Buying the Dip on ASX

[frugal.rock]

Well, it's not really my theory, just a collection of observations.

• OPEC finger pointing re manipulation of the POO.
• Various sources finger pointing re manipulation of the POG.
• Most commodity prices apparently ignoring standard supply demand rules.
• Most Central bank's late to act, gee, didn't Brazil get in early...?

The earlier points go towards helping the last point and the standing government.
No need to mention which government but they can't be acting alone.
I'm off to the library now to borrow "The Catcher in the Rye". wish me luck...

 

[frugal.rock]

OPEC finger pointing re manipulation of the POO.

Probably should clarify this.
Fingers have pointed at OPEC for ages re manipulation, my point is, this time it's OPEC pointing the finger... but if course it's not directed at any one entity. Their not that stupid...

 

[gartley]

Nothing wrong with buying the dips even when the trend is down. Fast and powerful counter moves happen if the dip is timed correctly. But first need to find a way to differentiate between the probability of a shallow rally compared to the probability of good move.

This is what I do as explained in the excel file attached. For example in the last rally we had in the ASX. Firstly the TDI indicator which is based on the RSI and sentiment. When the green and red lines "throw over" the light blue band ( actually green line is enough),this sets the possibility of a counter trend move against the larger trend or the light blue line ( 200 ema) in the upper pane. This throw over suggests a good move to come in the opposte direction. Next move to the Dual CCI. Brown is 55cci and blue line is 13cci. After the TDI throw over event occurs, cast eye to 55cci ( brown line) and see if it was at -100 or less. If so the conditions are in place for a good tradeable counter trend rally. When the the cci13 crosses zero that's the signal to long with stop just below the last price low but only on one condition. When CD1 is above zero and FT above 50 as this leads to the momentum of the move up. Hold positions till TDI green and red throw over at the other extreme ( upper blue channel line) and cci13 crosses zero moving down. Along with this I also use price projection to add weight to the possibility of a good move but it's not necessary

 

[Telamelo]

Nothing wrong with buying the dips even when the trend is down. Fast and powerful counter moves happen if the dip is timed correctly. But first need to find a way to differentiate between the probability of a shallow rally compared to the probability of good move.

This is what I do as explained in the excel file attached. For example in the last rally we had in the ASX. Firstly the TDI indicator which is based on the RSI and sentiment. When the green and red lines "throw over" the light blue band ( actually green line is enough),this sets the possibility of a counter trend move against the larger trend or the light blue line ( 200 ema) in the upper pane. This throw over suggests a good move to come in the opposte direction. Next move to the Dual CCI. Brown is 55cci and blue line is 13cci. After the TDI throw over event occurs, cast eye to 55cci ( brown line) and see if it was at -100 or less. If so the conditions are in place for a good tradeable counter trend rally. When the the cci13 crosses zero that's the signal to long with stop just below the last price low but only on one condition. When CD1 is above zero and FT above 50 as this leads to the momentum of the move up. Hold positions till TDI green and red throw over at the other extreme ( upper blue channel line) and cci13 crosses zero moving down. Along with this I also use price projection to add weight to the possibility of a good move but it's not necessary

Take note from 5:15 onwards in relation to "buying the dip" scenario

 

[gartley]

Take note from 5:15 onwards in relation to "buying the dip" scenario

understood, need to trade larger trend but can dip buy by finding a way to differentiate between the probability of a shallow rally compared to the probability of good move.

 

[ducati916]

Well, it's not really my theory, just a collection of observations.

• OPEC finger pointing re manipulation of the POO.
• Various sources finger pointing re manipulation of the POG.
• Most commodity prices apparently ignoring standard supply demand rules.
• Most Central bank's late to act, gee, didn't Brazil get in early...?

The earlier points go towards helping the last point and the standing government.
No need to mention which government but they can't be acting alone.
I'm off to the library now to borrow "The Catcher in the Rye". wish me luck...

So a part answer from me:


So the US is trapped in this situation. To date, up to 2008 and that crisis, the US could force EM currencies to fund the US as the US could outlast the EMs through the crisis and the demand for USD would translate into demand for UST.



The first sign that conditions had changed fundamentally occurred in 2019 (box 1). Today (box 2) this is playing out even worse for the US. Why? Because China and Russia are no longer EM economies. They have broken the reliance upon the USD as the Reserve Transactional currency. Now all that US debt and deficits more than matter, they are critical. There is no way out other than to devalue the USD significantly as against gold.

We have seen this before when in 1968 the Gold Pool collapsed.


The same mechanism has been employed since. The COMEX and LBMA are simply extensions of that exact same process.

This time China has broken it. In 2014 China inked deals to buy oil in CNY. China created the Shanghai Gold Exchange. Essentially, China made the CNY exchangeable into gold. A de facto gold standard. But they were far smarter than the US: (a) CNY was exchangeable into gold only by demanding physical from the COMEX and LBMA at market prices and (b) the export of gold from mainland China is illegal.

With the war in Ukraine, Mr Putin has now joined that club overtly. Oil for Rubles or gold. Same deal. Drain the West of its gold, held low at artificial prices by the COMEX and LBMA. The gold and now silver, is leaving at an unprecedented rate.

Lurking in the background to all of this:



So on all those USTs that were sold, SWAPS on interest rates (fixed/variable) were sold. That is to say you could buy a CDS that protected your USTs in an environment where interest rates rose. Just like we have currently.

Much like the CDS on mortgages that blew up in 2008, we have losses accruing on the CDS for interest rate SWAPS. Thing is, no-one really knows who the counter-parties are and their credit worthiness. As the losses grow, the counter-parties will blow-up.

Meanwhile



Federal deficits as a % of GDP are required to be funded. How? By the issuance of UST, which no-one wants. The USTs are being force fed to the commercial banking system currently, but this cannot last.



Above is the Eurodollar. Yield rising fast.

The private sector is crowded out by government, causing tax receipts to fall, increasing the deficits that require funding. This has now reached a point where a death spiral is almost taking over.

There are more moving parts, but basically: the world is no longer funding the US. The US is trying to defend USD hegemony, because they have to. If they don't, their economy collapses. The last option is pretty much WWIII, which we seem to be fast moving towards. China/Russia/Arabs/Iran have the US in a choke hold and won't back off. The USD is finished as the Reserve Transactional currency. Possibly 1 year and it's over.

The dip that you want to buy is the dip in gold/silver.

Definitely not stocks. No telling which ones survive and which ones go to zero. I wouldn't touch banks or anything financial (insurance companies etc).

I was looking at currencies last night. The correlation on all the majors is now pretty much 1.0. Except for the Ruble:





jog on

duc

 

[gartley]

I still think we're in a bear market overall with further to fall to possibly re-test June '22 low's imo (though till last Friday we'd had a nice "bear market rally" to make some coin $$ on but unfortunately good times don't last long these day's lol)

Bear market, yep . Probably the biggest in our lifetime, correcting the biggest bull in history .
My 2c. Not only test the Jun 22 lows but by end October will be testing the March 2020 lows....

 

[divs4ever]

Take note from 5:15 onwards in relation to "buying the dip" scenario

now dips aren't totally bad even if you are an investor ( not planning to sell in the rallies )

my plan is to accumulate div. paying stocks

now sure the global economies ( and banks ) could collapse but then you have your cash in the bank waiting to be frozen ( or bailed in to nearly worthless bank stock ) which is worse cash in a selected but plunging stock or frozen in a bank account ( yes it is a case of choosing your preferred poison ) , hoping that one unfrozen your have something to buy



now i am NIBBLING my way down ( not splashing the cash )

regarding gold ( and gold stocks ) this to me smells like the edge of a liquidation event (everything goes to cash to reduce debt ) ( and yes i should reassess the target price for my next EVN parcel )

please take extreme care , but keep your eyes open ( for opportunity and educational moments )

 

[divs4ever]

Bear market, yep . Probably the biggest in our lifetime, correcting the biggest bull in history .
My 2c. Not only test the Jun 22 lows but by end October will be testing the March 2020 lows....

am not sure March 2020 was a genuine support ( governments were bailing like crazy to create that K-shaped recovery ) but until we hit March 2020 levels again we won't know for sure

 

[gartley]

As

am not sure March 2020 was a genuine support ( governments were bailing like crazy to create that K-shaped recovery ) but until we hit March 2020 levels again we won't know for sure

As soon as June 17 low is broken ( and it will be) there will be a slew margin calls triggered and the market will capitulate until all the stops are taken out and sellers exhausted. It will be wholesale panic among investors. As Bill Rodgers says, wait until there is a pile of money on the ground just waiting to be picked up....

Some examples below:

 

[divs4ever]

As

As soon as June 17 low is broken ( and it will be) there will be a slew margin calls triggered and the market will capitulate until all the stops are taken out and sellers exhausted. It will be wholesale panic among investors.

Some examples below:

View attachment 147235View attachment 147236View attachment 147237

am kinda hoping for that ( yes it seems like morbid fascination )

but still do NOT think it will be the BIG dip , i think they will even throw the kitchen sink at one last 'recovery ' before the US mid-term elections .. they can't afford to have ' Populists ' win the US Congress and Senate ( i think they would rather bankrupt the world first )

 

[gartley]

am kinda hoping for that ( yes it seems like morbid fascination )

but still do NOT think it will be the BIG dip , i think they will even throw the kitchen sink at one last 'recovery ' before the US mid-term elections .. they can't afford to have ' Populists ' win the US Congress and Senate ( i think they would rather bankrupt the world first )

Yep. They probably certainly will, but whether it's enough who knows. Rather than hope that they will ( as they are the cause of this through their reckless money printing policies) let's be optimistic about a big dip if it happens. It's opportunity, especially for those that are cashed up but more importantly for the younger generation who have a yet another chance to make their mark by buying low.
I feel sorry for the boomers who are just coming into retirement now as they will be the ones who lose most unless they take action very quickly although it's probably too late now. For the rest of us, the market will come back but my 2c worth: this will be a much longer bear market than previous ones. Once this wave a down completes we will get a really good wave b rally but it probably won't carry to new ATH. It will be followed by a very nasty wave c down in the longer term. The 20 year cycle ( if the pattern holds) is due to bottom this or next year, and if that is the case we are running out of time and so only a capitulation event can satisfy that low.

 

[divs4ever]

Yep. They probably certainly will, but whether it's enough who knows. Rather than hope that they will ( as they are the cause of this through their reckless money printing policies) let's be optimistic about a big dip if it happens. It's opportunity, especially for those that are cashed up but more importantly for the younger generation who have a yet another chance to make their mark by buying low.
I feel sorry for the boomers who are just coming into retirement now as they will be the ones who lose most unless they take action very quickly although it's probably too late now. For the rest of us, the market will come back but my 2c worth: this will be a much longer bear market than previous ones. Once this wave a down completes we will get a really good wave b rally but it probably won't carry to new ATH. It will be followed by a very nasty wave c down in the longer term. The 20 year cycle ( if the pattern holds) is due to bottom this or next year, and if that is the case we are running out of time and so only a capitulation event can satisfy that low.

i am one of those boomers , that has already been ( preemptively ) retired , and this might be my last big chance to get a reasonable return on my investment , yes i expect it will make 2011 and 2020 look like picnics but you can only buy what is for sale ( while you have access to your money )

luckily in 2010 when planning for this adventure , i tried to pick companies liable to survive the very worst , which ts why i sold down 90% of the inherited WOW holding ( if they stumble so much in the good times how will they handle a rout )

and yes , sadly capitulation is very possible

 

[gartley]

i am one of those boomers , that has already been ( preemptively ) retired , and this might be my last big chance to get a reasonable return on my investment , yes i expect it will make 2011 and 2020 look like picnics but you can only buy what is for sale ( while you have access to your money )

luckily in 2010 when planning for this adventure , i tried to pick companies liable to survive the very worst , which ts why i sold down 90% of the inherited WOW holding ( if they stumble so much in the good times how will they handle a rout )

and yes , sadly capitulation is very possible

I am not far behind you. I worked in the auto industry for 38 years and was forced out when it was shut down.

It was hard finding new work and even harder now. Luckily I started with the markets in the early 90s and had my ups and downs for 10 to 15 years until I realized that this requires work, effort perseverance and a certain type of mindset. Most importantly a good money management plan.
The turning point for me came when I stopped trying to be a perfectionist and starting becoming a "good loser" because this game is full of losses and we just gotta learn to deal with them by cutting them as soon as possible and don't go into prolonged and deep drawdowns.
Cut the losses early, there is always another trade around the corner and just work on developing a positive expectancy.
Do that and you will survive and eventually prosper slowly in the longer term

 

[ducati916]

As

As soon as June 17 low is broken ( and it will be) there will be a slew margin calls triggered and the market will capitulate until all the stops are taken out and sellers exhausted. It will be wholesale panic among investors. As Bill Rodgers says, wait until there is a pile of money on the ground just waiting to be picked up....

Some examples below:

View attachment 147235View attachment 147236View attachment 147237

The charts that you have put up are examples of recent deflationary (asset) bears. The answer to which was create monetary inflation which would transmit to asset prices.

The Fed and other Central Banks will certainly try the same ploy.

Only this time, we are already in an inflationary environment and money creation will lead not to a bull market, but phase II of this bear, which is a 1969 - 1982 type of bear.

The deflationary leg of the bear could take the SPY to 2000 odd. The bounce from Fed easing might take us back to 3000, then the erosion will take us down another 50%+ from there. Anything from 1000 to 1500 on SPY.

Along the way, fiat currencies will fail or more optimistically, be devalued significantly.

A ratio of 1.43 on March 1980 is what you are looking for:



jog on
duc

 

[divs4ever]

I am not far behind you. I worked in the auto industry for 38 years and was forced out when it was shut down.

It was hard finding new work and even harder now. Luckily I started with the markets in the early 90s and had my ups and downs for 10 to 15 years until I realized that this requires work, effort perseverance and a certain type of mindset. Most importantly a good money management plan.
The turning point for me came when I stopped trying to be a perfectionist and starting becoming a "good loser" because this game is full of losses and we just gotta learn to deal with them by cutting them as soon as possible and don't go into prolonged and deep drawdowns.
Cut the losses early, there is always another trade around the corner and just work on developing a positive expectancy.
Do that and you will survive and eventually prosper slowly in the longer term

the original plan , was to 'buy and hold ' and NOT draw-down and have a steady income stream for the rest of my life

i live a rather frugal life-style , so while there aren't many corners to cut , there are less expenses to blow out

now the 'buy and hold' part it quickly became obvious it needed frequent tweaking , but since i had inherited a portfolio and a LOT of related paperwork , there were some lessons to be learned ( even 'blue-chips' don't last forever was one )

i am more inclined to sell because a company turns in an unattractive direction , and if an attractive stock i tend to 'average-down '

my trip to retirement was a little more unplanned , in July 2016 i applied for sickness benefits , and went through various medical examinations to boost my claim by late December 2016 they sent me for an independent assessment , and the doctor looked briefly through the documentation including the recent results , coughed/choked stood up and said you will be hearing from Centre-link soon Happy New Year and six days later i had a full disability pension back-paid to July 2016

so my plan to gracefully retire on 1st of January 2020 hit a slight bump ... i expect the next bump , to be much bigger than March 2020

so i will have to see where the dust settles

 

[gartley]

The charts that you have put up are examples of recent deflationary (asset) bears. The answer to which was create monetary inflation which would transmit to asset prices.

The Fed and other Central Banks will certainly try the same ploy.

Only this time, we are already in an inflationary environment and money creation will lead not to a bull market, but phase II of this bear, which is a 1969 - 1982 type of bear.

The deflationary leg of the bear could take the SPY to 2000 odd. The bounce from Fed easing might take us back to 3000, then the erosion will take us down another 50%+ from there. Anything from 1000 to 1500 on SPY.

Along the way, fiat currencies will fail or more optimistically, be devalued significantly.

A ratio of 1.43 on March 1980 is what you are looking for:

View attachment 147241

jog on
duc

The 2022 stock market crash has wiped out $13 trillion of wealth. That should be more than enough to get the Federal Reserve to ease off their panicked hyper-rising interest rate policy they have irresponsibly embarked on. This Fed Chairman is unable to act with finesse. His open market committee policies are irresponsibly large, both when he eased in 2020 through 2021, and when he tightened the past several months. Mortgage rates have doubled in just a few months, an unheard-of event, and are now the highest in 20 years. This is Master Planner economic warfare on Americans.

The issues that led to hyperinflation are an aggregate supply shortage, as well as the Fed's massively historic balance sheet explosion of $6.0 trillion in a year and a half in 2020 and 2021. The Fed's policy to reduce inflation is to crush aggregate demand. They are working the wrong side of the equation. This Fed is not just incompetent, it is dangerous.

We are in it now. A bunch of simultaneous wave threes down. Batten down the hatches. It could be a nasty couple of weeks coming up.

 

[ducati916]

The 2022 stock market crash has wiped out $13 trillion of wealth. That should be more than enough to get the Federal Reserve to ease off their panicked hyper-rising interest rate policy they have irresponsibly embarked on. This Fed Chairman is unable to act with finesse. His open market committee policies are irresponsibly large, both when he eased in 2020 through 2021, and when he tightened the past several months. Mortgage rates have doubled in just a few months, an unheard-of event, and are now the highest in 20 years. This is Master Planner economic warfare on Americans.

The issues that led to hyperinflation are an aggregate supply shortage, as well as the Fed's massively historic balance sheet explosion of $6.0 trillion in a year and a half in 2020 and 2021. The Fed's policy to reduce inflation is to crush aggregate demand. They are working the wrong side of the equation. This Fed is not just incompetent, it is dangerous.

We are in it now. A bunch of simultaneous wave threes down. Batten down the hatches. It could be a nasty couple of weeks coming up.

Indeed it is most likely:



When a PUT is bought, the MM sells the PUT and hedges that exposure by selling short stock.



While the market could bounce...likely only a small bounce, a break below the June lows could as @gartley stated, result in a pretty big break lower.

jog on
duc

 

[waterbottle]

Another 2% down as of 1050hrs. Anyone going for a swim?

 

[KevinBB]

Another 2% down as of 1050hrs. Anyone going for a swim?

Not yet, but looking at specific stocks rather than the index.
KH