in the US markets but bottom line is that public sentiment is predominantly bearish so far as I can determine and I take that as a contrarian indicator.




Agreed.

Markets and the economy (which includes sentiment) often diverge. The day-to-day economy that we live in, is only a single variable in financial markets. Thus, the financial markets can (and often will) trade (seemingly) irrationally to that day-to-day economy.

jog on
duc


----------



## aus_trader

ducati916 said:


> Someone might want to stick a Fib. analysis on that level and see if it matches up at all. I haven't checked but I wouldn't be surprised to see a 50% mark on a Fib.




Here it is on the S&P500, already rebounded above 50%


----------



## ducati916

aus_trader said:


> Here it is on the S&P500, already rebounded above 50%
> 
> View attachment 103207




So it was actually a bit higher than I thought. It also looks like the sell signal will be invalidated today and a buy signal generated for tomorrow. Again, very shallow pullback if signal reverses. I'll post later on whether it has or not.

jog on
duc


----------



## aus_trader

I am still cautious on this V shaped US market recovery. The reason is simply this:

"" Looking at the stock markets, it seems that the US has recovered the most and the rest of the world markets are lagging behind in the recovery or languishing near the bottoms.

But I fear that the US might be the Achilles Heel in the Global market recovery thanks to mismanagement of the situation (the virus), although they are leading with their FED backed stock market bounce at the moment... ""

Quoted written by myself on another thread. I thought to just past it here.


----------



## gartley

aus_trader said:


> I am still cautious on this V shaped US market recovery. The reason is simply this:
> 
> "" Looking at the stock markets, it seems that the US has recovered the most and the rest of the world markets are lagging behind in the recovery or languishing near the bottoms.
> 
> But I fear that the US might be the Achilles Heel in the Global market recovery thanks to mismanagement of the situation (the virus), although they are leading with their FED backed stock market bounce at the moment... ""
> 
> Quoted written by myself on another thread. I thought to just past it here.




US has probably see the best of it's gains for now. ASX has catching up to do but trend still up and I think will pick up momentum in weeks ahead.


----------



## ducati916

So signal was triggered today: close shorts re-open longs. Choppy.

jog on
duc


----------



## ducati916

aus_trader said:


> I am still cautious on this V shaped US market recovery. The reason is simply this:
> 
> "" Looking at the stock markets, it seems that the US has recovered the most and the rest of the world markets are lagging behind in the recovery or languishing near the bottoms.
> 
> But I fear that the US might be the Achilles Heel in the Global market recovery thanks to mismanagement of the situation (the virus), although they are leading with their FED backed stock market bounce at the moment... ""
> 
> Quoted written by myself on another thread. I thought to just past it here.




Could be.

Trying to apply too much logic to these types of events, usually results in nothing much more than a headache. Sometimes you just hold your nose and jump in and hang on as best you can. If you wait for the all clear, markets are long gone and trying for a good entry is just a waste of time. The time to jump in is often when all looks lost. Easier said than done. 

jog on
duc


----------



## aus_trader

ducati916 said:


> Could be.
> 
> Trying to apply too much logic to these types of events, usually results in nothing much more than a headache. Sometimes you just hold your nose and jump in and hang on as best you can. If you wait for the all clear, markets are long gone and trying for a good entry is just a waste of time. The time to jump in is often when all looks lost. Easier said than done.
> 
> jog on
> duc






gartley said:


> US has probably see the best of it's gains for now. ASX has catching up to do but trend still up and I think will pick up momentum in weeks ahead.




Thanks guys, action trumps inaction (not referring to Donald Trump).

Yes things are not what they seem to be but I agree and I wrote a post with similar theme in another thread and why I am still taking small action steps at least on the ASX:

""
I just don't know. If everything is done to prop up the stock market in terms of FED actions and the leadership actions, well it is working at least for the time being. We can look at the US markets in disbelief, but human toll is not a factor that drives stock markets. It's the amount of money printing by the FED that can be used to buy the market either directly or indirectly via investment banks.

Anyway it is what it is, so I won't argue. As a well respected ASF member said either in this thread or another thread: it might take the loss of a high profile figure or their immediate family in the billionaire club for the funds and efforts to be directed to where it's actually needed in the real economy at ground level.

Good to hear that you are also re-entering stocks. I have also only just started buying ASX stocks, very cautiously and selectively. I have added another stock today that may be less affected economically in these times because they are an essential service provider. Will update my 'spec portfolio' in the evening with this purchase. For members interested, ASF thread for that portfolio is Speculative Stock Portfolio.

""


----------



## ducati916

Some more market history: short version 60% of bear markets result in new lows.







jog on
duc


----------



## ducati916

aus_trader said:


> Thanks guys, action trumps inaction (not referring to Donald Trump).
> 
> Yes things are not what they seem to be but I agree and I wrote a post with similar theme in another thread and why I am still taking small action steps at least on the ASX:
> 
> ""
> 1. I just don't know. If everything is done to prop up the stock market in terms of FED actions and the leadership actions, well it is working at least for the time being. We can look at the US markets in disbelief, but human toll is not a factor that drives stock markets. It's the amount of money printing by the FED that can be used to buy the market either directly or indirectly via investment banks.
> 
> 2. Anyway it is what it is, so I won't argue. As a well respected ASF member said either in this thread or another thread: it might take the loss of a high profile figure or their immediate family in the billionaire club for the funds and efforts to be directed to where it's actually needed in the real economy at ground level.
> 
> Good to hear that you are also re-entering stocks. I have also only just started buying ASX stocks, very cautiously and selectively. I have added another stock today that may be less affected economically in these times because they are an essential service provider. Will update my 'spec portfolio' in the evening with this purchase. For members interested, ASF thread for that portfolio is Speculative Stock Portfolio.
> 
> ""




1. So if we create an equation that more or less states your position in [1].

Corporate profits (Stock Market) = investment + dividends/buybacks - household saving - government saving - rest of world saving.

So: (-30%) + (-20%) - 20% - (-$3.7T)

In 2019, net investment, dividends/buybacks, household savings and rest-of-world-savings added up to $4.7 trillion. In 2020, the government is going to generate 78% of that in total.

So the point is, it’s not remotely surprising that the stock market has recovered, simply because it’s now trying to guess when those other variables will recover. And if they do recover, then there’s a very real chance you’re going to see record profits in 2021 and 2022.

2. The British Prime Minister almost died. I doubt you even blinked.

I think this market will fall into the 40% bracket (from above chart).

jog on
duc


----------



## aus_trader

ducati916 said:


> Some more market history: short version 60% of bear markets result in new lows.
> 
> View attachment 103220
> 
> 
> jog on
> duc



Amazing stats duc. This is why I love hanging around these forums. You get to learn from other members and have a broader perspective rather than hiding in a hole and being scared.

I am more prepared this time. If the markets need to re-test or go below the lows, I would have most likely liquidated the positions that I am putting on now, unless a particular stock decides to go against the grain and rally hard.

My extreme cautious view to buy very cautiously and very selectively comes from living through the GFC and coming out the other side on life support. I thought I was a genius when the market tanked during the GFC and bought up everything under the sun including mining juniors and mining services companies going all in. Didn't have an exit plan and sold out of a lot of those companies either when most were trading for pennies with almost no value left in them or still held on stubbornly till the companies were wound up and given to either receivers or administrators to clean up and to this day I didn't get a cent back.


----------



## aus_trader

ducati916 said:


> I think this market will fall into the 40% bracket (from above chart).




I hope so, fingers crossed !


----------



## waterbottle

ducati916 said:


> Could be.
> 
> Trying to apply too much logic to these types of events, usually results in nothing much more than a headache. Sometimes you just hold your nose and jump in and hang on as best you can. If you wait for the all clear, markets are long gone and trying for a good entry is just a waste of time. The time to jump in is often when all looks lost. Easier said than done.
> 
> jog on
> duc





I agree wholeheartedly with you on this.

There is a risk no matter what option you take: either in the form of lost opportunity or lost capital.
The decision between one or the other is up to the individual, although risk management & luck each have a role to play.

Risk management
Risk management
Risk management please!


----------



## ducati916

aus_trader said:


> Amazing stats duc. This is why I love hanging around these forums. You get to learn from other members and have a broader perspective rather than hiding in a hole and being scared.
> 
> I am more prepared this time. If the markets need to re-test or go below the lows, I would have most likely liquidated the positions that I am putting on now, unless a particular stock decides to go against the grain and rally hard.
> 
> My extreme cautious view to buy very cautiously and very selectively comes from living through the GFC and coming out the other side on life support. I thought I was a genius when the market tanked during the GFC and bought up everything under the sun including mining juniors and mining services companies going all in. Didn't have an exit plan and sold out of a lot of those companies either when most were trading for pennies with almost no value left in them or still held on stubbornly till the companies were wound up and given to either receivers or administrators to clean up and to this day I didn't get a cent back.




Which is why I only really trade ETFs directionally. If I trade individual stocks it has to be a market neutral position so that if they go to zero, I still get paid.

jog on
duc


----------



## ducati916

Buffett speaks:

_A firsthand explanation of why Berkshire continues to sit on top of some $137 billion in cash and Treasury bills following the steepest market sell-off since the 2008-09 financial crisis, rather than snapping up beaten down stocks or entire companies. The Oracle of Omaha told a spookily empty auditorium for the first time how credit markets had virtually seized up in March, as the Covid-19 pandemic and related economic shut down punished stocks — and sent companies scrambling to tap their credit lines, bringing markets to the financial edge. 

“We came very close to having a total freeze of credit to the largest companies in the world who were dependent on it,” Buffett said. Chief financial officers were petrified. “Fear is the most contagious disease you can imagine,” he said.

The precarious state of the U.S. banking system was not widely known. “I had no idea how much we were up against it in terms of facing a banking crisis,” said Thomas Russo, managing member of Gardner Russo and Gardner, a money management firm in Lancaster, Pennsylvania, which has owned Berkshire shares since 1990. “We were near a precipice.”

He pointed out how the 2008-09 financial crisis unfolded in stages. “You didn’t see all the problems the first day,” Buffett said. “There are things that trip other things and we take a very much worst-case scenario into mind.”
_
jog on
duc


----------



## $20shoes

FRED developed a new chart painting a not so pretty picture. 

The WEI is an index of real economic activity using timely and relevant high-frequency data. It represents the common component of ten different daily and weekly series covering consumer behavior, the labor market, and production. The WEI is scaled to the four-quarter GDP growth rate; for example, if the WEI reads -2 percent and the current level of the WEI persists for an entire quarter, one would expect, on average, GDP that quarter to be 2 percent lower than a year previously.

The WEI is a composite of 10 weekly economic indicators: Redbook same-store sales, Rasmussen Consumer Index, new claims for unemployment insurance, continued claims for unemployment insurance, adjusted income/employment tax withholdings (from Booth Financial Consulting), railroad traffic originated (from the Association of American Railroads), the American Staffing Association Staffing Index, steel production, wholesale sales of gasoline, diesel, and jet fuel, and weekly average US electricity load (with remaining data supplied by Haver Analytics). All series are represented as year-over-year percentage changes. These series are combined into a single index of weekly economic activity.






Although you could assess the damage as being front loaded as Duc mentioned (and it may be), the probability of this leg up being a relief rally are higher than it being the continuation of the bull market. 

However, the exuberance of the move does not appear to have yet ceased. With Wave A complete, we should expect a small pullback for Wave B (we are currently in Wave B) and then highs above 3000 before Wave C terminates this leg up. That should set up a broader move down well below the MArch lows.


----------



## qldfrog

N


$20shoes said:


> FRED developed a new chart painting a not so pretty picture.
> 
> The WEI is an index of real economic activity using timely and relevant high-frequency data. It represents the common component of ten different daily and weekly series covering consumer behavior, the labor market, and production. The WEI is scaled to the four-quarter GDP growth rate; for example, if the WEI reads -2 percent and the current level of the WEI persists for an entire quarter, one would expect, on average, GDP that quarter to be 2 percent lower than a year previously.
> 
> The WEI is a composite of 10 weekly economic indicators: Redbook same-store sales, Rasmussen Consumer Index, new claims for unemployment insurance, continued claims for unemployment insurance, adjusted income/employment tax withholdings (from Booth Financial Consulting), railroad traffic originated (from the Association of American Railroads), the American Staffing Association Staffing Index, steel production, wholesale sales of gasoline, diesel, and jet fuel, and weekly average US electricity load (with remaining data supplied by Haver Analytics). All series are represented as year-over-year percentage changes. These series are combined into a single index of weekly economic activity.
> 
> View attachment 103227
> 
> 
> Although you could assess the damage as being front loaded as Duc mentioned (and it may be), the probability of this leg up being a relief rally are higher than it being the continuation of the bull market.
> 
> However, the exuberance of the move does not appear to have yet ceased. With Wave A complete, we should expect a small pullback for Wave B (we are currently in Wave B) and then highs above 3000 before Wave C terminates this leg up. That should set up a broader move down well below the MArch lows.



Not an Elliot fan, but that scenario seems quite reasonable vs figures and psyche.good find!


----------



## ducati916

The 2020 crash had many of the hallmarks of the 1987 crash.

_I was 25 years old and had been on John Meriwether’s Arb Desk for just over a year, following two years working in Salomon’s Bond Portfolio Analysis Group. My memories from the day the US stock market dropped 22% didn’t seem very noteworthy when my friend Rich Dewey asked to interview me for an article, Black Monday Revisited, he was writing for Bloomberg to mark its 30th anniversary. After all, compared to the other people Rich was interviewing—Paul Tudor Jones, Howard Marks, Stanley Druckenmiller, Ed Thorp and my former Salomon colleagues Eric Rosenfeld and Michael Lewis— what could I add?_

_We borrowed money to finance our long positions in bonds primarily through the repo market, but we also had to borrow securities to support our short positions. When we shorted a bond, such as the 9.25% of 2/15/2016 that we were running a big position in at the time, we needed to borrow that specific bond from someone who held it in order to make good on the sale. We could borrow money from anyone– a client, a bank or as a last resort even the Fed. But the only party who could lend you a security was someone who owned it free and clear, and hadn’t lent it already. And the lending market was mostly overnight, so we had to roll every day.1_

First takeaway: Bond traders finance their positions by selling 'X' and buying 'Y' (bonds). This has to be rolled over in the Repo Market. There were issues in the Repo Market in September 2019. The result being that Relative Value Arbitrage positions had created significant negative convexity positions, which, with an increase in volatility, leads to an endogenous feedback loop and margin calls. The Fed had stepped into the Repo market, but, with the massive increase in volatility, the forced selling overwhelmed (again) the Repo Market, resulting in significant selloffs in Treasuries, driving the sell what you can in equity markets.











Continuing:

_Another thing that I don’t remember happening was an economic depression following the stock market crash. Well, I guess that’s because it didn’t! It was supposed to though, just as the Great Depression followed the Black Tuesday of October 1929. In fact, in December 1987, 33 prominent economists (5 with Nobel prizes) issued a statement predicting that “the next few years could be the most troubled since the 1930s.”2 The fact that we moved forward with barely a blip to the real economy makes us feel that October’s stock market crash was bogus, a market move that had nothing to do with fundamentals. But it didn’t have to turn out that way. It’s important to remember what didn’t happen: an alternative future in which the Fed didn’t act as it did (would Volcker have reacted as Greenspan did?), the stock markets fell even further, financial firms started failing, and we got a long and deep recession.3_

Obviously there are differences then to now: what is common however is the speed of the intervention from the Federal Reserve.

The recovery:






Some blips lower, but essentially, a 'V' recovery. Of course there was no aftermath recession.

So some examples of earnings based recessions:






The drawdown in earnings is YoY. The worst being 2007 with 35% drawdown. The market fell 57%. We have had  earnings Q1 already. Pretty grim for the Banks, but they already had issues that as usual, they were hiding. However the issue will be going forward (for most listed companies mid-caps+) will be with so much stimulus already provided and no hint that more, if necessary, could not be made available, it is quite possible that there is no second shoe to drop as earnings + stimulus will keep earnings higher than anticipated.

The fall in March was a Bond market margin call that as usual migrated into stocks. The COVID-19 lockdown that has subsequently been enforced, is (has) creating the losses going forward. The fallout is (will) mostly fall on small (non-listed firms) that have difficulty accessing capital. The larger firms will weather the storm via bailouts etc and emerge into a lower competition market, which, paradoxically, could enhance earnings going into 2021.

At the moment (but that could change) I do not see anything that will break the current secular (bull) market. This remains primarily a margin call that has crushed (mostly) small businesses through a lockdown. There will be exceptions (examples in the oil patch) but by-and-large, as we start to exit, I don't see a second leg down.

jog on
duc


----------



## aus_trader

Reading all of the above I come to the conclusion that 1987 comparison to current market and Buffet's actions contradictory .


----------



## Smurf1976

$20shoes said:


> The WEI is a composite of 10 weekly economic indicators: Redbook same-store sales, Rasmussen Consumer Index, new claims for unemployment insurance, continued claims for unemployment insurance, adjusted income/employment tax withholdings (from Booth Financial Consulting), railroad traffic originated (from the Association of American Railroads), the American Staffing Association Staffing Index, steel production, wholesale sales of gasoline, diesel, and jet fuel, and weekly average US electricity load (with remaining data supplied by Haver Analytics).




I like that they're measuring very real things in the economy not conjured up numbers produced by some model subject to hedonic adjustment and based on dubious assumptions.

Retail sales, unemployment, income tax, petroleum consumption and the activities of freight trains, steelworks and power stations are absolutely very real things with broad economic implications that are difficult, in some cases outright impossible, to fudge by any means short of outright lies. Either workers are employed, the train's hauling freight and the blast furnace is running or it's not, that sort of thing is very real.

It's not like some model where you can say it's hot despite the fact it's snowing outside if you just refine the definition of "hot" until it gives the answer you want and nobody can really prove it's wrong or right. Jet fuel loaded onto aircraft and gigawatt hours sent out to the grid are far more real, definite things.


----------



## Smurf1976

An interesting mix of views here on all this, ranging from "new all time highs are just around the corner" through to "end of the world is nigh" sort of stuff.

Personally, I'm somewhat biased to the upside but far from convinced. There's all that money printing going on and there's a lot of bearishness from the public and both of those point toward markets more likely to go up than down. On the other hand, the rally does seem rather like the battery's just about stuffed, it's struggling along at best. 

Main thought though is a comment I saw on a YouTube video regarding the S&P500: "Stop focusing on the detail and indicators, stand back and look at the chart. Now tell me this isn't a huge bear flag".

Thoughts?


----------



## ducati916

Obviously the COVID-19 is having an impact. But by comparison to the 1917-1919 variety which killed 50M-100M, it's nothing really by comparison. 






This is the 1917 market. The first wave of flu. The dips were deeper, but still nowhere near the lows. The second wave, which was actually the most significant wave in 1918, the market came back to the lows in 1917. The third wave in 1919, market was long gone. COVID-19 wave 1 will be (in my opinion) the worst wave. Once we get through this, any subsequent waves will be lesser, although some industries may be hit harder than others. So one takeaway is choose the industry carefully.






The key going forward for the market is forward guidance.






Clearly there is anticipation and profit warnings going forward. But nothing compared to the 2008 situation:






The key difference is time: COVID-19 has a finite shelf life, either through herd infection or some sort of vaccine. Therefore currently I don't see significant declines back to the lowpoint in the market currently. If the situation changes, well, then I might change my position.

Industries to date:






And just a little history of volatility.






jog on
duc


----------



## ducati916

And:

_This morning the Treasury Department announced the resumption of 20-year bonds for the first time since 1986, with the first $20 billion auction set for two weeks from today.  That announced sale is well above the $10 billion to $13 billion size range suggested by a Wall Street advisory committee and complements an upsized reopening schedule across existing maturities.  Next week, Treasury will sell a record $96 billion in so-called refunding debt across three-, 10- and 30-year auctions, up from an $84 billion quarterly refunding schedule which had been in force since fall 2018.

With a frozen economy and cascading job losses necessitating colossal fiscal stimulus, Uncle Sam is obliged to fill in the gap.  On Monday, the Treasury announced it will borrow a record $2.999 trillion during the second quarter, more than six times that of the prior three-month period.  

The figures are mind boggling.  According to projections from the Congressional Budget Office, the fiscal deficit this year will equal 18% of GDP, the highest since World War II and double that seen at the height of the Great Recession in 2009.  Since March 1, the national debt has grown by $1.5 trillion to $24.9 trillion, an increase of 6.4%. Even before the bug began wreaking havoc, the budget deficit during the first three months of the fiscal year came to $389 billion, up 25% from a year ago

Yet the dramatic escalation of supply has made no dent in the multi-generation bull market in Treasurys. Even following some selling pressure today, the 10-year yield of 0.70% is down from 2.03% as recently as late July, and 0.78% when Federal Reserve announced on March 23 that it will buy Treasurys “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.” 

This afternoon, the New York Fed announced it is “prepared to include the 20-year bond in System Open Market Account (SOMA) operations and treat it in a similar manner to other nominal coupon Treasury securities, effective immediately.” 

There’s more where that came from. 
_
jog on
duc


----------



## Garpal Gumnut

Be very, very, very careful about trading a bounce. 

I was listening in to a podcast from Blackrock to high net worth individuals last night and the predictions for the NASDAQ are dire. 

Ergo, the ASX will further tank. 

I can say no more. 

Be brave to keep the liquidity going but not to make a profit. 

gg


----------



## mangojoe

Garpal Gumnut said:


> Be very, very, very careful about trading a bounce.
> I was listening in to a podcast from Blackrock to high net worth individuals last night and the predictions for the NASDAQ are dire.




Could you link said podcast here? Thanks


----------



## Smurf1976

Garpal Gumnut said:


> Be very, very, very careful about trading a bounce




One thing when trading a bounce is to make sure that what you're trading does in fact bounce.

Thus far the Nasdaq has bounced like one of those you beaut super bouncy balls that would be considered cheating if used in any proper sport.

The S&P 500 has bounced like a regular ball that would be legit for use in sports.

The ASX has bounced like, well, rather a lot of stocks have bounced much like a bag of cement really.  The index looks somewhat miserable compared to the US but dig beneath the surface and there's rather a lot of stocks which have gone pretty much nowhere but of course there are others which have indeed performed well.

If there's one lesson from the past few weeks it's that correlations can and do fail. Trading OOO is not actually trading crude oil as many have found out. Trading randomly chosen shares, or even an ASX200 index ETF, is not a proxy for the Nasdaq, S&P500, FTSE or whatever else you did your analysis based on.

Or in other words, whatever you're trading, and whatever you're analysing, need to be the same thing. Correlations work until suddenly they don't - I expect many have discovered this in various ways in recent times.


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## ducati916

Something to think about when you select an industry to invest in (trade in). However, also consider the profitability of that industry and earnings growth. Yes we all buy food, but margins are tight and what is the earnings growth likely to be?

jog on
duc


----------



## Smurf1976

So with the US employment data to be released tonight (Australian time) will this be a "sell the news" sort of event?

My thinking is a short move up for the US indices, on the expectation of further efforts from the Fed, then a pullback. That's more a gut feel thing though than any serious number crunching so wondering what others foresee?


----------



## ducati916

Breadth is increasing, which provides overall strength to converting the bounce, into a more sustainable trend:






A look at how bad it was historically:






Just to confirm it is still a 'bounce' and not a trend:






In the last chart (above) we would want to see 50%+ with rising 50DMAs. That (I doubt) will happen anytime soon, we will continue to have a choppy market through the next few months. But with economies gradually re-opening, that number should increase, converting the bounce into a trend. Of course, if it does not, that in itself will be a warning sign.

jog on
duc


----------



## ducati916

So what about risks that could derail the bounce and send the market back down to re-test or surpass the lows?

Things to watch for in no particular order:

(a) Italy defaulting (Italian banks [all] are insolvent) needing a Greece style bailout;
(b) European banks have some really weak banks that are also insolvent (particularly France, Germany, Spain);
(c) New York State and City are insolvent, and will require a bailout;
(d) CMBS & EETC defaults are set to rise (although credit spreads are not as elevated as in 2008/9).

What I'm agnostic on (what I have no idea what the outcome might be) is the US$, should it:
(a) strengthen;
(b) weaken

jog on
duc


----------



## qldfrog

ducati916 said:


> So what about risks that could derail the bounce and send the market back down to re-test or surpass the lows?
> 
> Things to watch for in no particular order:
> 
> (a) Italy defaulting (Italian banks [all] are insolvent) needing a Greece style bailout;
> (b) European banks have some really weak banks that are also insolvent (particularly France, Germany, Spain);
> (c) New York State and City are insolvent, and will require a bailout;
> (d) CMBS & EETC defaults are set to rise (although credit spreads are not as elevated as in 2008/9).
> 
> What I'm agnostic on (what I have no idea what the outcome might be) is the US$, should it:
> (a) strengthen;
> (b) weaken
> 
> jog on
> duc



Warning, opinion not facts below for a US dollar view
I believe the real economy in the US has an advantage above the rest of the world.
EU political monster is dead, shown as irrelevant and negative.
that will free the UK and ultimately Germany..for the best or worse, to follow their own destiny..but this will take time and a lot of bumps along the way.
China while not killed will initially be hurt and lessen, but nevertheless getting stronger in the asian area as the US withdraws.
This leaves the US growing on its own mostly domestic market.
That would lead to a stronger USD vs the rest.with no incentive to devaluate as exports are not as primordial.
That is for the real economy.but of course, the financial view is not as clear cut, as the US is as much a basket case as the others.
We have not seen yet a financial crisis.it may strike anytime and i am surprised it did not with the virus.
That crisis would smash the rebound yet could even help the USD
So overall medium term 1y or so, i am still bull on USD.now need to see ideas confirmed by facts


----------



## ducati916

So with earnings winding down, some takeaways:






Earning misses are not being punished. There is already a big discount on majority of stocks. Upside beats, also due to the uncertainty, are also down with regards to moves higher. Sort of a wait and see attitude.






If you want to open a position based on an earnings beat: do it later, at the close.

jog on
duc


----------



## ducati916

So a couple of charts:










You will know that I hold positions in:

(a) Oil Producers; and
(b) Financials; and
(c) Industrials (defence).

They the top 2 worst and the 3'rd is not far behind. Given that I use x3 leverage, the falls are x3.

I hold them because they fell the furthest. They have (in my opinion) the most to gain going forward. The leaders (currently) will likely lose that leadership and slow. Financials are critical to the economy. Oil is critical to the economy. Defence (as far as the Yanks are concerned) is critical to national security (hence the economy).

It might take 2 months, it might take 2 years. Eventually, these industries will return, because, they have to. The economy cannot function (currently) without them.

A little Horace for you:

_"Many shall be restored that are now fallen and many_
_Shall fall that are now in honour."_

_Ars Poetica._

jog on
duc


----------



## makteb

Interesting and not interesting depending on the perspective.  My comment may or may not be interesting.  We are here to learn (some to teach) the art of trading and fundamentally we need history, discipline and cash?  The price history action of charts teaches, our discipline will reward and cash to transact on the bounce.  Of course there is all the noise and distraction to test our inner beings.  

To trade this bounce, you would buy a small parcel.  A bounce is only a bounce after the fact.

If the bounce is fake, from previous experience you learnt DCA is an important method to manage funds and risk thus you would allocated funds for a second drop to next support all pre determined.  If you are an "all in" kinda trader,  your better parking your hard earned money in a managed fund.

If the bounce takes off, then you bought some at the bottom and you DCA up according to your prognosis.
Make no mistake, these outliers as mentioned those on the forum, are indicators, the rise and fall.  There is no better simple indicator than this...other than price itself.  When your Big Mac is $1, you know you are on to something good.

This is how i am trading this bounce/mid way drop/next 6 months because i don't know what will happen next until after the fact.
But history paints a picture for me.


----------



## ducati916

Latest sentiment polls:






In the past, when sentiment bearish, the market moves higher.





_Bullish sentiment dropped down further to 23.31% from 23.67% last week. That is the lowest level of bullish sentiment since the COVID-19 pandemic began and the lowest number since last October when the percentage of investors reporting as bullish bottomed out at 20.31%._

_



_

_Bearish sentiment likewise fell slightly this week from 52.66% to 50.61%.  Although that is slightly lower, the majority of those surveyed are still bearish._

_



_

_Of the previously mentioned past ten weeks, even if bearish sentiment was not above 50% it was at least one standard deviation above its historical average.  That now ranks as the longest streak since 2008 (14 weeks) and the fourth-longest in the history of the survey dating back to 1987._

_



_

_With such a large divergence between bulls and bears, the bull-bear spread now stands at -27.3 which is slightly better than the -28.99 reading last week but still clearly at the low end of the past decade's readings._

The takeaway: sentiment is bearish, possibly even 'very' bearish and has been for some time. The market however is still above the lows. It is choppy, there is paranoia, there is plenty of bad news day-in-day-out, yet still the market is above its lows.

Time is on this market's side. The more time that passes without the market breaking blow the low, the less likely it is to do so, because over time, issues induced by the causes will be solved and/or recede.

jog on
duc


----------



## ducati916

makteb said:


> A bounce is only a bounce after the fact.




I have removed all the noise from your post that distracts from the central premise.






Here is the current market. Is it still a bounce or is it a new trend?

The problem with your position as stated is: it is only a bounce if we go to new lows. Then (after the fact) we can state with authority that it was a bounce.

If it goes higher and never goes to a new low, it was never a bounce, it was the start of a new trend. I assume most would like to get on the train early.

The issue therefore is: lack of certainty. There are 2 choices: (a) trade, (b) don't trade. If (a) there are many strategies to engage with the market.

jog on
duc


----------



## Student of Gann

SP500 14th - 15th May Low should hold . 2761 is an important price level . the next price level down is 2730.


----------



## Student of Gann

SP500  Should see Top 29th May .


----------



## makteb

Student of Gann said:


> SP500  Should see Top 29th May .



If I understand your reply,  you believe the top of this bounce is happening soon before decline?


----------



## Student of Gann

14th May 2766 Low is in place . trend should continue up to 29th May High .


----------



## Student of Gann




----------



## aus_trader

Student of Gann, thanks for the short term view of the markets.

Do you have any longer term price projections ? For example Up towards New High's, Sideways Grind or Down to re-test the Lows ?


----------



## makteb

Thank Gann for the explanation and thoughts


----------



## Student of Gann

I have a Curve out till August but let's see how this Forecast plays out .


----------



## aus_trader

Student of Gann said:


> I have a Curve out till August but let's see how this Forecast plays out .



OK sure. I'll be watching the market around the end of the month as per your topping pattern...


----------



## ducati916

So yesterday I posted this in the Gold forum:






Is inflation, moving forward, going to be an issue for common stocks? 

If rising inflation creates a response from the Fed. with regard to rising yields, probably. 

When rates last started to rise in 2018: in January 2018 the 3mth sat at a yield of 1.5%+/-. By July 2018 it sat at 2%. By October (when the stock market started to sell off) it sat at 2.4% +/-. The 30yr Bond went to just under 3.5%.

Historically that is a very low yield. The market has little to no tolerance for rising yields, which, could very well happen if inflation is once again adjudged to be a risk. The Fed. reversed its tightening posture with regard to yields and the market recovered in early 2019.

So the end of last week saw moves in Gold, Silver, Oil and the 30yr Bond. Now these are single day moves. At the moment, it is simply a fluctuation and nothing to rebalance your portfolio on. However it is something worth watching simply because there has been an increase in the financial 'media' about inflation. 

It is not however being overly discussed by non-finance persons.






Inflation is one of those phenomena that can be created out of 'belief'. If enough people believe; and start acting on that belief, there is the potential (if the underlying circumstances, viz. credit expansion are present) to drive almost a self-fulfilling prophecy.

Unfortunately the above chart is of too short a time frame to really give much information as a comparison.






So we have (above) Silver, Industrial metals (Copper, etc) 20yr Bond, US Dollar and Energy. I probably should have added Agriculture to that also. I used XLE as USO is somewhat broken atm.

This is what I will be keeping a close eye on moving forward. Plotting the relationships as ratios also tends to clarify the picture (information) with regard to these relationships.

On the above, there would not seem to be an excessive threat of inflation currently. Yields are still low. Energy, historically cheap with current high inventory. This will change moving forward as the world has lost production. It remains to be seen just how much. The dollar is also stable atm.

Silver, although it has jumped...is still below its early 2020 high. Until it trades through that point, Silver is not signalling anything as far as inflation. If it trades through that high I would be paying much closer attention.

If inflation does move higher, it will (in my opinion) be because of oil and the damage to production inflicted by the Saudi price war. That would mean oil moving north of $70. To that point, I think the market would live with it. After that, I'm not so sure. Early moves signalling inflation will likely first show up in the Dollar/Bonds.

As to the virus...only a crushing, worldwide re-infection driving a second global shutdown (if that even happened) will see the 'bounce' fail and move below the lows already seen.

jog on
duc


----------



## aus_trader

ducati916 said:


> So yesterday I posted this in the Gold forum:
> 
> View attachment 103559
> 
> 
> Is inflation, moving forward, going to be an issue for common stocks?
> 
> If rising inflation creates a response from the Fed. with regard to rising yields, probably.
> 
> When rates last started to rise in 2018: in January 2018 the 3mth sat at a yield of 1.5%+/-. By July 2018 it sat at 2%. By October (when the stock market started to sell off) it sat at 2.4% +/-. The 30yr Bond went to just under 3.5%.
> 
> Historically that is a very low yield. The market has little to no tolerance for rising yields, which, could very well happen if inflation is once again adjudged to be a risk. The Fed. reversed its tightening posture with regard to yields and the market recovered in early 2019.
> 
> So the end of last week saw moves in Gold, Silver, Oil and the 30yr Bond. Now these are single day moves. At the moment, it is simply a fluctuation and nothing to rebalance your portfolio on. However it is something worth watching simply because there has been an increase in the financial 'media' about inflation.
> 
> It is not however being overly discussed by non-finance persons.
> 
> View attachment 103560
> 
> 
> Inflation is one of those phenomena that can be created out of 'belief'. If enough people believe; and start acting on that belief, there is the potential (if the underlying circumstances, viz. credit expansion are present) to drive almost a self-fulfilling prophecy.
> 
> Unfortunately the above chart is of too short a time frame to really give much information as a comparison.
> 
> View attachment 103562
> 
> 
> So we have (above) Silver, Industrial metals (Copper, etc) 20yr Bond, US Dollar and Energy. I probably should have added Agriculture to that also. I used XLE as USO is somewhat broken atm.
> 
> This is what I will be keeping a close eye on moving forward. Plotting the relationships as ratios also tends to clarify the picture (information) with regard to these relationships.
> 
> On the above, there would not seem to be an excessive threat of inflation currently. Yields are still low. Energy, historically cheap with current high inventory. This will change moving forward as the world has lost production. It remains to be seen just how much. The dollar is also stable atm.
> 
> Silver, although it has jumped...is still below its early 2020 high. Until it trades through that point, Silver is not signalling anything as far as inflation. If it trades through that high I would be paying much closer attention.
> 
> If inflation does move higher, it will (in my opinion) be because of oil and the damage to production inflicted by the Saudi price war. That would mean oil moving north of $70. To that point, I think the market would live with it. After that, I'm not so sure. Early moves signalling inflation will likely first show up in the Dollar/Bonds.
> 
> As to the virus...only a crushing, worldwide re-infection driving a second global shutdown (if that even happened) will see the 'bounce' fail and move below the lows already seen.
> 
> jog on
> duc



Glad you are keeping a tab on inflation duc. It usually creeps up on you while not being aware of it...


----------



## ducati916

So a few more charts today:







Retail sales down. No surprises. Moving forward:






Online sales has gained traction. Traditional retail may never recover that lost ground.






Certainly in the market, those online/cloud based businesses are doing very well.






With a little prediction thrown in.

jog on
duc


----------



## ducati916

So on that 'inflation' trade:


















Possibly in the future. But not at the moment. The US Dollar would need to weaken and/or Oil to move past $70 (my figure) before inflation will become an issue for the markets. The Dollar looks to have support currently. Oil also has support.

jog on
duc

However the COT does go some way to explaining the Gold/Silver relationship currently.


----------



## ducati916

Trading to trendlines etc:














ERX/FAS both at or slightly above trendlines. I like to see this as you want the 'support' of the trendline moving forward. Does it always work? No of course not.

DFEN still needs to get above that trendline as it may act as resistance.

jog on
duc


----------



## qldfrog

Woke up to stellar figures in New york sp500+3.5%, 4% for dow30
Putting this in perspective buy friday sell now and you have beaten bonds and term deposit for the next 2 years.....unreal isn't it
Mr duc leverage entries should have done well!
The other way to see that is borrow money at 2pc friday,and invest it in a dow30 index,,sell1/2 gain today and you have repaid your interest for next 2 years


----------



## Student of Gann

SP500 Minor Turning point is indicated for 21st May . Most likely Minor Top at 2975 or  3041* .


----------



## aus_trader

qldfrog said:


> Woke up to stellar figures in New york sp500+3.5%, 4% for dow30
> Putting this in perspective buy friday sell now and you have beaten bonds and term deposit for the next 2 years.....unreal isn't it
> Mr duc leverage entries should have done well!
> The other way to see that is borrow money at 2pc friday,and invest it in a dow30 index,,sell1/2 gain today and you have repaid your interest for next 2 years




Could have worked, yes. Beautiful in hindsight isn't it ?

Could've also been killed if the market fell as it did in any one of the days during the crash. In that case would be paying back the interest and lost principal over the next 5 years !


----------



## qldfrog

aus_trader said:


> Could have worked, yes. Beautiful in hindsight isn't it ?
> 
> Could've also been killed if the market fell as it did in any one of the days during the crash. In that case would be paying back the interest and lost principal over the next 5 years !



what I mean with that post is that the  price of money is completely out of wack;
as for betting, millions of people are doing this every day in casinos with worse odds.
Realistically , there are less chances to loose money now or in the last month than there was in january, august or December last year yet people were piling into margin loans like mad at the end of last year...
Outch :-


----------



## aus_trader

qldfrog said:


> what I mean with that post is that the  price of money is completely out of wack;
> as for betting, millions of people are doing this every day in casinos with worse odds.
> Realistically , there are less chances to loose money now or in the last month than there was in january, august or December last year yet people were piling into margin loans like mad at the end of last year...
> Outch :-
> View attachment 103607



True, hence likes given. I wouldn't do it with money I can't afford to lose though


----------



## ducati916

Almost time to call time on the question of the 'bounce', but not quite.






Obviously the market is still below previous highs. Therefore it cannot be a new 'trend'. However with the majority of the market above the 50DMA and moving towards the 200DMA, there will be support moving forward.

The real test will be when a rising 50 meets a falling or sideways 200. That 200 will be the Bears Alamo. If stocks break the 200, the bounce converts to a trend.

So the QQQ is already over it:










The SPY still below. 

There will likely be an increase in vol. as we hit that area in the SPY. With the majority of the sectors over their respective 50DMAs however, that should result in the SPY crossing back into Bull-land, at which point, the bounce is a trend.

jog on
duc


----------



## qldfrog

Bring it on


----------



## Smurf1976

Student of Gann said:


> View attachment 103557



So far this looks at least plausible, reached 2979 then turned down.

So if we do get the top on 29 May or thereabouts then what happens beyond that?

Decline as in we're talking about a 10% pullback?

Or decline as in it's mainstream headline news and seen as a major crisis sort of decline?


----------



## ducati916

SPY approaching 200SMA





Forming an ascending triangle with the 20SMA and 200SMA. Whether it resolves this week or next is the question. So to help in that decision:






Junk Bonds. Risk on. Not back to a Bull market (still a long way below the 200) but if you can buy this, you can buy stocks.






Again, bullish.

Why? The search for yield from Pension Funds, Insurance Companies, etc, will drive these markets and stocks, particularly those that pay dividends that are considered (a) safe and (b) growing.

Treasuries, while a safe haven, are starting to see a rotation back into the (above) risk assets.










So 'Risk On' is back on the table.

jog on
duc


----------



## qldfrog

ducati916 said:


> SPY approaching 200SMA
> 
> View attachment 103647
> 
> Forming an ascending triangle with the 20SMA and 200SMA. Whether it resolves this week or next is the question. So to help in that decision:
> 
> View attachment 103648
> 
> 
> Junk Bonds. Risk on. Not back to a Bull market (still a long way below the 200) but if you can buy this, you can buy stocks.
> 
> View attachment 103649
> 
> 
> Again, bullish.
> 
> Why? The search for yield from Pension Funds, Insurance Companies, etc, will drive these markets and stocks, particularly those that pay dividends that are considered (a) safe and (b) growing.
> 
> Treasuries, while a safe haven, are starting to see a rotation back into the (above) risk assets.
> 
> View attachment 103650
> 
> View attachment 103651
> 
> 
> So 'Risk On' is back on the table.
> 
> jog on
> duc



Hum would you offload urgently your gov bonds (Australian) or do you expect them to still be seen as protection by many burnt this year ?
I like the risk on with my systems, but still find it unreal for the world indexes to pretend that we are in the same situation as in what 2017 or so.even if we find a Covid-19 pill treatment tomorrow.
Noticed that last night both gold and market are Up..gold maybe due to relative fall of USD.
Let's wait for the end of the session...


----------



## qldfrog

qldfrog said:


> Let's wait for the end of the session...



I mean to see gold vs market position in the US.
But risk is definitely back on


----------



## $20shoes

Smurf1976 said:


> So far this looks at least plausible, reached 2979 then turned down.
> 
> So if we do get the top on 29 May or thereabouts then what happens beyond that?
> 
> Decline as in we're talking about a 10% pullback?
> 
> Or decline as in it's mainstream headline news and seen as a major crisis sort of decline?




I'll take the bearish flipside of the coin  There's a lot optimism behind this move up from our March lows. My systems are on for taking shorter term trades but I'm starting to get cautious. 

I'll keep this simple: From an Elliot perspective, markets advance in 5 impulse waves up. They then correct in 3 waves down (forget the infinite complexities, of which there are many). 

If the move down to the March Lows was in 3 waves (an A-B-C pattern) that would be an entire correction complete. We could see an A-B-C and could say the correction was over. On we march. 

However, the move down does appear impulsive: 5 waves down looks like a nice fit. If we subscribe to this possibility then its a fundamental rule that the entire corrective structure is not yet complete. It's possible that the move down was Wave A and this move up is Wave B.

If this is the case, then Wave B might carry us just above 3200 on the SPX. If we treat this as a zigzag pattern (this looks like the best fit), then Wave C would breach the March lows.


----------



## Student of Gann

SP500


----------



## gartley

A nice EW count developing in SPX  at the moment. I suspect it may come to a conclusion end of this week or early next week and we might start a correction thereafter which will be joined be gold too. Interestingly we are 13 weeks along from the market top in February 5 down and 8 up, adjacent Fib no's. This needs to be confirmed by dynamic cycles which it has not done yet and I will post these if and when they confirm in the weeks ahead.


----------



## Student of Gann

22nd May SP500 Minor Top  2991 or 2998 .


----------



## qldfrog

Mr LeDuc must be busy
So so day in the US:slight fall 1pc of nasdaq, but Russel up, gold and USD up after previous session fall
SPY below 295can not break the 300.
VIX at 29.5 more or less stable in the last few days
We can read this as either consolidation or calm before storm
Real experts like @ducati916  might have a more informed view.


----------



## Beaches

Student of Gann said:


> SP500
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 103655




Gann you have a pullback shown on Monday 25 May which is Memorial Day and the market is closed. Does that change your call at all?


----------



## ducati916

Today:







Not quite ready to test 200SMA, or that is the test: either way consider the following:














The bears have been fighting this market all of the way. They have had ample news to support their case: virus, deaths, economic contraction, unemployment, etc. It has done nothing to blunt the advance.

Going forward, there will be improvements. There will still be issues, but they will be reducing, not increasing. In 2007, the story was worsening all the way through 2008. The depth and full extent of the problem only gradually revealed itself. To an extent that (could) be possible here, but it is less likely.

This is now less a bounce, than a V shaped recovery forming.

jog on
duc


----------



## Student of Gann

The Main point I am looking at is the 29th May which completes an important Time Cycle and should be High . The Minor Cycles such can sometimes have -/+ 1 day allowance so yes the 26th May could be Minor Low and then up into the 29th May Top.


----------



## Knobby22

ducati916 said:


> This is now less a bounce, than a V shaped recovery forming.
> jog on
> duc




A bear signal if ever I saw one


----------



## Garpal Gumnut

Knobby22 said:


> A bear signal if ever I saw one



I'd agree @Knobby22 . Thanks @ducati916 but I'll not be jogging with you on this one.

The dramatic fall off in volume since May makes me feel that there are few committed buyers and the slight increase in volume recently saw a flood of sells and a decrease in prices before volume decreased again. 

The show ain't over until the fat lady sings and she is stuck somewhere in downtown Chicago with ole Trump. 

gg


----------



## ducati916

Knobby22 said:


> A bear signal if ever I saw one





Fair enough.

jog on
duc


----------



## ducati916

Garpal Gumnut said:


> I'd agree @Knobby22 . Thanks @ducati916 but I'll not be jogging with you on this one.
> 
> The dramatic fall off in volume since May makes me feel that there are few committed buyers and the slight increase in volume recently saw a flood of sells and a decrease in prices before volume decreased again.
> 
> The show ain't over until the fat lady sings and she is stuck somewhere in downtown Chicago with ole Trump.
> 
> gg





Again, fair enough.

jog on
duc


----------



## gartley

I think the next week will be critical and it will also tell us what it wants to do. Bull or bear does not matter..... If it is going to be bearish then the volatility has to pick up and we need to see some big down days coming again soon to invalidate the bullish projections


----------



## aus_trader

Looks like a period of consolidation on the Indices except for the Tech Giants that is pushing up the NASDAQ...


----------



## Smurf1976

I've had a decent look around as to what others seem to be thinking and there's a definite pattern here.

Go to any forum, website etc where there's comment from people who are somewhere from keen investors / traders (which I assume to be most on this forum) through to actual professional economists etc and there's a definite mix of opinions as to whether we're in a bull market or a bounce before we head back down. Many individuals readily acknowledge both possibilities despite seeing one as more likely than the other.

Now go somewhere where financial discussion is off topic. Forums about IT, consumer issues, music, even fashion. There's a very strong "FAANG can't go wrong" mentality there. Anyone not into the tech stocks must be a fool they say. Next question, from the same individuals, is "so how, exactly, does one buy shares" the answer being "you need a broker.....".

I'm taking that as a definite warning sign and I think that those pondering whether we were seeing a repeat of 1987 or 1929 are perhaps both wrong. This looks awfully like the year 2000 with the tech stocks and investors with zero experience throwing everything they got at them.

Time will tell. I'm in the camp which sees a move either way as being possible although I do think that any major move is more likely to be down than up. That is, a retest of the low is more likely than a new all time high in the next few months.

On the bullish case is the Fed. Don't fight them as they say. Not much more to say really - the Fed is the bullish case as I see it apart from the possible development of a vaccine but that's very uncertain at this point and could be argued a speculative. 

On the bearish case well the COVID-19 issue has damaged the real economy and if you take a look at the daily infection rate in the US and plot it on a chart well then it looks to have bottomed and now starting to trend back up. So they're probably opened up the economy too much and need to pull that back somewhat. It could well be either that or face a truly massive death toll that far exceeds any war and prompts broader change in the US. Either way, if that's what's going to happen then once the market works it out there's going to be an awful lot of selling pressure.

Both are very powerful forces. Don't underestimate the Fed and don't underestimate the market response to finding out that the virus drama is really only just beginning if that is indeed the case. There's an outright fortune involved in either case.


----------



## ducati916

Smurf1976 said:


> 1. I've had a decent look around as to what others seem to be thinking and there's a definite pattern here.
> 
> 2. Go to any forum, website etc where there's comment from people who are somewhere from keen investors / traders (which I assume to be most on this forum) through to actual professional economists etc and there's a definite mix of opinions as to whether we're in a bull market or a bounce before we head back down. Many individuals readily acknowledge both possibilities despite seeing one as more likely than the other.
> 
> 3. Now go somewhere where financial discussion is off topic. Forums about IT, consumer issues, music, even fashion. There's a very strong "FAANG can't go wrong" mentality there. Anyone not into the tech stocks must be a fool they say. Next question, from the same individuals, is "so how, exactly, does one buy shares" the answer being "you need a broker.....".
> 
> 4. I'm taking that as a definite warning sign and I think that those pondering whether we were seeing a repeat of 1987 or 1929 are perhaps both wrong. This looks awfully like the year 2000 with the tech stocks and investors with zero experience throwing everything they got at them.
> 
> 5. Time will tell. I'm in the camp which sees a move either way as being possible although I do think that any major move is more likely to be down than up. That is, a retest of the low is more likely than a new all time high in the next few months.
> 
> 6. On the bullish case is the Fed. Don't fight them as they say. Not much more to say really - the Fed is the bullish case as I see it apart from the possible development of a vaccine but that's very uncertain at this point and could be argued a speculative.
> 
> 7. On the bearish case well the COVID-19 issue has damaged the real economy and if you take a look at the daily infection rate in the US and plot it on a chart well then it looks to have bottomed and now starting to trend back up. So they're probably opened up the economy too much and need to pull that back somewhat. It could well be either that or face a truly massive death toll that far exceeds any war and prompts broader change in the US. Either way, if that's what's going to happen then once the market works it out there's going to be an awful lot of selling pressure.
> 
> 8. Both are very powerful forces. Don't underestimate the Fed and don't underestimate the market response to finding out that the virus drama is really only just beginning if that is indeed the case. There's an outright fortune involved in either case.




Mr Smurf;

1. So let's compare notes.

2. That is probably true. Here are some bears:

-David Tepper call this the “most overvalued stock market” outside of the 1999 bubble.
-Stanley Druckenmiller is “bracing for a bear market.”
-Leon Cooperman suggested stocks could fall as much as 22%.
-Mark Cuban said “Stocks are overvalued and the risk-reward isn’t there till we see a cohesive plan for testing from the government.”
-Howard Marks cautioned “Those of us in markets believe that stocks and bonds are selling at prices they wouldn’t sell at if the Fed were not the dominant force.”

Their opinions are informed. They also have reputations. They are weighed down by knowledge. They are discretionary, fundamental value chaps (not sure about Cuban). Rationally, they find it hard to get past all of the issues. The issues are myriad. Certain individual stocks will go under (just look at the Oil sector). Others that will do well are already running and are 'overvalued'.

Here is the thing: let us accept that there will be a bear market. There will be a new low. Why would you not trade the bounce? The reason is that they are so committed to their viewpoint, they simply cannot trade long, expecting at every point, the market to collapse: at 3%, 5%, 9%, 15%, 30%. Now, the market has run so far, that if they started to buy and the collapse comes, they have additional losses etc. In epic declines, you buy and are ready to sell pretty quick if it turns to custard. If it doesn't turn to custard, you are sitting pretty.

Time is always a factor. It is a crucial factor. If something is going to break (Enron) it will break. The time it takes to break is however relevant. You could have traded Enron with massive profitability utilising a mechanical system because although it was a fraud, it went higher for a long time. A mechanical exit, you come out with significant profits. 

From the lows of 2009, you can argue that the recovery was/is a fraud. Probably. Wages have been stagnant, inflation rampant, quality of life for many lower, corporate earnings lower, etc. All true. The market went in 1 direction (until March 2020). Now we have the 'bounce'. Will it break? Maybe. Maybe not. Will you sit on your hands because the market sucks, the economy sucks, employment is in the gutter, etc? Or will you simply trade? If you have an exit plan...you trade. Why would you not?

On the other hand, time can also fix problems. Virus. Things improve. Economy re-opens. Things start to improve and return to 'normal'. In this case, the more time that passes, the less likely is a downturn. The reason is that the factors that drove the market higher from 2009 are still present x 10. Whatever was under the hood (excepting the virus) that were showing signs of strain (corporate debt) are now granted a new lifespan before time once again catches up with them. How long? Who knows. 1 year, 10yrs, 20yrs. Does it matter? Yes if you are sitting on your hands. No if you have an exit plan.

3. I have become interested in the online phenomena recently (last 6 mths). Certainly the COVID-19 issue has already, or will drive increasing business the way of FAANG, particularly AMZN/GOOG/FB (as much as I despise FB). So much so, that lofty as their valuations are, they could actually prove to be cheap currently. Now I know that this isn't exactly your point, however, I was really surprised at what was going on under the covers (so to speak).

4. I don't see this as a Tech wreck. The risk (as so often) lies again in the financials.






Banks are 'supposed' to be better capitalised after the last fiasco. Whether they are or not, we'll find out sooner rather than later. Of course, this time there may well be bailouts for the homeowner, taking the banks off the hook.

5. Agnostic is the correct position. Systems traders (Mr Skate et al) are positioned perfectly. They hold no mental position. They hold no bias. They hold no conflicted views. They simply trade the signal. Ignore the noise. I am the same (slightly different) in that I trade volatility, on a mathematical basis. I am agnostic. I engage in discussion simply because I enjoy it. I like to test theory against reality. I love market history. I have a limited suite of indicators that I follow simply because it allows me (often) to optimise the model that I trade. That is my discretionary input. They also inform my viewpoint (bias) if I express one (which I do quite often). These indicators however are not 'sentiment' based. They are demonstrated choice. Skin-in-the-game. Currently (despite everything) the market is moving higher. 

Why?

_*Recent history*: Since it is that 30%+ rally off the lows that seems to have startled so many, let’s use that as our leaping off point. Frame the present move in terms of the S&P 500 Index falling 34% to its March 23rd lows. That month was one of the 20 worst in market history, and the fastest bear market ever. Deeply oversold, the market rubber band got stretched too far in one direction. Hence, the snapback rally. Once its overdone to the upside, argues the technical types, it will swing the other way. Eventually, equilibrium is achieved.

It is inappropriate to focus on the strength of this rally while ignoring the sheer speed and force of the collapse. Looking at one without the other is the investor’s version of denominator blindness.

*Markets are forward-looking*: Equity markets do a great job making probabilistic assessments of likely outcomes. Regardless of your views of the efficient market hypothesis, you have to admit that markets sniff out shifts in economic data and corporate profits or revenues long before the official news is released.

Meanwhile, economic data looks backwards. The weekly first time initial jobless claims are an assembly of state data, which is already known days earlier. Monthly non-farm payroll can be deduced via other data sources a week or two prior to the official BLS release. And GDP is so old as to be months behind what already has occurred.
_
Which is a pretty fair summary.

6. Which since about 2003 has been my position. I could argue all the negatives. The reality is (to date) that fighting the Fed. is a losing game. Combine the Fed. and a massive deficit Fiscal policy, well now you have a mountain of money moving markets higher. I would have said that this is obvious, but after experiencing the limited understanding of Mr Kahuna, possibly not as obvious as I thought.

7. Markets don't care about death. Markets care about money.

8. There is the Fed + Government. Opposing, nothing (never confuse the market with the economy). The virus is a non-issue. I would only add, you still need to think about the stocks that you buy. Not all will survive. Hence I buy ETFs, not individual stocks. I buy sectors.

jog on
duc


----------



## bux2000

Hi Duc,

I enjoy your commentary, thank you for your time.

All the best
bux


----------



## qldfrog

And while market  was stable last night, another kind of flat session, vix fell again and i notice Russel is the top winners of the us indexes.
That really seems to indicate a positive consolidation more than a peak reached.
This is the US market, not the Australian economy where we are increasingly boycotted by China but even with an economy in tatters, if wall street goes up, we will participate .
Pessimistic mood wise and rationally wise, but positive looking at my systems..and I know which is the $winner there.
If dancing is required, i dance


----------



## Knobby22

ducati916 said:


> Fair enough.
> 
> jog on
> duc



Thanks for the work. I was half joking,  it has been a bit weird how much confidence there is.

Consolidation around these levels is a reasonable call.


----------



## aus_trader

Love the discussion and both sides of the arguments, hence likes given to both bears and bulls. This is what makes markets, or should I say what should make markets as bulls and bears fight it out till true price discovery is achieved.

The problem I have at the moment is Central bank distortion of the markets. What used to drive stock markets is the profitability and productivity of companies. Now it's pure speculation as to how much gets printed and pumped into it.


----------



## Smurf1976

ducati916 said:


> The virus is a non-issue.




This is the bit about which I'm most unconvinced either way.

One argument says that it's almost sorted, we've seen the worst, things will open up and so on.

The other argument says that what we've seen thus far is only the beginning.

At a personal level well my account balance is up compared to February, the whole thing has been profitable thus far, and I agree with what you're saying - trade what actually happens.

That said, I do find it helpful in any situation to know what's possible. Outside the financial markets, that approach has become invaluable more than once. Knowing where the limits sit and what's going on gives confidence to be that guy with the poker face taking action whilst all around you are in an outright panic extrapolating data whilst being unaware of reasons that won't work.

I claim zero expertise in anything medical but I can add up numbers and that has me worried. Almost 100K COVID-19 deaths in the US thus far whilst official data shows 0.5% of the US population has been infected. Meanwhile the US is opening up and seems to be going down the "let it rip" path.

Now I don't think anyone can say with certainty how this would unfold but if, and I stress the word "if" here, we come to a point where the US states decide to lock down again well then I can't see the market being overly joyed with that idea. Nor can I see the market being thrilled if it comes to millions dead and civil unrest and so on.

I'm doing a lot of speculating there and looking at extreme scenarios certainly but for me personally, well I do find it useful to understand that there's a few guns pointed at the market and some of them may well turn out to be loaded.

The pandemic fire is still very much alight so far as I can determine. The only question is which way the wind blows.

I'm just under 50% in stocks at the moment and ready to jump either way. So I'm acknowledging both cases as possible. I readily acknowledge I could be completely wrong - I'm posting to see what others think of the reasoning and to share the idea, not to try and convince anyone.


----------



## Garpal Gumnut

Smurf1976 said:


> This is the bit about which I'm most unconvinced either way.
> 
> One argument says that it's almost sorted, we've seen the worst, things will open up and so on.
> 
> The other argument says that what we've seen thus far is only the beginning.
> 
> At a personal level well my account balance is up compared to February, the whole thing has been profitable thus far, and I agree with what you're saying - trade what actually happens.
> 
> That said, I do find it helpful in any situation to know what's possible. Outside the financial markets, that approach has become invaluable more than once. Knowing where the limits sit and what's going on gives confidence to be that guy with the poker face taking action whilst all around you are in an outright panic extrapolating data whilst being unaware of reasons that won't work.
> 
> I claim zero expertise in anything medical but I can add up numbers and that has me worried. Almost 100K COVID-19 deaths in the US thus far whilst official data shows 0.5% of the US population has been infected. Meanwhile the US is opening up and seems to be going down the "let it rip" path.
> 
> Now I don't think anyone can say with certainty how this would unfold but if, and I stress the word "if" here, we come to a point where the US states decide to lock down again well then I can't see the market being overly joyed with that idea. Nor can I see the market being thrilled if it comes to millions dead and civil unrest and so on.
> 
> I'm doing a lot of speculating there and looking at extreme scenarios certainly but for me personally, well I do find it useful to understand that there's a few guns pointed at the market and some of them may well turn out to be loaded.
> 
> The pandemic fire is still very much alight so far as I can determine. The only question is which way the wind blows.
> 
> I'm just under 50% in stocks at the moment and ready to jump either way. So I'm acknowledging both cases as possible. I readily acknowledge I could be completely wrong - I'm posting to see what others think of the reasoning and to share the idea, not to try and convince anyone.




I'm in a similar situation to you and agree with all your thoughts. 

Will Covid or won't it. Only the virus knows. Nobody else does.

The Chinese are getting warry. The USA is disease ridden and led by a lunatic. Even without a virus the markets should be more wary. 

A bounce is as likely as President Xi becoming a godbotherer and joining Hillsong. 

gg


----------



## ducati916

Smurf1976 said:


> 1. This is the bit about which I'm most unconvinced either way.
> One argument says that it's almost sorted, we've seen the worst, things will open up and so on.
> The other argument says that what we've seen thus far is only the beginning.
> 
> At a personal level well my account balance is up compared to February, the whole thing has been profitable thus far, and I agree with what you're saying - trade what actually happens.
> 
> 2. That said, I do find it helpful in any situation to know what's possible. Outside the financial markets, that approach has become invaluable more than once. Knowing where the limits sit and what's going on gives confidence to be that guy with the poker face taking action whilst all around you are in an outright panic extrapolating data whilst being unaware of reasons that won't work.
> 
> 3. I claim zero expertise in anything medical but I can add up numbers and that has me worried. Almost 100K COVID-19 deaths in the US thus far whilst official data shows 0.5% of the US population has been infected. Meanwhile the US is opening up and seems to be going down the "let it rip" path.
> 
> 4. Now I don't think anyone can say with certainty how this would unfold but if, and I stress the word "if" here, we come to a point where the US states decide to lock down again well then I can't see the market being overly joyed with that idea. Nor can I see the market being thrilled if it comes to millions dead and civil unrest and so on.
> 
> 5. I'm doing a lot of speculating there and looking at extreme scenarios certainly but for me personally, well I do find it useful to understand that there's a few guns pointed at the market and some of them may well turn out to be loaded.
> 
> 6. The pandemic fire is still very much alight so far as I can determine. The only question is which way the wind blows.
> 
> 7. I'm just under 50% in stocks at the moment and ready to jump either way. So I'm acknowledging both cases as possible. I readily acknowledge I could be completely wrong - I'm posting to see what others think of the reasoning and to share the idea, not to try and convince anyone.




1. Which is the rational position. No-one really knows. Historically:






Markets just haven't cared. People die in all manner of ways. I could post charts from periods of war: WWI/WWII/Vietnam: markets (once over the initial shock/uncertainty) trade higher.

2. But we have agreed: no-body actually knows what will happen.

3 - 6. We will never know the truth of the matter until so much time has passed that taking any action will also have passed. I repeat: Markets could care less based on historical precedent.

7. That is a plan. Stick to your plan. The problem only arises when you have no plan and are swayed back and forth by the 'experts' and end up doing nothing at all. The 'experts' know' only marginally more than anybody else.

Approach the market with a 'Shoot first, ask questions later' mentality. Not too much can go wrong.

jog on
duc


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## ducati916

Garpal Gumnut said:


> I'm in a similar situation to you and agree with all your thoughts.
> 
> Will Covid or won't it. Only the virus knows. Nobody else does.
> 
> The Chinese are getting warry. The USA is disease ridden and led by a lunatic. Even without a virus the markets should be more wary.
> 
> A bounce is as likely as President Xi becoming a godbotherer and joining Hillsong.
> 
> gg





Mr Gumnut,

See post above.

jog on
duc


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## qldfrog

What my history and many relatively benign failures in the market has told me is that there is no point being right, or wise and knowing before the masses.
You need to play the lemming even if you guess or even see the cliff, just be ready to jump out.
This is for the money you manage directly and can get in out with a call or internet order, not the one in super funds etc where there is too much lag.
So my super still 90 pc capital garanteed
But nearly 90pc trading for the other free cash
And starting a 4th system on Monday, able to gain on both up and down moves
Do not stay frozen out is my view..trade the bounce


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## ducati916

Checking in with the Commercials:

For the market going forward the inflation/deflation question is important given the volume of monetary and fiscal policy intervention.













The Commercials are consistent: deflation.

For us that means we stay long. The market (will of course fluctuate day-to-day) but (for the moment) the bounce (or new trend) remains long.

jog on
duc


----------



## aus_trader

qldfrog said:


> And starting a 4th system on Monday, able to gain on both up and down moves
> Do not stay frozen out is my view..trade the bounce




Sounds exiting qldfrog. I have tried to develop some form of trading methodology either based on company research or chart based for the short side but no success so far. I don't beat myself up for it because it's really tough to be consistent in making money on the downside and people more wiser has also struggled to pull it off such as Peter2 some time ago.

Recently I am only exposed to the upside and cautiously with few selective stocks. I practiced a few paper trades on the short side as the market was more weighted to the downside recently. The results are not that impressive. Would have made money on GMG, REA and MGR, but got killed shorting APT and FMG.


----------



## qldfrog

T


aus_trader said:


> Sounds exiting qldfrog. I have tried to develop some form of trading methodology either based on company research or chart based for the short side but no success so far. I don't beat myself up for it because it's really tough to be consistent in making money on the downside and people more wiser has also struggled to pull it off such as Peter2 some time ago.
> 
> Recently I am only exposed to the upside and cautiously with few selective stocks. I practiced a few paper trades on the short side as the market was more weighted to the downside recently. The results are not that impressive. Would have made money on GMG, REA and MGR, but got killed shorting APT and FMG.



Took me a while to find the holy grail, not sure this is it but will try, need specific conditions so can not sadly wait to paper trade for months..
Will keep you posted in my thread weekly status reports


----------



## aus_trader

qldfrog said:


> T
> 
> Took me a while to find the holy grail, not sure this is it but will try, need specific conditions so can not sadly wait to paper trade for months..
> Will keep you posted in my thread weekly status reports




Sure mate, will read you posts and updates. I'll get involved also if I can see good Risk/Rewards setups.

We can't predict exactly what will happen, but if the fundamentals play out, over-riding the Central Bank interventions, I think we have a higher probability to the downside than upside IMO.

You are probably right in saying paper trading will not suit as the market may already run it's course before practice is complete. I'll join in with smaller position sizing and get my feet wet, that's the best way to learn and grow as real money is involved.


----------



## mangojoe

Thought this is an interesting piece of information:

From: https://www.marketwatch.com/story/s...s-below-its-200-day-moving-average-2020-05-22
_Through Friday’s close, the index had remained between the 50- and 200-day averages for 21 straight sessions.




SentimenTrader

Since 1928, there have been 29 streaks that have stretched to at least 20 days — and 21 of them ended with the S&P 500 falling below the 50-day average, while only eight ended with a push above the 200-day, he noted, making for a roughly 72% probability the index will break down._


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## Smurf1976

mangojoe said:


> SentimenTrader
> 
> Since 1928, there have been 29 streaks that have stretched to at least 20 days — and 21 of them ended with the S&P 500 falling below the 50-day average, while only eight ended with a push above the 200-day, he noted, making for a roughly 72% probability the index will break down.




I'm not convinced either way but I liked your post for bringing the info to attention. 

We seem to be in a situation where there's a lot of argument for both possible outcomes. That being so, I'm thinking that whenever the breakout comes it could be fairly dramatic. Whichever way it goes, there's going to be a lot of people on the wrong side and keen to buy / sell.


----------



## ducati916

mangojoe said:


> Thought this is an interesting piece of information:
> 
> From: https://www.marketwatch.com/story/s...s-below-its-200-day-moving-average-2020-05-22
> _Through Friday’s close, the index had remained between the 50- and 200-day averages for 21 straight sessions.
> 
> 
> 
> 
> SentimenTrader
> 
> Since 1928, there have been 29 streaks that have stretched to at least 20 days — and 21 of them ended with the S&P 500 falling below the 50-day average, while only eight ended with a push above the 200-day, he noted, making for a roughly 72% probability the index will break down._




On that basis, let us delve a little deeper:

Number of S&P500 above:

3 day: 47% (heading lower)
5 day: 50% (heading lower, but at support at Mean)
10 day: 78% (at resistance 1STD)
20 day: 70% (resistance x3 top)
50 day:  81% (breakout to new highs through 1STD)
100 day: 35% (trending higher from (-1STD) to Mean)
200 day:  33% (same as 100 day)

We can easily see superficially that the short term averages are (3day - 20day) are heading lower or stalling. We can therefore say that with a higher probability, things will (already have) get choppy or increasingly so.

The longer term indicators (100day - 200day) are moving (strongly) from an oversold to the mean. There remains, underlying strength in the overall market currently.

Which leaves the 50 day. This also (coincidentally) is the one I watch very closely. How you read the above data is very SUBJECTIVE. You could (a) strong trend upwards, will continue or (b) reaching an 'extreme' and will pullback.

Historically over the last 5yrs, (b) is closer to the truth. Out of +/- 20 occasions where the 50 day has reached or breached the 1STD mark only on 3 occasions has it trended higher.

On that basis, it would be reasonable to expect the averages to pullback from the first test of the 200EMA.

Pullback or failure of the bounce?

I'll leave my opinion on that for a later post.

jog on
duc


----------



## ducati916

Smurf1976 said:


> I'm not convinced either way but I liked your post for bringing the info to attention.
> 
> We seem to be in a situation where there's a lot of argument for both possible outcomes. That being so, I'm thinking that whenever the breakout comes it could be fairly dramatic. *Whichever way it goes, there's going to be a lot of people on the wrong side and keen to buy / sell.*




I agree. Breakouts/downs tend to gather increased volume as there are flippe floppes.

Part of any analysis must consider the truisms of the market: (a) Greed, (b) Fear and (c) Need: and in which direction those emotions are most strongly leaning. 

I always post the 'sentiment' polls. They are a complete waste of time. What people 'think' is irrelevant. How they place their money is all important. Therefore an analysis of the above 3 (a-c) could offer an interpretation of the demonstrated position currently, which is/has been the purpose of the thread to date. 

jog on
duc


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## qldfrog

As i see it based on the 3 abc factors
A :Greed always here but gosh, market has been up 20pc or more since the crash..am I missing out?
- greed is high....
B: fear lower and lower even with scary headlines the virus is not that bad..not just a flu..but not the plague.
We did not know 3 months ago, we now know.economic reality not understood yet...
Fear is lower...
C: need well so so here: super withdrawn vs super invested..not a high push into shares from that.
Age pyramid effect slowing down, people losing jobs but many other spending less..inflation may be officially negative or near zero but cost of living increases
 so people feel pressed to get some return from their savings 
Overall a moderate push to go into shares, catch a few bargains and some dividend income on the way
Mildly positive...
2 +,1=
Globally positive still


----------



## ducati916

Let me concentrate on (c) Need.

Who needs to be in the market?

Insurance companies,
Pension Funds,
National Wealth Funds,
Big Banks,
Others.

These represent a significant amount of capital that has to go somewhere, because they need to earn a return on their assets v liabilities. That somewhere could be:

Bonds,
Stocks,
Commodities,
Real Estate,
Esoteric,
Cash,
Other.

In addition to a return they require liquidity, depth and transactional speed. We are left with the top 3 + RE for longer term propositions.

Currently stocks (SPY ETF) 
	

		
			
		

		
	






Yield 2.17%
30yr Treasury yields 1.37%
Almost 100 basis pts.

Look around the world for yield: there is none. The SPY (or ES) represent a basket of 500 large companies. That yield is as risk free as you will find.

Prior to the crash, money was pouring into Corporate BBB rated debt. That is essentially Junk. That 2.17% is attractive to a significant mass of capital that needs yield.






We know the battleground: it is at 300 (see 200EMA).










Calls on top, Puts below:

There is significant volume at that 300 level (OI: Call: 185,818 and Put:107,832). This confirms the battleground.

Who has the greatest conviction leading into the battle?










On Balance Volume:

_On-balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock price. Joseph Granville first developed the OBV metric in the 1963 book Granville's New Key to Stock Market Profits._

_Granville believed that volume was the key force behind markets and designed OBV to project when major moves in the markets would occur based on volume changes. In his book, he described the predictions generated by OBV as "a spring being wound tightly." He believed that when volume increases sharply without a significant change in the stock's price, the price will eventually jump upward or fall downward._

On that basis, the Bulls have the stronger position going into this battle. The Bears have (as price has risen) lost their conviction.

Finally:






The VIX is still historically elevated. The trend is lower. It can however still spike higher.






It is not however giving any indication of doing so.

Overnight Futures pretty calm currently:






So going into next week the (c) Need is currently dominating. At that 300 level, we have potentially a volume of 30 million shares that could change their position. There are 10 million currently betting short, which if they reverse is actually 20 million shares just at that 300 level in the Options market. Fear and Greed will always capitulate before Need.

jog on
duc


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## aus_trader

Great analysis all, especially duc 

I especially like the comments about it's what people do i.e. where they place their money than what they say or what they believe. I am also guilty of posting my views and ideas without having the conviction to take action. It might be the inner need to see what others think and be challenged before acting 

Have been watching the market like a hawk but have been passing up on possible opportunities either because prices have run up too far too fast or I still see some risks that may only be assessed when future results are reported.

However I found a stock that has been kicked to the curb and beaten down to the gutter, but based on my analysis should not be affected by the health scare at all. In fact it could even benefit in the current geopolitical situation, I mean people still have to eat right ? I'll write up a report very late tonight in the "spec portfolio" thread with the details.

It's good to see one of the stocks in the spec portfolio (ALK) showing up as one of the top performers of the day:


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## sptrawler

+1 aus trader, thanks you guys, I'm in the black on quite a few of the stocks ( dollar cost averaging helped), only the banks bleeding ATM.
It will be interesting if the prediction, of a second drop at 6,000 eventuates, here's hoping a W recovery doesn't eventuate.


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## sptrawler

My apologies, I didn't look at the forum (international markets) thought it was the Aussie market. My bad.


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## ducati916

First shots fired:





This week will probably see resolution of this battle at 300. Looking underneath the hood at the various sectors:





Market is nicely placed to break through that 300 battleground. The leaders still have space to advance and the laggards are starting to move (FAS). The financials are very important. They need to participate.






jog on
duc


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## Joules MM1

*RenMac: Renaissance Macro Research*‏ @*RenMacLLC* 


The struggle of value investors vs growth investors has been real, persistent and brutal. Here's the drawdown of value vs growth back to the 1920s.....ouch.


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## gartley

On the following thread https://www.aussiestockforums.com/threads/how-far-will-the-market-fall.35253/page-23#post-1065137 post #448  we labelled an developing upward corrective pattern with contracting triangle wave b. The measured move out of the contracting triangle was approx 5750.
So the market has thrust upward as expected and reached this measured target but is that the end of the move and what are the other options?
Well one possibility could be that waves a and c are equal in which case that gives us a target of 6408.
I have recently been looking at the eliades/hurst cycle projections for the SPX using the 10 and 20 week nominal cycles using with 27/28 day and 48/52 day offsets respectively, and translated these same cycles to the XAO. Both give substantially higher projections to where we currently stand namely 6153-6615 and 6905-7205 respectively. These are not set in stone and can be invalidated by price action crossing back below both offsets. To invalidate the 20 week projection we are talking about a huge move down starting now to retest lows and cross the very low levels of the V shape of the offsets. I can't see that happening in a hurry although anything is possible. What would more than likely happen is the market continues to trend to the 10 week projection of 6153-6605  and then corrects and has a chance of crossing the offsets of the 20W cycle at a higher level and invalidating that projection if it gets down that far, or reversing before that and start a new leg up bullishly to meet the 20 projection but I don't think that will happen because that means an new ATH and we have long term delta cycles that are due to bottom in 2022(Cycle point red 14).


----------



## aus_trader

Joules MM1 said:


> *RenMac: Renaissance Macro Research*‏ @*RenMacLLC*
> 
> 
> The struggle of value investors vs growth investors has been real, persistent and brutal. Here's the drawdown of value vs growth back to the 1920s.....ouch.
> 
> View attachment 103842



Thanks Joules MM1. I knew instinctively that value investors were getting smashed compared to all the money going into growth stocks and this chart just validates it quantifiably.

I am trying to figure out is this the new normal or it is a growth/tech stock bubble that is going to pop sometime in the future ? Similar to say 2000 tech wreck ?


----------



## qldfrog

aus_trader said:


> Thanks Joules MM1. I knew instinctively that value investors were getting smashed compared to all the money going into growth stocks and this chart just validates it quantifiably.
> 
> I am trying to figure out is this the new normal or it is a growth/tech stock bubble that is going to pop sometime in the future ? Similar to say 2000 tech wreck ?



Isn't this just a reflexion of crazy QE?;
So much money forced into the market that PE can not be meaningful again, so we are just in a bidding war attached to any ticker


----------



## aus_trader

qldfrog said:


> Isn't this just a reflexion of crazy QE?;
> So much money forced into the market that PE can not be meaningful again, so we are just in a bidding war attached to any ticker




I think you are absolutely right


----------



## Student of Gann

8th June could be Low for SP500.


----------



## gartley

Looks like the NASDAQ maybe starting to run out of steam for the time being here. Has formed some type of ending diagonal which might lead to a correction. This is confirmed by 8hr dynamic cycles which are bearish. The  daily is on the verge of a sell, although hasnot triggered yet. Will know this evening if that happens and until it does no sells as 8h sells sometimes only lead to minor moves.


----------



## ducati916

So the battle rages on at the 300 level:






Some further under-the-hood observations:

_There's been a number of different stories flowing around this morning regarding the fact that more than 90% of stocks in the S&P 500 are above their 50-day moving averages (DMA) and how that has historically been a bullish indicator for the subsequent performance of the market. _

_A second notable aspect of the names listed pertains to recent performance.  In going through the charts of the names listed, you would expect to mostly see charts of bombed-out stocks that were so weak that they couldn't even manage to rally in this environment.  While that was the case for many of them, there were also a number of stocks that actually outperformed in the initial stages of the bear market, but have started to fall apart either later in the decline, or in many cases, after the market bottomed.  The nine stocks shaded in the table below (charts below) all traded at 52-week highs at least two weeks after the S&P 500 peaked in late February.  These are all generally names that investors thought would benefit from the pandemic and a prolonged decline.  Not that markets have stabilized, though, and the economy appears to be on the mend, there's been a rotation out of them. One example is Citirix Systems (CTXS).  After hitting a 52-week high as recently as May 11th, it now finds itself on the loser list. _

_






_

Just the point that: identifying individual stocks is harder than identifying sectors. Even identifying sectors is fraught with difficulties. Unless you are using some form of mechanical system (new found appreciation for the mechanical chaps) that will put you in and take you out quickly, it is possible to get bogged down or back the wrong horse so to speak.

With regard to the battle at 300: currently I like (see as bullish) the rising 20SMA. That could well provide the support to push the index through that resistance point.






Financials coming to the party. Lagging for sure, many will be concerned on rising loan defaults and bank capitalisation. The 'major' banks (once again) will not be allowed to fail. There may well be issues, however, they will resolve. This essentially means that a very important sector for the overall health of the market will bolster the overall market performance.






Energy is a two edged sword as far as the market is concerned. Too little, and it negatively impacts. Too much and inflation becomes an issue. The bottom is in for energy. It will however take (quite a bit of) time to recover from all the issues. The energy sector won't be a drag, but neither will it support overmuch the move in the overall market.






This is the 'Military Industrial Complex'. Starting to move. It was never going to be allowed to fail. Moreover it will once the initial COVID issues resolve, become the focus in another cold war that is developing with China. The other sector will be Tech.

jog on
duc


----------



## ducati916

gartley said:


> Looks like the NASDAQ maybe starting to run out of steam for the time being here. Has formed some type of ending diagonal which might lead to a correction. This is confirmed by 8hr dynamic cycles which are bearish. The  daily is on the verge of a sell, although hasnot triggered yet. Will know this evening if that happens and until it does no sells as 8h sells sometimes only lead to minor moves.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 103857
> View attachment 103858




The US averages tend to track each other. The Q's had significant outperformance over the last few years due to concentration in the big Tech names. Everyone else just catching up currently.






jog on
duc


----------



## ducati916

Joules MM1 said:


> *RenMac: Renaissance Macro Research*‏ @*RenMacLLC*
> 
> 
> The struggle of value investors vs growth investors has been real, persistent and brutal. Here's the drawdown of value vs growth back to the 1920s.....ouch.
> 
> View attachment 103842




Unfortunately, that does seem to be the case. This is another reason that some form of mechanical selection process (that incorporates that growth aspect) would seem to be the way to go. Just remove any bias you may hold (value chaps, myself) and simply trade what is succeeding.

jog on
duc


----------



## ducati916

Consumer spending.






It is down. Unemployment levels through the roof. But, it is already picking up. Markets price forward. Something to keep an eye on.

jog on
duc


----------



## aus_trader

ducati916 said:


> So the battle rages on at the 300 level:




Like the historical one, looks like it'll be an epic battle...


----------



## ducati916

aus_trader said:


> Thanks Joules MM1. I knew instinctively that value investors were getting smashed compared to all the money going into growth stocks and this chart just validates it quantifiably.
> 
> I am trying to figure out is this the new normal or it is a growth/tech stock bubble that is going to pop sometime in the future ? Similar to say 2000 tech wreck ?




Tech will remain an area (sector) to be in. The big guys benefit from the networking effect. Here is my worst call ever: when GOOG listed they did it via a public auction (which was pretty unusual, most will engage an investment bank for the IPO) and were valued at $90 (before stock splits). I was into valuing companies on the financials. I had them overvalued at $90. The rest is history.

Financial analysis (value investing/micro) is really only necessary if:

(a) you are buying a stock (company) and you want to ensure that it is not fraudulent;
(b) you really want to understand its business model (which often requires looking past the financials);
(c) buying for the dividend stream;
(d) buying the entire company;
(e) other.

Value investing is usually micro. Fundamentals macro, however is a separate issue and I would argue, incredibly important. My focus evolved from micro to macro. Any analysis (technicals/etc) will always start from a macro analysis, moving down the hierarchy.

Tech, particularly now, will play an increasing role in society. The big guys will continue to win. There will of course be new entrants who potentially will grow huge. Finding those (which are value) is no easy task.

jog on
duc


----------



## Joules MM1

*Walter Murphy*‏ @*waltergmurphy* 5h5 hours ago


Both the S&P and DJIA are moving through a 61.8% retrace of the Feb-Mar decline. I am more impressed that the VL Arithmetic is too.


----------



## ducati916

Made a pretty solid move through that 300 level. It will (most likely) backfill and retest the resistance as support at some point.






Assuming the level holds as support, we'll be off to the races.

jog on
duc


----------



## Beaches

qldfrog said:


> So much money forced into the market that PE can not be meaningful again, so we are just in a bidding war attached to any ticker




I don't consider PE values are meaningless. The market is where it always sits, some stocks overvalued, some fairly valued and some undervalued. The only thing that changes is the extent of over or under valuation, which at times can be excessive in either direction.

While there are obviously companies on the ASX with extremely high PE values and probably highly overvalued, there are still plenty of companies that are either fairly valued or undervalued based on both current and future earnings.

As an example, take Emeco Holdings EHL. The half year report to 31 December had the following results
EBITDA - $119m
NPAT   - $27m
EPS     - 8.13c

Today they announced a full year guidance of $244m to $247m EBITDA. Increased costs were mentioned, however these related to mine site costs and I have assumed are included in the EBITDA figure

Using the first half figures of $119m EBITDA producing a profit of $27m. The full year guidance of $244m EBITDA would imply a profit of around $55m for the year to 30 June, giving earnings of 0.15c per share, taking into consideration the dilution from the SPP earlier this year.

The share price closed today at $1.085 and with earnings per share of 15c, they have a PE of around 7.2 times.

A PE of 7.2 would be undervalued for me and the announcement of a new contract today is positive for future earnings.

PE values are still relevant and there is still value to be found, just not for every stock on the market.


----------



## Chronos-Plutus

The stock market isn't reflective of the real economy. The stock market has decoupled from the real economy due to Central Bank intervention; has been from the 2008 GFC.

Example: How can QANTAS shares be at ~$4.10 when QANTAS will be on its knees by the end of the year if the macro global fundamental status-quo is maintained. International and domestic travel will not return to their pre-COVID levels by the end of the year, not a chance.


----------



## Student of Gann

SP500


----------



## aus_trader

ducati916 said:


> Tech will remain an area (sector) to be in. The big guys benefit from the networking effect. Here is my worst call ever: when GOOG listed they did it via a public auction (which was pretty unusual, most will engage an investment bank for the IPO) and were valued at $90 (before stock splits). I was into valuing companies on the financials. I had them overvalued at $90. The rest is history.
> 
> Financial analysis (value investing/micro) is really only necessary if:
> 
> (a) you are buying a stock (company) and you want to ensure that it is not fraudulent;
> (b) you really want to understand its business model (which often requires looking past the financials);
> (c) buying for the dividend stream;
> (d) buying the entire company;
> (e) other.
> 
> Value investing is usually micro. Fundamentals macro, however is a separate issue and I would argue, incredibly important. My focus evolved from micro to macro. Any analysis (technicals/etc) will always start from a macro analysis, moving down the hierarchy.
> 
> Tech, particularly now, will play an increasing role in society. The big guys will continue to win. There will of course be new entrants who potentially will grow huge. Finding those (which are value) is no easy task.
> 
> jog on
> duc



There is no easy answer even with regards to value investing. Your GOOG example is "Once in a Blue Moon" outcome that you feel particularly emotionally attached to as you missed the gains that followed. I have had similar examples on the asx where I thought "It's too expensive, so I'll pass and wait for a cheaper entry" and missed out as the stock continued higher. But these are some exceptions that are somewhat rare.

If valuations are of no value at all your GOOG example would have applied to every Tech stock that went bankrupt or pretty much worthless during the tech wreck. They had lofty valuations in the 100's with minimal or in some cases no earnings at all but people thought this is the 'new normal' i.e. the Tech mania removed any common sense and reality check from punters, speculators, traders and even seasoned investors who threw the value books in the bin and joined in at the latter hysteria stages.

So just remember, for every GOOG or MSFT or NFLX tech stock that made it big time, there were 100's (maybe 1000's) of Tech stocks that failed. So these are the few that rose from the ashes of the Tech bust. Predicting these were the winners (and would later become household names) amongst thousands of Tech hopefuls would have been near impossible without some form of time travel or future telepathy.


----------



## sptrawler

aus_trader said:


> There is no easy answer even with regards to value investing. Your GOOG example is "Once in a Blue Moon" outcome that you feel particularly emotionally attached to as you missed the gains that followed. I have had similar examples on the asx where I thought "It's too expensive, so I'll pass and wait for a cheaper entry" and missed out as the stock continued higher. But these are some exceptions that are somewhat rare.
> 
> If valuations are of no value at all your GOOG example would have applied to every Tech stock that went bankrupt or pretty much worthless during the tech wreck. They had lofty valuations in the 100's with minimal or in some cases no earnings at all but people thought this is the 'new normal' i.e. the Tech mania removed any common sense and reality check from punters, speculators, traders and even seasoned investors who threw the value books in the bin and joined in at the latter hysteria stages.
> 
> So just remember, for every GOOG or MSFT or NFLX tech stock that made it big time, there were 100's (maybe 1000's) of Tech stocks that failed. So these are the few that rose from the ashes of the Tech bust. Predicting these were the winners (and would later become household names) amongst thousands of Tech hopefuls would have been near impossible without some form of time travel or future telepathy.



Never a truer statement made.
Would have, should have, could have, we all have had those opportunities, the trick is not to dwell on them, but learn from them.


----------



## ducati916

Economy improving:





Obviously not where it needs to be: but definitely moving in the right direction.

jog on
duc


----------



## qldfrog

Above related to US, just to clarify


----------



## ducati916

And here is the pullback to former resistance and now potential support:






Which is the scenario addressed earlier.

So tomorrow morning we'll likely open lower and the outcome will be decided by the close.






Futures indicating a lower opening tomorrow.

jog on
duc


----------



## ducati916

Going forward into tomorrow:






_As for bearish sentiment, after the 1.17 percentage point decline to 42.13% this week, AAII's survey is reading the lowest level of bearish sentiment since mid-April. This week was the third consecutive week with bearish sentiment declining, but despite that it is still fairly elevated. In fact, this week marked the twelfth consecutive week in which bearish sentiment was at least one standard deviation above it historical average (30.48%).  That is the longest such streak since a 14-week long streak in 2008._

Seasonality:






Feeling bullish?

jog on
duc


----------



## ducati916

The 50SMA has already been identified as an important data point in an earlier post.

_Currently, 96.24% of S&P 500 stocks are above their 50-DMAs.  On a sector basis, Consumer Discretionary, Energy, Industrials, and Materials all have 100% of their stocks above their 50-DMAs.  That is a huge share of the index sitting above their 50-DMAs at once.  As shown in the chart below, times in which there have been this many stocks above their 50-DMAs have been few and far between.  Of all days since the start of 1990, there have only been four other days with a reading as high or higher than the current 96.24%.  The most recent of these was March 5th, 1991 when 96.59% of the index was above its 50-DMA. Other than that, only February 11th through 13th of that same year saw these types of readings (97.4%, 96.6%, and 97.8%, respectively)._






This increases the probability of breaking through (above) and remaining above that 200SMA.

The 200SMA (rightly or wrongly) is commonly perceived as the demarcation point between a Bull and Bear market. If the market stays above that 200SMA and starts to move higher, the overall mood of the market will alter. The next big target will become the previous (all time) highs. The chart above (although it looks like noise) is signal.

The caveat however is that the chart (above) is extended. How long will 90%+ of stocks remain so elevated? The trend prior to the crash had 80% participation (above the 50SMA) and this is fairly typical of a higher trending market. I would therefore expect this number to fall back into the 80% range over time.

If we shift into lower (faster) timeframes: the noise to signal ratio increases: 20, 10, 5, 3SMAs will all trigger signals that are daily variations rather than return that can accrue to a trending market. These are valid for daytrading strategies, but not for longer timeframes where the idea is to catch big moves.

Assuming (always a dangerous undertaking) that the market stays above the 200SMA, this thread will be concluded as the bounce is renamed a 'trend'.

jog on
duc


----------



## qldfrog

I believe that one of the uniqueness of the current situation, one of the real "it is different this time" is the speed factor.
Mostly due to technology changes, mood and market swings are faster, previous developments which used to take months are done in weeks, crashes fully develop in days.
As such, it is harder to parallel todays  to past 1900's or even 2000 events.this is both a problem and an advantage.your learnings mental or quant becomes obsolete, my weekly systems are too slow to be efficient, going daily becomes a pain:
By the time you get last world data, you have only a few hours before Sydney opening.
On the other end, you can potentially beat the old timers and it removes the advantages of some self learning systems


----------



## ducati916

qldfrog said:


> I believe that one of the uniqueness of the current situation, one of the real "it is different this time" is the speed factor.
> Mostly due to technology changes, mood and market swings are faster, previous developments which used to take months are done in weeks, crashes fully develop in days.
> As such, it is harder to parallel todays  to past 1900's or even 2000 events.this is both a problem and an advantage.your learnings mental or quant becomes obsolete, my weekly systems are too slow to be efficient, going daily becomes a pain:
> By the time you get last world data, you have only a few hours before Sydney opening.
> On the other end, you can potentially beat the old timers and it removes the advantages of some self learning systems




As to speed: #1 with a bullet baby!







It could be that the speed, caused comparisons with 1929, 1931, 1934. The response however was vastly different to the 1929 response:















Which is accounting for the current situation.

jog on
duc


----------



## ducati916

So pretty much as expected, the SPY retested the former resistance, now support and we are into Bull market territory. The next big test will be the previous (all time) high of late February 2020 at 340+/-






That closes the 'Bounce' thread.

jog on
duc


----------



## aus_trader

ducati916 said:


> That closes the 'Bounce' thread.




Let's keep going, to all-time-high's, now that we've come thus far... To quote a Macbeth quote from Shakespeare's:

"Returning were as tedious as *go* o'er"--He could *turn around*, *go back* to the bank of that river of blood, but it's *too late*. He's half way across, so he keeps going.

My stomach says, we will not see all-time-high so soon with the continuation of this V-shape recovery. But I'll just take some antacids and calm the gut and keep trading this bounce as with selective picks in the speculative stock portfolio as long as you guys continue with chart guidance and navigation through this volatile times.


----------



## Smurf1976

ducati916 said:


> That closes the 'Bounce' thread.



I think that's a matter of perception at least partly.

My view is that until such time as the February highs are passed then it remains at least possible this is a bounce. That's not saying "is" it's saying "possible".

Eg as a hypothetical, a double top wouldn't seem impossible as a scenario. First top in February, second one in the next few weeks, then down.

Note that I'm just throwing ideas around here not saying they'll necessarily happen.


----------



## ducati916

aus_trader said:


> Let's keep going, to all-time-high's, now that we've come thus far... To quote a Macbeth quote from Shakespeare's:
> 
> "Returning were as tedious as *go* o'er"--He could *turn around*, *go back* to the bank of that river of blood, but it's *too late*. He's half way across, so he keeps going.
> 
> My stomach says, we will not see all-time-high so soon with the continuation of this V-shape recovery. But I'll just take some antacids and calm the gut and keep trading this bounce as with selective picks in the speculative stock portfolio as long as you guys continue with chart guidance and navigation through this volatile times.




Mr Trader, 

Take a look at the same chart, next timeframe higher:






We can see just how important that 300 level was. Looking up at the Oct/Nov/Dec 2019, that if you remember was the 'Taper Tantrum'. It still took a year and 3 attempts to break through. This time the market just sailed through no questions asked.






Next stop for this market: the all time high level 340'ish. That is the next test. 

There will undoubtably be chop between the 300 and 340 levels. However for the moment, the bears are licking their wounds. 300 was their line in the sand. You will very likely see a short squeeze now that could push the market close to that 340 level quickly.

We can imply where the Bears will make their next stand prior to 340. It will be at 320 and 325.






Currently, demonstrated (again) bullish volume dominates. Previously at the 300 level it was pretty close. The bulls had greater volume, but marginally so. Now they are x2.

At 340 almost 2:1 in favour of the Bulls






Between 300 and 340, what if anything of material consequence can or more accurately will change?

The death rate, unimportant, virus, unimportant, unemployment unimportant. There is a single reality in the market: money. All else is noise no signal.

As to support for the market, 3 lagging sectors (see previous chart detailing current lagging sectors)













With yields of 2.5%, 3.5% and 3% respectively +/-. This market is yield hungry. All 3 of these sectors are strong dividend payers and are capable of supporting the drive through 340.

jog on
duc


----------



## aus_trader

ducati916 said:


> The death rate, unimportant, virus, unimportant, unemployment unimportant. There is a single reality in the market: money. All else is noise no signal.



You said wat I wanted to say Duc. These are the factors along with a bit of rioting in the streets of major US cities that churn my stomach. But I am going to watch how it plays out at the edge of my seat 

Chart guidance helps to get out of the way if needed and I want the smartest/wisest of the forum members to think about if there is anyway to predict a convergence of the real street level economy where the heart of businesses and people's spending and confidence lies and where the FED pumping keeps the stock and ETF prices reflated. I don't think people will disagree the two are diverging so much that the gap is getting as big as the grand Canyon... purely referring to US markets that duc is referring to of course, so just keep tiny asx out for now to prevent confusion as to why it's rallying as we are coming out of lockdown.

This is real life learning. ducati916 is doing lot of the work, I reckon we should not let this opportunity go to waste. If we can find a good indicator or ratio or some other matric to show the end of the paper rally and it's time for the real economy to be reflected in the ticker prices I think it'll be a magical find. Not to mention the power such find would have, to position ourselves ahead of the move


----------



## qldfrog

aus_trader said:


> You said wat I wanted to say Duc. These are the factors along with a bit of rioting in the streets of major US cities that churn my stomach. But I am going to watch how it plays out at the edge of my seat
> 
> Chart guidance helps to get out of the way if needed and I want the smartest/wisest of the forum members to think about if there is anyway to predict a convergence of the real street level economy where the heart of businesses and people's spending and confidence lies and where the FED pumping keeps the stock and ETF prices reflated. I don't think people will disagree the two are diverging so much that the gap is getting as big as the grand Canyon... purely referring to US markets that duc is referring to of course, so just keep tiny asx out for now to prevent confusion as to why it's rallying as we are coming out of lockdown.
> 
> This is real life learning. ducati916 is doing lot of the work, I reckon we should not let this opportunity go to waste. If we can find a good indicator or ratio or some other matric to show the end of the paper rally and it's time for the real economy to be reflected in the ticker prices I think it'll be a magical find. Not to mention the power such find would have, to position ourselves ahead of the move



One thing for sure, it is a pretty scary time.
I am working very hard right now to ensure my aws setup is completed so that i can run my systems on tuesday remotely  as we go for a small break by the sea
In normal situation would not worry missing one day too much but everything is on the edge


----------



## aus_trader

qldfrog said:


> One thing for sure, it is a pretty scary time.
> I am working very hard right now to ensure my aws setup is completed so that i can run my systems on tuesday remotely  as we go for a small break by the sea
> In normal situation would not worry missing one day too much but everything is on the edge



All my work is manual, but like you I can't afford to ignore a single day due to family/work commitments etc because the markets are going through the 'calm before the storm' in my opinion. I don't have any proof or other tool to say it with more confidence other than volatility which could spike any day...


----------



## qldfrog

volatility is not bad as it offers opportunities..but also risks...volatility wise, as you can see , it does not seem to be as pessimistic as I am.
So I trade


----------



## Warr87

My current worry is that my system gets fully invested and then the market crashes again (just like it did when I started in Feb). Certainly is scary times. But the system says trade so I do. And I'm sure others have the same worry as me (that a potential crash could happen again taking losses even further).


----------



## aus_trader

Warr87 said:


> My current worry is that my system gets fully invested and then the market crashes again (just like it did when I started in Feb). Certainly is scary times. But the system says trade so I do. And I'm sure others have the same worry as me (that a potential crash could happen again taking losses even further).



I have the same worries, but I don't sit completely on the sidelines as this bounce is continuing, instead buy into selective stocks that I research up, while it continues.


----------



## Warr87

My system has actually been slow to take up new positions. Beginning of the year or last year I could almost fill all 20 positions in the first week or 2. Right now its been about 3 or 4 positions per week. As a fully systematic mechanical trader I don't have a choice though. Fingers crossed though  .


----------



## aus_trader

Warr87 said:


> My system has actually been slow to take up new positions. Beginning of the year or last year I could almost fill all 20 positions in the first week or 2. Right now its been about 3 or 4 positions per week. As a fully systematic mechanical trader I don't have a choice though. Fingers crossed though  .



Yes best of luck !

Just my opinion, I think it's good your system fills your portfolio slowly coming up from a low. It probably re-risks you from having a large draw-down if you fill up all of your positions in one hit, in case it happens to be at a market top


----------



## qldfrog

aus_trader said:


> Yes best of luck !
> 
> Just my opinion, I think it's good your system fills your portfolio slowly coming up from a low. It probably re-risks you from having a large draw-down if you fill up all of your positions in one hit, in case it happens to be at a market top



It can work both way i started with systems in 2019 which just managed to get fully invested by end January 2020..yeap max hit, min gain..outch
Often in amibroker, the difference between using a cross() vs ">"
The disadvantage with slow entry was clear with my first system start in 2019: first half of 2019 was really good for trend, with a slow take off l lost minimum 10%gain just in the first 2 months
Timing is timing: just luck
In short, if you make the decision to invest $n, you want them to work for you ASAP so system ramp up should be ideally short, if not you are not trading a bounce but a trend


----------



## Beaches

Warr87 said:


> My current worry is that my system gets fully invested and then the market crashes again (just like it did when I started in Feb). Certainly is scary times. But the system says trade so I do. And I'm sure others have the same worry as me (that a potential crash could happen again taking losses even further).






aus_trader said:


> I have the same worries, but I don't sit completely on the sidelines as this bounce is continuing, instead buy into selective stocks that I research up, while it continues.




There is a long history of markets climbing a Wall of Worry. There is still a lot of money sitting on the sidelines which is becoming increasingly frustrated with the market refusing to fall back. As that frustration increases, more of the fearful money is being put back into the market and the market continues to climb.

Just trade what you see.


----------



## Warr87

Beaches said:


> There is a long history of markets climbing a Wall of Worry. There is still a lot of money sitting on the sidelines which is becoming increasingly frustrated with the market refusing to fall back. As that frustration increases, more of the fearful money is being put back into the market and the market continues to climb.
> 
> Just trade what you see.




I think you are right. I also assume that institutional investors will try and claw back as many profits as they can before the end of financial year and put their money back in the market.

As you say, trade what you see. Markets go up and I will trade.


----------



## ducati916

Two charts:










So XLF as the example (but most if not all will display the same) of a sector. The important point to note is that the 50SMA is still below the 200SMA. This is true for the broad market as well.






This just provides context for first chart. Obviously the shorter 20SMA will cross the 200SMA first. Generally what happens is that we will see a pullback to the 20SMA (once it has crossed the 200SMA) to test whether it provides support. Assuming that it does, eventually the 50SMA will also cross.

That 20SMA should cross sometime this week and we can expect a pullback. Typically these things always seem to coincide with the weekend.

In the US, the reason for this is that the Market Makers (MM) (obviously) make their money in the number of shares actually transacted. Big blocks of shares 10M, 50M, etc will require that the MM at least offer a price at the VWAP price, hence the periodic pullbacks etc. The 'machines' jump on these (sometimes) pushing price below the VWAP or whatever price has been negotiated. Often the 'Bears' get excited, and jump on board, only to be trapped (assuming it is simply initially a VWAP type exercise and not a legitimate reason) when the MMs reverse the direction once more.

jog on
duc


----------



## qldfrog

ducati916 said:


> Two charts:
> 
> View attachment 104217
> 
> View attachment 104218
> 
> 
> So XLF as the example (but most if not all will display the same) of a sector. The important point to note is that the 50SMA is still below the 200SMA. This is true for the broad market as well.
> 
> View attachment 104219
> 
> 
> This just provides context for first chart. Obviously the shorter 20SMA will cross the 200SMA first. Generally what happens is that we will see a pullback to the 20SMA (once it has crossed the 200SMA) to test whether it provides support. Assuming that it does, eventually the 50SMA will also cross.
> 
> That 20SMA should cross sometime this week and we can expect a pullback. Typically these things always seem to coincide with the weekend.
> 
> In the US, the reason for this is that the Market Makers (MM) (obviously) make their money in the number of shares actually transacted. Big blocks of shares 10M, 50M, etc will require that the MM at least offer a price at the VWAP price, hence the periodic pullbacks etc. The 'machines' jump on these (sometimes) pushing price below the VWAP or whatever price has been negotiated. Often the 'Bears' get excited, and jump on board, only to be trapped (assuming it is simply initially a VWAP type exercise and not a legitimate reason) when the MMs reverse the direction once more.
> 
> jog on
> duc



So can expect a rise till friday and traders should get out  Friday oz time. interesting
I would understand market here being edgy keeping money in over the weekend..i am. Should see if my daily systems could have an edge getting out quicker on Friday's open


----------



## aus_trader

I think there is a 'Risk ON' in the markets based on the flight out of the safety of the US dollar into currencies like ours:










Not sure if this is due to the USA situation or due to actual risk appetite ?

Just something that caught my eye, which I thought was interesting.


----------



## qldfrog

Feeling good being in before the lemmings, but when do we jump....


----------



## ducati916

Market strong to the upside:






















Bad news is good news, good news is good news.

jog on
duc


----------



## ducati916

There are lots of articles appearing comparing the 1968 market to the current market (for obvious reasons).






Plus ça change, plus c'est la même chose.

jog on
duc


----------



## Joules MM1

trader stable genius gave a small sell signal

Donald J. Trump
@realDonaldTrump
·
4h
I feel more and more confident that our economy is in the early stages of coming back very strong. Not everyone agrees with me, but I have little doubt. Watch for September, October, November. Next year will be one of the best ever, and look at the Stock Market NOW!


----------



## ducati916

Tech. running super hot.












The Tech. sector has its 50SMA crossing the 200SMA while the broader market lags behind still waiting for the 20SMA to cross. Tech. when it pulls back will pull back to the 20SMA. As other sectors' 20SMA cross the 200SMA, we'll have a broader based pullback. This will not invalidate the 'new trend'. 

The 'Bounce' is dead. Long live the Trend.

jog on
duc


----------



## qldfrog

Fwiw, i expect a pull back today/tomorrow (US) and have setup a short fuse in my weekly systems which will be installed by Monday
As long as we are not crashing today, i should be able to carry on trading the bounce/new trend without too many stomach cramps.
Crossing fingers .


----------



## gartley

NDX has met all upside projections reaching the yellow projection range. Only 2 things can happen here, 1/ It reverses trend 2/ It stays in this range until other indices  reach their respective projection ranges.

Having said that the SPX can turn down without reaching it's range cross the offset lines that gave the projection, and invalidate the upside projection.

Dynamic Cycles show a strong bearish divergence on the Trend indicator but more importantly this market has reached an "extreme" on the upside reaching the 3rd standard deviation of the average % price excursion from the pink line. I have placed arrows to show how the market has reversed trend in previous instances when reaching this important extremes. All that remains are the weekly sell signals to form, however
today the NDX has printed  a bearish engulfing candle...


----------



## gartley

The current XJO wave count suggests we are approaching a completion of this rally(or at least this leg up). It is a whisker away from entering the 10 Week cycle projection zone. It should be noted the 20 week cycle has substantially higher projections that have not been met. 
All projections generated by cycles must be met or invalidated, so for the 20 week cycle invalidation price action must cross back down below the 2 offsett line. It can be seen that there is quite a big space between price and the trough of the 2 offset lines in the 20 W cycle so it would take quite a big move to invalidate it. 
My 2c worth is that the market will correct after meeting the 10W cycle projection. If it holds up above the 20W cycle offset troughs we might get another leg up but for now i am eyeing a correction although I have no sell signal yet in the weekly or daily dynamic cycles. I will post these when they generate.


----------



## RazzaDazzla

Low close off of today's busrting out of the gate, could be an indication of a high being in place. I'm not in front of charts, but I'm estimating we're just a tick over a 61.8% Fib. retracement level.


----------



## aus_trader

RazzaDazzla said:


> I'm estimating we're just a tick over a 61.8% Fib. retracement level



Good observation and an area to watch...


----------



## makteb

ducati916 said:


> So pretty much as expected, the SPY retested the former resistance, now support and we are into Bull market territory. The next big test will be the previous (all time) high of late February 2020 at 340+/-
> 
> View attachment 103955
> 
> 
> That closes the 'Bounce' thread.
> 
> jog on
> duc




The bounce was never a bounce...unless its premature to say at this point.


----------



## makteb

makteb said:


> The bounce was never a bounce...unless its premature to say at this point.



I should correct myself.

It was not a bounce, never is a word that should not be used in trading.


----------



## Smurf1976

makteb said:


> It was not a bounce



That partly depends on how you define "bounce".

If I drop a basketball well then as we all know it will bounce but due to energy loss (getting into physics here.....) it won't bounce to a height higher than that from which it was released assuming that the only downward force was gravity (that is, I let it go and didn't throw it down).

So long as the ASX is higher than the low and hasn't exceeded the previous high then it remains possible that it's a bounce using that definition of it.

That is of course being rather pedantic on my part.....


----------



## ducati916

makteb said:


> I should correct myself.
> 
> It was not a bounce, never is a word that should not be used in trading.










jog on
duc


----------



## tinhat

Rudyard Kipling would be proud of you all. I have no idea which way the cat bounces. Betty takes a Shi7 most days is my guess.


----------



## RazzaDazzla

Wishing I was short 2 days ago. Downwards from here?


----------



## over9k

Yes. The yanks were always going to have a 2nd wave as they never contained the virus in the first place but it's come far earlier than it should have on account of the george floyd death. I've nuked all non-stay-at-home positions. I was expecting a correction but not this early and nowhere near this quickly but I've effectively been black swanned by the george floyd riots. I've done two months of gains literally overnight.

About 40% of my position is now in zoom - about 5-6 weeks ahead of what I'd scheduled.

On the ASX I bought qan/syd/web/flt/aia at about 11 this morning and made about 3% in just a few hours. Aus has contained the virus and will reopen pretty soon as well as its size meaning it has a significant domestic air travel market (unlike NZ). There's also the talk of a travel "bubble" with NZ on account of them having contained the virus entirely and I fully expect that to happen. Combine that with AU being such a large chunk of NZ's tourist numbers and AIA should shoot up nicely.

Even if there's more cases from these stupid protests, I'd just buy in once that hits the news. AU & NZ are primed for a reopen. USA is not. USA is actually now the epicentre (yes, really). 

Brazil is going to be absolutely obliterated by coronavirus so I'm both long and short on fmg/rio/bhp, but the smart money figured that out weeks ago - this is just a dip for the miners.


----------



## RazzaDazzla

over9k said:


> Brazil is going to be absolutely obliterated by coronavirus so I'm both long and short on fmg/rio/bhp, but the smart money figured that out weeks ago - this is just a dip for the miners.




Long and short?


----------



## over9k

RazzaDazzla said:


> Long and short?



No increase is ever linear - there was a dip to buy just today for example. Mining stocks were always going to get hit despite the domestic coronavirus cases actually having very little to do with their market.

Dunno about you but with a position like this I'll never sell/buy the whole thing, I'll leave say 50% untouched and play around with the other half trying to pick dips like what was obviously going to happen today.

We can now expect a bounceback as everyone realise that one coronavirus case in victoria isn't exactly going to effect the chinese iron ore demand much.

There's also all kinds of other funny business like how the chinese still produce steel flat out even when there's no market for it and then dump it in sports stadiums when their storage yards reach capacity, but that's probably beyond the scope of this thread. 

There's all kinds of funny business like that that those in the iron ore business know occurs all the time.


----------



## over9k

Now that I think about it, if you were confident of more coronavirus cases coming from the protests that have both already occurred and are going to happen this weekend, you could do the same with aviation/travel stocks. Longer term they ARE going to increase as au/nz WILL reopen, but we can expect some decent dips like today if the protests spread any more cases. Longer term, they're not going to stop a reopening, just delay it. Short, there's big dips like today - assuming there's more coronavirus cases, of course.


----------



## aus_trader

over9k said:


> There's also all kinds of other funny business like how the chinese still produce steel flat out even when there's no market for it and then dump it in sports stadiums when their storage yards reach capacity, but that's probably beyond the scope of this thread.



That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !


----------



## qldfrog

aus_trader said:


> That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !



I make 5k shorting mostly fmg during the crash...
Just went too late with bhp so will probably loose 1k there
Would not have been that disastrous


----------



## over9k

aus_trader said:


> That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !



Yeah this one threw me completely when I initially looked at things as well (I haven't been in the mining stocks for a while) as I fully expected mining to be in the toilet on account of steel demand being non-existent and it took a full day of researching chinese steel stock levels etc and then also talking to a friend of mine who works in the mines to find out just wtf had gone on. 

It's quite obvious in hindsight though as the chinese government targets full employment no matter the cost and so literally pays companies to produce stuff even when there isn't a market for it. 

I wouldn't expect steel prices to improve for quite a while though as they have ungodly amounts of it stockpiled by now and trump & co fully intend of giving china the proverbial to boot. 

The only thing I really see increasing steel demand properly is china's usual construction madness - if they decide to prebuild another dozen cities or something then that'd do it, but otherwise...


----------



## Smurf1976

There seems to be a pretty clear sentiment divide at the moment.

Based on my reading of an assortment of blogs, forums and so on:

Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.

Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.

The divide seems considerably clearer than usual.


----------



## frugal.rock

Monkey see, monkey do.


----------



## waterbottle

Smurf1976 said:


> There seems to be a pretty clear sentiment divide at the moment.
> 
> Based on my reading of an assortment of blogs, forums and so on:
> 
> Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.
> 
> Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.
> 
> The divide seems considerably clearer than usual.




Agreed.

The difference that a week makes in the markets is incredible and humbling.
Countries are, overall, re-opening.
Economies are restarting.
Federal banks are stimulating.
Global interest rates are negative or near 0%.
And money must always find a home.

I just can't see HOW this would lead to a second crash? Perhaps I'm stubborn and I'm just not considering all perspectives?
The contrarian view is that we are headed for a second bottom. But why? The federal reserve has indicated that they will stop at nothing to support the economy. Government actions, on the whole, are in line with this thinking.

I acknowledge that there are many opinions out there that we will indeed have a second wave. This may be true, but how can it be any worse than the 1st?
Keep in mind that initially we had no idea what we were up against, or how to fight it. Now we have testing regimes and preventative measures, the expected outcome who be different, indeed milder.

Then there are arguments that the market is being fuelled by work-from-home speculators. Really I haven't seen any evidence to see that these are the primary market movers. And if so, speculators have always existed, the difference this time is that there is more money in circulation courtesy of government and reserve bank intervention.

Perhaps I'm trying to convince myself that I'm making the right call.... This past week has definitely been a wild ride


----------



## over9k

The second crash comes from a 2nd wave of infections, which some parts of the world will have and some will not. Just look at the way the ASX was spooked today despite friday being an overwhelmingly green day for USA.

And USA was deeply in the red the day before in response to a spike in virus cases... see where I'm going with this?

The market hadn't really tracked virus cases after the march stimulus. It will now. Yes we'll get another stimulus, but it's still going to be a bloodbath until the mask factories come online and can churn masks out by the million, and that won't happen until august. 

VERY stormy seas ahead.


----------



## over9k

I've bet that it will. It takes 3ish weeks for virus spread to show in the data and the riots are 1-2 weeks old now and even more have just happened after another dude was shot. Then there's the spike in china over the weekend which wasted the ASX today (despite everyone's expectations of green after a green day in USA on friday) and will undoubtedly be all over the news in the USA tonight our time. 

 Did you see my other post RE: employment data miscalculation in USA too?


----------



## Chronos-Plutus

Smurf1976 said:


> There seems to be a pretty clear sentiment divide at the moment.
> 
> Based on my reading of an assortment of blogs, forums and so on:
> 
> Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.
> 
> Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.
> 
> The divide seems considerably clearer than usual.



Well I must be an amateur because I think we are going lower and liquidated on Friday


----------



## Smurf1976

Chronos-Plutus said:


> Well I must be an amateur because I think we are going lower and liquidated on Friday




I've intentionally excluded stock market forums, including this one, from my list since they likely have people with a range of experience posting on them.

In contrast a real financial advisor, brokerage etc I've placed in the "professional" category and if someone's talking about stocks on a music or technology forum then I've assumed they're an amateur since someone more serious would far more likely ask their questions on a stock forum etc. 

As with any indicator this one's imperfect but it's another thing to consider.


----------



## qldfrog

I think you are overheating on a self induced loop; what about looking at current European situation: all green and restarting:
As for the US..well is it really getting that bad? yes Trump is still in charge so the world is collapsing but:





if the red line was : i do not know the price of gold?, would you buy gold now?
I would wait till August or September to buy..
so for the time being, the bounce may crash, but if it does, it will not have much to do with the pending second wave;
Plenty of reason like already occurred cost and losses, riots, elections in US etc, but IMHO you are shaking the wrong tree.

If people were so afraid of contagion, they would not be in the street or rioting so except for a  minority of potential victims, older people, etc  right now, from the US to Europe to even here, the majority of people is fed up and just want to restart.
The longer the governments wait, the more the majority will feel they are [and maybe even they were ]conned and expect some serious backlash

As for the famed second wave : 
contamination number is BS as testing rate change-> second wave will only be validated/real if deaths and ICU admissions increases and reach a new peak which I doubt.
Australia is a bit special: we had no wave: good measure, good weather
Market may fall, sure, but it will not be caused by this.
And I believe we should all hope I am right.trade as you feel comfortable anyway.it is indeed a VERY volatile time


----------



## Chronos-Plutus

Smurf1976 said:


> I've intentionally excluded stock market forums, including this one, from my list since they likely have people with a range of experience posting on them.
> 
> In contrast a real financial advisor, brokerage etc I've placed in the "professional" category and if someone's talking about stocks on a music or technology forum then I've assumed they're an amateur since someone more serious would far more likely ask their questions on a stock forum etc.
> 
> As with any indicator this one's imperfect but it's another thing to consider.




It's okay, I like being the underdog


----------



## over9k

USA is the one first world economy that never contained the virus really much at all. It was always going to have a 2nd wave, it's just that it's now going to come much sooner and much steeper as a result of the george floyd riots, and another dude was just shot/more riots were kicked off over the weekend.

Think what the data is going to look like when all those infections are actually reflected in it, which seems to take 3ish weeks from moment of infection. Just look at last thursday on the nasdaq in response to USA infection spike or today on the ASX in response to the chinese news. Think those are both one-off's?

Remember that people aren't actually afraid of the virus yet on account of relatively low infection spread. Think how they're avoiding hospitals due to the environment being so infectious, and take and apply when the whole country is like that.

Also remember your exponentials RE: virus spread.

One of the quants in another thread has already said that today's asx tank puts us very close to busting all his modelling limits too. Another drop and even his model says we're toast.


----------



## over9k

Frog - I don't own gold, but I do own a couple of gold miners.


----------



## qldfrog

Chronos-Plutus said:


> It's okay, I like being the underdog



Being bear right now is not being underdog, this is the majority feeling
Was still bull up to today, based on tonight will see where my indicators point
I went from +4k to -6k between 11am and close time, would not be surprised to see trend change tonight wait and see what ny will do at close time


----------



## Chronos-Plutus

qldfrog said:


> I think you are overheating on a self induced loop; what about looking at current European situation: all green and restarting:
> As for the US..well is it really getting that bad? yes Trump is still in charge so the world is collapsing but:
> View attachment 104814
> 
> if the red line was : i do not know the price of gold?, would you buy gold now?
> I would wait till August or September to buy..
> so for the time being, the bounce may crash, but if it does, it will not have much to do with the pending second wave;
> Plenty of reason like already occurred cost and losses, riots, elections in US etc, but IMHO you are shaking the wrong tree.
> 
> If people were so afraid of contagion, they would not be in the street or rioting so except for a  minority of potential victims, older people, etc  right now, from the US to Europe to even here, the majority of people is fed up and just want to restart.
> The longer the governments wait, the more the majority will feel they are [and maybe even they were ]conned and expect some serious backlash
> 
> As for the famed second wave :
> contamination number is BS as testing rate change-> second wave will only be validated/real if deaths and ICU admissions increases and reach a new peak which I doubt.
> Australia is a bit special: we had no wave: good measure, good weather
> Market may fall, sure, but it will not be caused by this.
> And I believe we should all hope I am right.trade as you feel comfortable anyway.it is indeed a VERY volatile time




Our market will fall if there is another fallout in the USA and/or China. If the USA and/or China go back into lockdown; then forget it, we will all be running for the hills again and this time the global equity markets will drop well below the March lows. The risk is too great for me; I don't need to risk my capital on such a scenario that could quite easily eventuate. I will buy at rock bottom prices or I will buy when there is certainty that the global economy is well and truly on its way out of this pandemic.


----------



## Chronos-Plutus

qldfrog said:


> Being bear right now is not being underdog, this is the majority feeling
> Was still bull up to today, based on tonight will see where my indicators point
> I went from +4k to -6k between 11am and close time, would not be surprised to see trend change tonight wait and see what ny will do at close time




The reports out of China are a significant cluster has just come out of a Beijing seafood market and their government is adopting wartime measures to go into lockdown now: "Beijing is reintroducing strict lockdown measures and rolling out mass testing after a fresh cluster of novel coronavirus cases emerged from the city's largest wholesale food market, sparking fears of a resurgence of the deadly outbreak."(https://edition.cnn.com/2020/06/15/asia/coronavirus-beijing-outbreak-intl-hnk/index.html)

So we will see what happens. Either way my primary objective is to protect my capital, so if the fallout doesn't eventuate I don't carry. I would rather panic early than panic when it's too late.


----------



## qldfrog

I understand. Even if still bullish on my weekly, i m overall just 75% invested in my share dedicated portion.


----------



## over9k

Chronos-Plutus said:


> The reports out of China are a significant cluster has just come out of a Beijing seafood market and their government is adopting wartime measures to go into lockdown now: "Beijing is reintroducing strict lockdown measures and rolling out mass testing after a fresh cluster of novel coronavirus cases emerged from the city's largest wholesale food market, sparking fears of a resurgence of the deadly outbreak."(https://edition.cnn.com/2020/06/15/asia/coronavirus-beijing-outbreak-intl-hnk/index.html)
> 
> So we will see what happens. Either way my primary objective is to protect my capital, so if the fallout doesn't eventuate I don't carry. I would rather panic early than panic when it's too late.



Yeah this is what pasted the ASX this morning after everyone expecting an overwhelmingly green day. It's kind of silly really as a lot of the stocks in the toilet have almost nothing to do with china at all. 

But markets have never been rational.


----------



## Smurf1976

qldfrog said:


> As for the US..well is it really getting that bad?



The issue is that the US has recorded a decline followed by a sideways consolidation and now a higher high in infection rates.

Still waiting to see a higher bottom but it's plausibly a breakout to the upside in COVID-19. Time will tell if it is or isn't but we're only days away from finding out realistically.

Death rates will follow infection rates with a time lag most likely. If infection rates turn up then, in the absence of a major improvement in treatment, so too will death rates. If infection rates don't turn up then no such concern.


----------



## sptrawler

IMO the market is being driven by fear which it loves, as waterbottle said money must always find a home, when the reality of the returns being generated on parked money hits home people will buy based on returns.
So my guess is, those companies that report stable or increased earnings, will take off.
$500k sitting on the side earning 1.5% isn't going to cut it IMO.
Greed will overcome.
Also add to that, the super companies can't just sit on the sidelines and they have to generate capital. Even at a reduced drawdown, their pension members aren't going to be happy if there 3-4% drawdown is higher than their earnings.
We've had 100 deaths, JB HiFi had a 20% increase in profits, Harvey Norman increased profits, Kogan increased profits.
The only obvious loser up until now, has been the Government $xbillion in debt.
By the way just received my cruise refund, so Carnival must be hanging in there.


----------



## frugal.rock

sptrawler said:


> By the way just received my cruise refund, so Carnival must be hanging in there.



Hanging in there? 
Of course you will get your refund. Carnival mostly owned by the Chinese Communist party.
The belt and roads plot thickens... and can't be seen to be running out of funds.


----------



## sptrawler

frugal.rock said:


> Hanging in there?
> Of course you will get your refund. Carnival mostly owned by the Chinese Communist party.
> The belt and roads plot thickens... and can't be seen to be running out of funds.



Is that right, I thought it was a majority U.S company.
Just checked wiki, spot on joint venture between American cruise line Carnival Corporation & plc, Chinese sovereign wealth fund China Investment Corporation.
Good pick up, as you say, no wonder the refund came.


----------



## over9k

Anyone else buy on the ASX yesterday arvo? Tons of green all morning now. 

It's almost as if everyone have now realised that yesterday's panic selloff was a bit silly...


----------



## Chronos-Plutus

over9k said:


> Anyone else buy on the ASX yesterday arvo? Tons of green all morning now.
> 
> It's almost as if everyone have now realised that yesterday's panic selloff was a bit silly...



US FED to the rescue again buddy. Last night global equities would have cratered if Powell didn't give the reassurance that the FED will backstop the entire market.


----------



## gartley

We have been living in a world of "managed markets" since the GFC.  The FED will eventually fail and all the are doing is postponing nature taking it's course...


----------



## over9k

I wish you were right - the USD being the world's trading/reserve currency means that they can abuse it like nothing else (which they are) with depressingly few problems. It's a safe haven for a reason.

The next major news are virus spikes and employment data - virus data comes in all the time but employment data is on first friday of every month. I'm expecting some bad virus data between now & the 3rd on account of the virus spread from the riots and I'm expecting it to be bad enough to effect the markets.


----------



## qldfrog

gartley said:


> We have been living in a world of "managed markets" since the GFC.  The FED will eventually fail and all the are doing is postponing nature taking it's course...



we all agree so let's use this knowledge to one's profit instead of being skinned alive


----------



## waterbottle

qldfrog said:


> we all agree so let's use this knowledge to one's profit instead of being skinned alive




Indeed.

The biggest take home lesson for me during the GFC was that governments will stop at nothing to keep asset prices inflated. The alternative is literally economic, social and political turmoil.
The sooner i accepted that, the easier it was too understand why markets behaved the way they did.

Coronavirus was an uncontrollable factor. It wasn't a man-made phenomenon (or at least the consequences weren't).

And if you're in the camp that thinks this will all crash once stimulus is withdrawn, ask yourself why that is?
Consider this: the US feds funds rate peaked at 2.5%. they began tightening monetary policy in 2016, 8 years post GFC, but tightening nonetheless. Then what happened? Markets reached all time highs in 2019.

Crises come and go. We live in a society where inflation is critical to production. So long as central banks are mandated to aim for maximal employment and 2-3% inflation, the markets will be ok in the long run.


----------



## basilio

waterbottle said:


> The biggest take home lesson for me during the GFC was that governments will stop at nothing to keep asset prices inflated. The alternative is literally economic, social and political turmoil.
> The sooner i accepted that, the easier it was too understand why markets behaved the way they did.




Ok so on this principle one is saying that underlying realities of profitability of a business are no longer drivers of share prices. As long as one can stay convinced of a steadily increasing stock market and *convince new people to buy into that premise *then it will all be hunky dory.

And to help achieve that nirvana we have to believe governments and central banks will create trillions of dollars of stimulus to keep the market fully supported.

What could possibly go wrong ?


----------



## qldfrog

basilio said:


> Ok so on this principle one is saying that underlying realities of profitability of a business are no longer drivers of share prices. As long as one can stay convinced of a steadily increasing stock market and *convince new people to buy into that premise *then it will all be hunky dory.
> 
> And to help achieve that nirvana we have to believe governments and central banks will create trillions of dollars of stimulus to keep the market fully supported.
> 
> What could possibly go wrong ?



Well @basilio, that is the difference between ideology and facts...
From global warming to QE...or here economy
As long as you do  understand that since Brentwood, money is a fabrication, everything is actually making sense.
Does not mean you and i agree on the foundations..or absence of..but guess what we are in this world and an extreme version since gfc.
If people can join by millions the myth of BLM, it is not hard to make them live and work for Monopoly money..


----------



## RazzaDazzla

XJO showing
	

		
			
		

		
	






	

		
			
		

		
	
XJO showing an ABC correction to the 61.8% Fib.






	

		
			
		

		
	
 Zooming in and looking at hourly charts, the recent strength is just shy of 61.8% Fib.  

Downwards from here?


----------



## makteb

Hi Razza

I'm not familiar with 1hr chart of XJO.  I am of the understanding your a day trader thus the hr chart is significant as oppose to the daily chart?


----------



## makteb

I did note the daily chart, more in reference to your hourly comment.


----------



## over9k

The second major virus data hits is the second the bloodbath begins. There's also speculation RE: trump's trillion of infrastructure actually getting funded (approved by house/senate). IIRC the democrats want the money spent elsewhere. 

All of this means more uncertainty.


----------



## aus_trader

Do we know more about this infrastructure proposal ? 
Where is it going to ? Roads, Bridges and Hospitals and other Public facilities or is he trying to compete with China by building Ghost cities/dwellings/skyscrapers ?


----------



## Smurf1976

aus_trader said:


> Where is it going to ? Roads, Bridges and Hospitals and other Public facilities or is he trying to compete with China by building Ghost cities/dwellings/skyscrapers ?



The other question - is it to be infrastructure funded by government for the use of the public and business?

Or is it infrastructure effectively gifted to a private owner who then generates revenue from it?

If the latter then owning shares in relevant companies might be worthwhile.


----------



## over9k

Nah it's fixing existing stuff - crumbling bridges, worn out roads etc. They've been banging on about this since election time.


----------



## gartley

qldfrog said:


> we all agree so let's use this knowledge to one's profit instead of being skinned alive



Choppy market so far this week, despite the bounce after the big drop last Thursday market is struggling to move higher and my 2c worth correction does not look complete. SPX 20D Nominal cycle still has  an oustanding projection 2862-2907 and probably lower to the 2828. Came close to invalidating but did not. I think we might start moving lower tonight or tomorrow.


----------



## Smurf1976

gartley said:


> SPX 20D Nominal cycle still has an oustanding projection 2862-2907 and probably lower to the 2828.




To clarify - you're expecting it to drop to that level and then resume the up trend if I'm understanding correctly?


----------



## sptrawler

gartley said:


> Choppy market so far this week, despite the bounce after the big drop last Thursday market is struggling to move higher and my 2c worth correction does not look complete. SPX 20D Nominal cycle still has  an oustanding projection 2862-2907 and probably lower to the 2828. Came close to invalidating but did not. I think we might start moving lower tonight or tomorrow.



Well gartley, you and proper and a couple of others did say an upswing to 6,000 on the ASX then there will be resistance, that call has been spot on.


----------



## sptrawler

aus_trader said:


> Do we know more about this infrastructure proposal ?
> Where is it going to ? Roads, Bridges and Hospitals and other Public facilities or is he trying to compete with China by building Ghost cities/dwellings/skyscrapers ?



My guess is the panic button has been hit, productivity needs a massive hit, bottlenecks need to be opened.
Australia doesn't have the luxury of most first world countries, which is a massive domestic market place and a large population tax base.
We are exactly the opposite a small domestic market place, a small population tax base and a very large country to supply with first world infrastructure and welfare system.
It really is stacked against us, unfortunately a lot don't appreciate the issues.


----------



## over9k

Not sure what you guys are trading but some companies in some sectors get slammed much harder than others in them. Food for thought.


----------



## Chronos-Plutus

We got worse than expected unemployment data in from the USA.






Mostly down across all indices, ASX200 holding up though at the moment.


----------



## gartley

Lq,


sptrawler said:


> Well gartley, you and proper and a couple of others did say an upswing to 6,000 on the ASX then there will be resistance, that call has been spot on.



Lucky guess.... And seldom works out that way.
Smurf, both the SPX and ASX200 have higher projections from here that are not met yet. 
They maybe invalidated if the market falls a certain level,  and until they are I can only assume they will be met.
But for now we have lower projections that need to met or invalidated too, and we can theorize that these will be met without invalidating the higher targets. I am just looking at it step by step at the moment.


----------



## sptrawler

over9k said:


> Not sure what you guys are trading but some companies in some sectors get slammed much harder than others in them. Food for thought.



Some things haven't been affected, some things have been hammered, you aren't flying, you aren't going on holidays, you aren't going to the cinema or theatre, you have only just started to go to the pub.
But you have been eating, you have been doing those jobs around the house, you have been putting out the rubbish.
What industries shut down, which industries kept running, what services were required more while people were stuck at home?


----------



## aus_trader

over9k said:


> Nah it's fixing existing stuff - crumbling bridges, worn out roads etc. They've been banging on about this since election time.



OK thank you for the information. It's great to get the intel from fellow members because information and news is all over the place and many brains working together in collaboration can achieve far more than individually.

Keep the intel coming guys/gals, I may research up ways to take positions for the infrastructure boom if that eventuates/passes/approves. Yes it's the USA but it's relevant to us Aussies too when 'trading the bounce'. As always you lot will be the first to know if I align any stock/s for the situation as/if it unfolds...


----------



## Smurf1976

aus_trader said:


> OK thank you for the information. It's great to get the intel from fellow members because information and news is all over the place and many brains working together in collaboration can achieve far more than individually.




There's definitely a push for spending on infrastructure in Australia too with various gas pipelines, power transmission lines, railways and hydro power projects among those I'm aware of being considered.

There are both private sector proponents there and government-owned businesses with proposals too. 

In other cases the proposal is from someone who'd use it rather than own it - finding an owner is one of they things they'd be wanting government to help with since the interest of the proponent is simply to use it once built.


----------



## gartley

Smurf1976 said:


> To clarify - you're expecting it to drop to that level and then resume the up trend if I'm understanding correctly?




The first chart below is the 20 day cycle with projection target range in yellow. This was almost invalidated by price crossing offset lines but it didn't and is still on track to reach the target.
The other cycles below are the 10 week and 20 week. You can see they have much higher projections target levels. The 10W can be invalidated quite easily because price action is very close to the offset lines. The 20W cycle offset lines are a long way down from current price action and it would take a drop below approx 2750 to invalidate that. Until that happens, IF it happens we can only assume the market will move higher after this correction.
So in short "yes"  but that this is subject to change if price action crosses the offset lines in the 10 and 20W Nominal cycles below.
It should be noted though in the AUS200, the current pattern of trend from the crash low at first glance looks like a typical EW abc corrective pattern and that we are headed to re test the lows again in the months ahead. It has rallied 55 fibonacci days from the low and very close to the 0.618 retracement, with waves a and c being equal.That is not to say that it cannot  upward in a more complex EW pattern but I am not looking that far ahead yet and focusing on the pattern of trend at hand.


----------



## makteb

@gartley

EW formation looking good with numbers fitting in the range


----------



## gartley

The following are cycle projection charts for the All Ordinaries.
The first one is the 4 year cycle weekly bars gave a projection range for the recent crash low and was slightly surpassed and only briefly.
The next one is the 20W daily bars has an outstanding projection range of 6913 to 7419. This can only be invalidated by a fall back below both offset lines probably around 5300 .
The last chart is the 10 Week  cycle daily bars. This projection has now been met.
Since a correction ( or even a potential reverse in trend) is underway, we need to see how the price interacts with th 20W Offset lines in the weeks ahead.


----------



## RazzaDazzla

Bulls and bears fighting in a sideways battle.  Break to the upside? Or to the downside?

Stonks go up, printers go brrr is argument for the upside.

Pandemics, recessions, presidential election, covid second wave, US civil war, China trade deal fail are arguments for baked beans and ammo.


----------



## over9k

We all know the printers go brr every time the market tanks.

The question is where the money then all goes - and I think it's pretty clear that it goes into stay-at-home tech stocks. Here's my post from another thread:




over9k said:


> Stay-at-home tech being the overwhelming contributor to the overall market improvement(s) we're now seeing:
> 
> 
> 
> 
> 
> 
> With the megatech having such a weighting in the index, it's little wonder we see an overall bump. Take the stay-at-home tech out of things and it's a very different picture. Just on open there's a 1% bump in the sp500 but the equal weight index is just 0.16%. 6x the difference. Remove tech, and it's actually a slump.
> 
> Like I said/did, put your money into say-at-home tech - remember, the rest of tech's gone nowhere (e.g intel & AMD). Hell, if you want to put things on total autopilot, dump it into a tech index fund.
> 
> Virtually ALL the gains are coming from stay at home tech.




The hard part is predicting the stimulus timing - the IMF's just downgraded global outlook from -3% to -4.9% for the year so I feel like that'd do a very good job of spooking the fed.

They learned from the GFC that they need to have the printing presses on a hair trigger so it's my opinion that it'll be implemented/approved far, far easier now than it did then, and we can see that it's the tech stocks which have overwhelmingly benefited from the last round. I see no reason why they wouldn't the 2nd or 3rd time either as there's actually some fundamentals behind them, not just an inflated money supply.


----------



## Chronos-Plutus

over9k said:


> We all know the printers go brr every time the market tanks.
> 
> The question is where the money then all goes - and I think it's pretty clear that it goes into stay-at-home tech stocks. Here's my post from another thread:
> 
> 
> 
> 
> The hard part is predicting the stimulus timing - the IMF's just downgraded global outlook from -3% to -4.9% for the year so I feel like that'd do a very good job of spooking the fed.
> 
> They learned from the GFC that they need to have the printing presses on a hair trigger so it's my opinion that it'll be implemented/approved far, far easier now than it did then, and we can see that it's the tech stocks which have overwhelmingly benefited from the last round. I see no reason why they wouldn't the 2nd or 3rd time either as there's actually some fundamentals behind them, not just an inflated money supply.




Markets are tanking now:





I think it is Steven Mnuchin's turn to tell CNBC that everything is going to be OK.


----------



## frugal.rock

Opinion has it that the stimulus isn't filtering down from Wall St to Main St. The fat cats are keeping it whilst the average citizen is doing it tough.

So confused, is it a trendy bounce or a bouncy trend?


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## over9k

It is my very firm opinion that the U.S is headed for a 2nd slump after it gets a 2nd wave. Duc's looking at the traditional indicators and I think virus data is the precursor/driving force behind all of them.

Stimulus is big company rescue packages, not mum & dad business rescue package. Combine that with big business being able to raise private capital in a way that mum & dad businesses can't and you have all the little people going bust while the big companies remain solvent.

Mortgage delinquencies are way up and the IMF has just downgraded global outlook significantly. I'm now looking for what the final straw will be that spooks the fed into more action. It might be virus data this weekend, but I reckon the most likely near term thing is jobs/employment data on the 3rd of july.

Zoom is still the standout performer - up now when even the stay-at-home tech stocks are down.


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## over9k

The most annoying thing is irrationality in australian markets - companies which have almost nothing to do with the U.S nonetheless still follow the U.S market from the night before. 

Good dip(s) to buy, but annoying for a long position. It's bloody choppy at the moment.


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## Smurf1976

over9k said:


> The most annoying thing is irrationality in australian markets - companies which have almost nothing to do with the U.S nonetheless still follow the U.S market from the night before.




Should I interpret that to mean you're not expecting the Australian market to slump overall?

I mean if you're still buying then presumably that's the case? Or you're buying to sell quickly not for a long term hold?


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## over9k

Slowly growing a long position buying into the dips. My position increases with every dip.

The new mask factories come online in august so we'll see a massive improvement/reduction in virus spread then as there will be such a supply of masks that everyone can wear one everywhere and constantly.

I should have been more specific when I mentioned slump - short term slump that the fed will pump ungodly amounts of money into if necessary. There's going to be more virus data in the next few weeks, but there's also a very high probability of more stimulus - it's just impossible to predict when that will be, so you just have to buy the dips and pucker in the meantime. I mentioned before that stimulus is now on a hair trigger so I'm certainly not nearly as jittery as I otherwise would be. If the jobs data out on the 3rd is catastrophic then that's actually excellent as we can be almost certain that there will be a ton of stimulus to follow it if it is - making it an excellent buying opportunity. If not, I already have positions bought in the dips, so gains are gains.

In the meantime, it's just really choppy.


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## qldfrog

over9k said:


> Slowly growing a long position buying into the dips. My position increases with every dip.
> 
> The new mask factories come online in august so we'll see a massive improvement/reduction in virus spread then as there will be such a supply of masks that everyone can wear one everywhere and constantly.
> 
> I should have been more specific when I mentioned slump - short term slump that the fed will pump ungodly amounts of money into if necessary. There's going to be more virus data in the next few weeks, but there's also a very high probability of more stimulus - it's just impossible to predict when that will be, so you just have to buy the dips and pucker in the meantime. I mentioned before that stimulus is now on a hair trigger so I'm certainly not nearly as jittery as I otherwise would be. If the jobs data out on the 3rd is catastrophic then that's actually excellent as we can be almost certain that there will be a ton of stimulus to follow it if it is - making it an excellent buying opportunity. If not, I already have positions bought in the dips, so gains are gains.
> 
> In the meantime, it's just really choppy.



Just a note: masks are available whenever you want: just order and you get them, was not the case 2 months ago, only companies in the west take 3 months to get online...
and China is producing masks at an amazing rate, moreover we never lacked scarfs which are useful enough if you are not working in an hospital but walking down the street..
finding post event reasons is different from finding true causes
but astrology is still alive 2000y AC so I assume mass media market analysts will still have jobs in the years ahead...




you get them on Monday 200 for 90AUD
yes it was cheaper 6 months ago but there is no penury, I pity the poor buggers coming online with a mask factory next month...on the other end but be fully government funded etc..as are most business these days


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## over9k

You're forgetting the intense distrust of china at the moment frog - there was even a planeload of defective ones that went to what I think was denmark that then made the news.

Combine that with tariffs and everyone obviously wanting the cheapest mask (that actually works) possible on account of everyone being skint at the moment and we see what we see.

"Made in china" is enough for people to just bin the thing and wear nothing at the moment. China's on EVERYONE'S shitlist.


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## FelixLazard7

Idex is gona be big. Do your due diligence and you will find out why. Black rock inc already owned 4m plus shares along with other big names involved. 
https://fintel.io/sob/us/idex

Youre welcome.


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## over9k

Wait, big as in big gain or big as in big crash? 

Got a cliff notes summary?


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## makteb

@felix,

please keep info relevant to thread


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## over9k

Cross-post:

Here we go, we've had a record spike in virus cases and futures are in the toilet with the tech heavy nasdaq once again having an overwhelmingly better time of things:







and with all the banks deep in the red: 






wall street is starting to now actively call for the already planned 2nd stimulus package to be brought forward:






I reckon the jobs data out next friday will be the big decider. If that's bad (and everything I've read says it's going to be) then more stimulus is a virtual certainty. That'll be the straw (or log) that breaks the camel's back. I'm now thinking about some put options.

Despite all of this, all of the european indexes are actually up significantly at the moment (which could just be a follow-on from yesterday's U.S bounce), but europe doesn't have anything near the virus problem that the united states does. We'll see what it closes at however.


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## over9k

Another cross-post 

The one screencap which really says everything at the moment: 






I know I keep saying this but tech and stay-at-home tech have had very different results and it's the stay-at-home tech that's driving the gains in tech overall.


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## over9k

Credit spreads are also way up, and I know that's a metric ducati would be thinking about.


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## aus_trader

This thing has powered along without a blip to make a new all time high. I never thought of such a speedy V-shaped recovery... unbelievable !


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## over9k

Thing is, once you factor in the exchange rate difference, things look VERY different. The exchange rate has pulled HARD against it. If you'd picked 23 march to the day, you'd "only" be +27%, not the +60% that the nasdaq (QQQ) would suggest (NDQ is an asx listed nasdaq tracking etf that obviously lists in AUD and so tracks it with the exchange rate factored in). If you'd just bought asx200 tech (ATEC), you'd be almost +100%: 







Over a 6 month period, the dow is now flat in USD and in AUD is obviously down almost 8% once the exchange rate is factored in: 






Let's not kid ourselves, this is not exactly organic growth we're talking about, and what growth does exist has gone almost entirely into tech. 


The two things to hold lately have been AUD & tech. Combine them both into an etf (ATEC), and you have something MILES ahead of everything else


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## aus_trader

over9k said:


> Let's not kid ourselves, this is not exactly organic growth we're talking about



Agree entirely, which is what puzzles me. Where to from here will be the question...


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## over9k

Well it's just choppy AF since the stimulus ended - even the small cap tech has largely done very little. And, a lot of stuff is priced in now. Now, things are a mess.

The really funny part is that whilst a lot of stimulus was spent on stay-at-home stuff (furniture, videogames etc) we've seen very little inflation because so much other stuff has had such negative pressure. The two have basically balanced each other out.

More stimulus looks increasingly unlikely now, especially with election coming up and the democrats undoubtedly trying to torpedo the economy to get trump ousted, so I've basically just gone back to where stimulus ended, seen what's pulled vs what hasn't (news flash, a lot of the stay-at-home stuff like docusign have just been a total clusterfuck) and rotated. On the NYSE, nvidia & pez are my two golden children at the moment.

It's the exchange rate that I'm watching like a hawk. I have a fair bit of (my remaining) cash here ready to deploy but we just seem to be bouncing between 71 & 73 US cents. If it busts 70 or 74, it's showtime.


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## aus_trader

over9k said:


> I have a fair bit of (my remaining) cash here ready to deploy but we just seem to be bouncing between 71 & 73 US cents. If it busts 70 or 74, it's showtime.



I think AUD was cracking higher lately until the interest rates expected to be held for the next few years was announced.


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## over9k

aus_trader said:


> I think AUD was cracking higher lately until the interest rates expected to be held for the next few years was announced.



Here's my post from another thread:




over9k said:


> View attachment 108060
> 
> View attachment 108059
> 
> Also probably not a coincidence that the exchange rate broke trend right when the PUC payments stopped. It's cracked the 71c mark a couple of times since and just been choppy for the last month. If it busts 70c, then it's showtime.




It broke trend as soon as the payments stopped, but it didn't bust low, it just went choppy. Is this just more and then less and then more and then less anticipation of some kind of stimulus *soon*? 

If so, we can expect a break the moment the market really thinks more stimulus isn't coming.


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