Perhaps we'll ride out this correction/crash/bear/recession/depression?

[theasxgorilla]

Re: Perhaps we'll ride out this correction?

Bears will eventually have their day, of course.

How long can they wait though?? 5 years, 10 even? Plenty of space left under that rug me thinks. Keep sweeping.

 

[Sean K]

Re: Perhaps we'll ride out this correction?

That damn old Chindia news just keeps resurfacing......old news??

China's metals demand to grow even if US slows down: analysts

Rowan Callick, China correspondent | August 25, 2007

LONG-term believers in the China "stronger for longer" resource boom story wore smug smiles of satisfaction on Wednesday when BHP Billiton CEO Chip Goodyear said demand from China and India would more than cancel out any likely contraction in the US economy.

They already knew that about 90 per cent of China's industrial production is actually going for domestic consumption and that while America is China's top market, in 2006 it still only bought 21 per cent of China's exports.

They also knew that the proportion is slowly declining.

Statistics from influential China database CEIC and UBS show that a contraction of 10 percentage points in US imports from China would only cut 0.2 per cent from China's gross domestic product. In the first half of this year, China's economy grew 11.5 per cent. Despite two recent interest rate rises, its stock markets in Shanghai and Shenzhen continue to surge.

Of course, the authors and interviewees have vested interests in keeping the bull alive, as well as keeping their jobs by getting it right I suppose.....

 

[Sean K]

Re: Perhaps we'll ride out this correction?

Well, when I started this thread I was shot down pretty quickly, even if I was actually thinking the bears were going to have their day.

There were a lot of 'perhaps's' listed in the first post, and 'perhaps' some of them are actually coming to fruition.

Perhaps the US are going to engineer a way out of what seems like a real pile of financial poo.

XAO cracking 6200, and DOW leaping last night means the break will be supported IMO. It's not a 100%, in the bag, continuation of the bull, but very unexpected to many, including me.

As embarrassing as it is to put an article here with Dubya as the chief protagonist, it's a symbol of what degree the US will go to to sort out the sub prime mess. Maybe they'll manage to do it?

Bush Tries to Calm Markets With Mortgage Plan
Reuters | 31 Aug 2007 | 02:54 PM

President Bush speaks during a news conference at the White House Friday.

President Bush tried to calm financial market turmoil from the credit crisis by announcing proposals intended to prevent homeowners from defaulting on risky mortgages.

 

[KIWIKARLOS]

Re: Perhaps we'll ride out this correction?

I've always thought that if they wanted to survuve as the one remaining superpower and to not lose ground to both Russia or China they would do anything to remain economically afloat. Esspecially when trying to fight a war.

I must admit though i was still freakin out a little but i managed to pick up what i feel are some really good bargins (FWLO, MPO, EDEO). I still want to pick up some MAE at a reasonable price if i can monday.

 

[dhukka]

Re: Perhaps we'll ride out this correction?

Well, when I started this thread I was shot down pretty quickly, even if I was actually thinking the bears were going to have their day.

There were a lot of 'perhaps's' listed in the first post, and 'perhaps' some of them are actually coming to fruition.

Perhaps the US are going to engineer a way out of what seems like a real pile of financial poo.

XAO cracking 6200, and DOW leaping last night means the break will be supported IMO. It's not a 100%, in the bag, continuation of the bull, but very unexpected to many, including me.

As embarrassing as it is to put an article here with Dubya as the chief protagonist, it's a symbol of what degree the US will go to to sort out the sub prime mess. Maybe they'll manage to do it?

Kennas,

Dubya's move seems more politically motivated than any broad based solution to the sub-prime debacle. He's been coping it from the Democrats for the last 3 weeks to do something. So he finally offers relief to 80,000 households out of 2 million resets expected. The waiving of IRS penalties is probably a bigger step.

That doesn't mean they won't do more. You can bet the Democrats will be all over this saying it's not enough. So yes your initial feeling that the government won't sit idly by was well founded, however the current measures are more of a band-aid than a solution.

Maybe today's measures mean that the government is willing as Bernanke keeps saying the Fed is, to do "whatever is needed". Will it be the American taxpayers coming to the rescue again as they did in the S&L crisis?

However the idea of throwing more money at a problem that was brought about by an excess of money doesn't add up. Bubbles need to be deflated not propped up.

Calling a 0.9% rise in the Dow a leap is pushing it. I was surprised at the relative lack of conviction in the rally compared to when Bernanke dropped the discount rate. Maybe the traders took the afternoon off for the labor day weekend?

 

[Sean K]

Re: Perhaps we'll ride out this correction?

Calling a 0.9% rise in the Dow a leap is pushing it.

Yep, sorry, that was a bit of a ramp wasn't it? LOL

While we're on the DJI, it looks to have almost broken back up, after diving on the H&S breakdown. Now, like the XAO an inverse H&S has formed and it looks like it might break up. Interesting, even if you are a funnymentalist you shouldn't ignore the factors that are less subjective. (maybe less subjective)

XAO already has broken up perhaps.

Or, perhaps I'm still living in the past, on old news....

(I'm still more in the bear den dhukka, but there are solutions to any problem)

 

[Nick Radge]

Re: Perhaps we'll ride out this correction?

continuation of the bull, but very unexpected to many, including me.

I think you need to break down the pieces a lot better. The market evolves each and every day and offers new information. Take a read of Mark Douglas' book "Trading In The Zone". Read it 10 times and absorb what is being said.

There was a lot o evidence, both domestically and in the US that a reasonable bounce would unfold. The blow off low, the record reading in the put/call ratio, the impulsive nature and rejection off the lows, etc etc. Review my post #1384 or better still watch this video and note how I build the "probable" argument.

You need to ask, "what is the most probable pattern now?" and therefore, "what is the next most probable pattern to unfold?" Add to these specific analysis of volume, seasonal tendencies and sometimes it all falls into place.

So, in the ASX we are nearing the completion of the 5-wave off the August lows. We therefore know that this move up can only be an impulse, a wave-1 or -A. Either way, the short term would suggest a 3-wave counter trend move followed by another leg higher of similar magnitude of what we've just seen. It does not mean "BULL" nor does it mean "BEAR". What the next impulse will show us is whether we're in a "probable" BULL or BEAR move. Understanding the relationships of moves and they they combine is a powerful tool.

Nick

 

[dhukka]

Re: Perhaps we'll ride out this correction?

Kennas I thought we'd agreed that the Dow is the muppet index?

Interesting, even if you are a funnymentalist you shouldn't ignore the factors that are less subjective. (maybe less subjective)

Surely you're not suggesting that lines drawn on a chart ex post facto as an explanation for what might happen in the future is less subjective?

(I'm still more in the bear den dhukka, but there are solutions to any problem)

Yes there are but the Fed and the government continue to ignore the obvious solution before their eyes - let the market do it's job.

 

[Sean K]

Re: Perhaps we'll ride out this correction?

I think you need to break down the pieces a lot better. The market evolves each and every day and offers new information. Take a read of Mark Douglas' book "Trading In The Zone". Read it 10 times and absorb what is being said.

There was a lot o evidence, both domestically and in the US that a reasonable bounce would unfold. The blow off low, the record reading in the put/call ratio, the impulsive nature and rejection off the lows, etc etc. Review my post #1384

You need to ask, "what is the most probable pattern now?" and therefore, "what is the next most probable pattern to unfold?" Add to these specific analysis of volume, seasonal tendencies and sometimes it all falls into place.

So, in the ASX we are nearing the completion of the 5-wave off the August lows. We therefore know that this move up can only be an impulse, a wave-1 or -A. Either way, the short term would suggest a 3-wave counter trend move followed by another leg higher of similar magnitude of what we've just seen. It does not mean "BULL" nor does it mean "BEAR". What the next impulse will show us is whether we're in a "probable" BULL or BEAR move. Understanding the relationships of moves and they they combine is a powerful tool.

Nick

Thanks Nick, I'm obviously an amateur at both FA and TA and learning what I can. I can say honestly say that saw the capitulation and mentioned it in the admin threads, but it was just a gut feel pluck I suppose. In regard to saying we may have returned to the 'BULL', I would define this as simply staying above the 200d ma at the moment. The US bounced off it, and we spent about 5 days below during the panic, so IMO the bull is still in tact. I'm looking for the XAO to make 6200 as support and the US to break through before opening some bubbly.

Long term, fundamentally, there are some serious issues with the US materialistic psych that need to be addressed, but probably won't.

 

[Sean K]

Re: Perhaps we'll ride out this correction?

Kennas I thought we'd agreed that the Dow is the muppet index?

Surely you're not suggesting that lines drawn on a chart ex post facto as an explanation for what might happen in the future is less subjective?

Yes, happy with a muppet index, but nonetheless an indicator that people watch.

I've come to trust a chart more than a company report crafted by a Hogwarts graduate...

Damn accountants!!!

 

[dhukka]

Re: Perhaps we'll ride out this correction?

Yes, happy with a muppet index, but nonetheless an indicator that people watch.

I've come to trust a chart more than a company report crafted by a Hogwarts graduate...

Damn accountants!!!

I don't trust company reports either, I trust in my own ability to dissect them and pull out what's relevant. Interesting that you have such faith in charts yet you're still in the bear camp, didn't yesterday give you a signal to go all in?

Oh ye of little faith.

 

[Sean K]

Re: Perhaps we'll ride out this correction?

Oh ye of little faith.

I don't post every trade, or investment.

 

[Nick Radge]

Re: Perhaps we'll ride out this correction?

would define this as simply staying above the 200d ma at the moment

Since 1960, the use of the 200ma on the S&P500 has only been effective on 30.7% of occasions. Of the 127 crossovers it has caught 7 significant bear markets ('62, '66, '69, '73, '77, '81 and '02) . On the other 120 occasions it gave false signals.

 

[Sean K]

Re: Perhaps we'll ride out this correction?

Since 1960, the use of the 200ma on the S&P500 has only been effective on 30.7% of occasions. Of the 127 crossovers it has caught 7 significant bear markets ('62, '66, '69, '73, '77, '81 and '02) . On the other 120 occasions it gave false signals.

I'm not exactly sure what your saying here Nick....

From my interpretation, I provide the fol:

I've only been applying this to the XAO actually, but just assumed it was a universal inicator. Assume - making an ass out of u and me.

Actually, I'm not sure if you mean crossing up, or down, Nick... I would always expect a cross up through the line (or hold above) to be more reliable than below. The charts do generally go up in the end.....

I do notice you've just used since 1960, you're not trying to use a certain time frame to support an argument are you? he he.

 

[nizar]

Re: Perhaps we'll ride out this correction?

Since 1960, the use of the 200ma on the S&P500 has only been effective on 30.7% of occasions. Of the 127 crossovers it has caught 7 significant bear markets ('62, '66, '69, '73, '77, '81 and '02) . On the other 120 occasions it gave false signals.

Nick, was 2002 a "significant" bear market?
What actually is a bear market or a bull market?
I think I might start a new thread...

 

[GreatPig]

Re: Perhaps we'll ride out this correction?

I'm not exactly sure what your saying here Nick....

My interpretation is he's saying a break below the 200 day MA is an unreliable indicator of a change to a bear market. 30.7% accuracy is hardly reliable.

In fact, based on those figures, you'd probably be more successful treating such a break as a buying opportunity and use some other stop to get you out of a real bear market.

Hmm... might have to try a bit of backtesting on that, although I only have data back to 1997.

Cheers,
GP

 

[Nick Radge]

Re: Perhaps we'll ride out this correction?

In regard to saying we may have returned to the 'BULL', I would define this as simply staying above the 200d ma at the moment

My point is the statement above is obviously based on testing you have done to qualify the 200ma as a trend determinant. My testing proves otherwise is all.

 

[wavepicker]

Re: Perhaps we'll ride out this correction?

Nick, was 2002 a "significant" bear market?
What actually is a bear market or a bull market?
I think I might start a new thread...

Hi Nizar,

This very question has cropped up quite a few times on other threads. Just about everyone has an opinion on it, and there is probably no right or wrong explanation.
I suppose it really depends on ones situation and how it effects your positions, and ultimately how one handles it psychologically.

Interestingly the DJIA market of the 70's (1968-1980)was often referred to as a bear market, but the market actually trended nett sideways in that timeframe with some repeated choppy swings.

I should add that many bear markets have also been followed by economic contraction shortly after. So then, a bear market is then the psychologically reality as reflected by falling prices, and the economic reality in some cases lags this ie recesssion, depression etc

 

[nizar]

Re: Perhaps we'll ride out this correction?

Thanks wave for your response.

 

[Nick Radge]

Re: Perhaps we'll ride out this correction?

My definition, and it will differ as waves says, is:

(1) > 15% decline, or
(2) 6 months sideways trading.

Each to their own.