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Saturday, May 9, 2009

Gann and Time Cycle

Hey, this is just a please please don’t forget me post. :-) And don’t get me wrong, sharing info make me happy therefore I’d like to share, but it doesn’t mean if I agree or disagree. Enjoy your weekend!

 

I’ve got my friend’s (uempel) permission to publish his thoughts bellow. I don’t quite understand the Gann method just I’m glad that he’s calling at least a 5% pullback. Again, forecast is trying to run before the market, but the actual trading should always let the market go first. It’s OK to bet a little on the forecast, but the most important of all is: NEVER EVER AVERAGE DOWN!

This evening I  looked at the SPX very closely.  I cannot believe that this is not the top for the next week, fortnight, month. The pattern shows all indications of a top. I have read so much in the papers and in blogs about the 200-day-MA and 940, that these targets have to be ruled out: too many people/funds investors/funds ready to go short at 940/200-day-MA, so the target loses it’s validity. Following Gann 905 could also have been a high, but now it’s going to be 930...

Top930

3CyclesSMI

22 comments:

  1. I don't understand how you can call a top.

    Sorry to say but it's sort of the "i heard that before" type of intuition..can you go into more detail about the evidence supporting this notion?

    thanks!

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  2. Just forward info, I said I don't understand Gann method, just I think someone might be interested and I'd like to share which make me feel happy.

    And about time cycle, yes, I saw it happened amazingly lots of times and I don't know why either.

    About calling a top, I don't recall I ever did that, so sorry, I cannot agree with you.

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  3. Bank P/Es:

    JP Morgan: 28.42
    Wells Fargo: 37.08
    Goldman Sachs: 31.20

    GOOGLE: 29.78

    "Interesting"

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  4. anony, you idiot, is not calling top. Is predicting a top. You must be a bulltard who recently just got suck in and bought long and wish that this thing can grow to sky... you idiot! I hope you lose all you money. This is a bear market rally, period! America is doom to FAIL!

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  5. I don't understand 2 things:
    1. Government says banks do not need money. OK, say, a year later if these banks require additional fund, what will government do? I think this virtually leaves no room for the banks to get further injection from the government.
    2. How come the bank which issues new offering rise? Doesn't that mean a diluation for the current shareholders?

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  6. It's very interesting chart. Thanks for posting it.

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  7. I am suspicious about the astronomical rise in bank stocks and the market in general, which just so happened to coincide with Wells Fargo's and Morgan Stanley's share offerings on Friday, Goldman's a few weeks ago and a few more next week.

    I am also suspicious about why the stress tests took so long to release - even the date of the release was pushed back. Perhaps the banks' shares weren't quite at their "target levels"? I guess what I'm saying is: With most of the volume in the market coming from Goldman Sachs, it seems very likely to me that this is the world's biggest pump and dump, with the goal of getting the banks' shares to good levels and creating enough bullishness that people would buy them, therefore enabling the banks to raise capital.

    Clearly if WFC, BAC, etc did their share offerings in early March when the stocks traded in the single digits, it's unlikely anyone would have bought them.

    Conspiracy theory? Maybe. But it's also pretty brilliant if that's how the scam was orchestrated.

    Let's see what happens to the market after all the banks have met their capital requirements through share offerings. That's the key to figuring out who or what was behind this.

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  8. "the astronomical rise in bank stocks and the market in general," WHAT? I'm assuming you are talking about from the March low...look at a chart from a year ago and show me the astronomical rise!

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  9. Jeff,

    Its a conspiracy theory which is probably closer to the truth than you think. These are not free markets. Nobody has any idea of the new level of fundamentals yet but the markets have soared on "less worse". There's every incentive in the world to inflate these markets:

    1. Raise confidence in the [average] people and promote spending in a consumer and services led economy. The people are/were terrified.

    2. Recapitalize the banks and REITs--our financial infrastructure. The Fed has a direct pipeline into GS (who has recently become the nearly the sole "Supplemental Liquidity Program") to essentially print money and broadly lift the entire stock market--even the trashiest of junk stocks. A side benefit to this is that inflating the markets will be cheaper than adding all the affected pensioners directly to the gov't spigot.

    3. Mid-term elections in 2010. The Democrats will have a hard time remaining in power if things have worsened by then. A side benefit is that if recover does happen at some point, the 2012 will be locked up for a second term for Obama.

    4. And most importantly, to buy time in hopes that time is what is needed for things to improve. This is very risky. I believe when the gov't chose to orchestrate this "scam" if you will, they basically went all or nothing here. There are no more bullets if this doesn't work and we'll be in for really hard times. The financial elite know they really messed up this time, but are unwilling to relinguish power. They are likely hoping time and trillions of pieces of paper will smooth things over.

    Lastly, who cares if some bears get slaughtered if this happens to save the world? Nobody does. So even though I lost a lot of money trying to fight the trend, once I realized the game was fixed, I went all in on FAS and have been recapitalizing myself. I'm certainly not married to this this market and I will short on it in a minute, but not until the banks are recapitalized and the trend reverses course due to poor earnings and shareholder dilution--Fall or Winter. Until then, I'm riding the summer wave to S&P 1200.

    Look at it this way: Either they will continue to prop the markets and the result will be incredible rates of inflation, I'll go along for the ride, or they will let the markets flow freely again and I'll ride this bear market rally all the way back to the bottom.

    I believe the gov't is taking an enormous risk with this one. A lot of high paying jobs are being lost and will not come back. We can not replace them with gov't sponsored shovel ready projects. Asset and wage deflation is in full effect.

    Anyway, I love Cobra's work here and I learn a lot because I know some day either the fundamentals or technical analysis will once again win out. We still appreciate Cobra's sacrifice even if he's board with recapping "overbought" scenarios all summer.

    Best to all,
    -A.

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  10. Cobra, thanks for your observation. Blue cycle is really interesting. Here's another observation : http://hqtrader.blogspot.com/2009/04/reminiscences-of-may-2008-top.html

    which also predicts a top based on May 2008 analogy

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  11. Cobra,

    T theory predicted a possible top at 925 and my stats say the NDX is rolling over...it will just take finance and oil to roll over which is any time now and the game is over for the bulls..4-5% pullback is about right..

    2c

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  12. http://www.d-e-f-i-n-i-t-e-l-y.com/

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  13. Follow the trend :
    April,2008 Dow 13100
    April, 2009 Dow 8100
    bear market rally depends always on HOPE
    by the way, the 3rd week usually weak.
    and just a reminder tha Lehman said it was well "capitalized " a month before its bankrupsy. And regarding the govermnment saying that most of the big banks are well capitalized, thats mean the government don't have money and they will not pay more. This is what a Politics mean.

    KaKa2009

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  14. Cobra,

    1. Anyone with IQ of 10 would know government is on Bank's side and they are working together to give out bogus numbers so to suck in more private funding to save their face...

    2. Yes, yes and YES! But who give a fu**, all the bulltards are buying thinking that government will never let these bank fail so "we are getting these bank at a discount!" (even my parents want to buy for crying out loud!) Also I find it hard to believe that bank would actually (i.e. Morgan stanley) offer to sell their stock at a "discount" rate?! They are being generous? I don't think so... they just want to raise captial (as fast as possible) while this "maniac" pump and dump is going.

    3. this is the question you should ask, but I'll answer for you. Why you think GS has a huge program trade of late? I wonder where they get the $$$. Of course! AIG! They being the "door way" for government hand out our FU**ING TAX MONEY to these bastards! Therefore, "white glove", GS, can pump up the market with our tax money (TARP, POS) while they can dump whatever they want and also make Obama (di** head) look good...

    So in short we shorts are fight against our own tax money, PERIOD!

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  15. Mr. Cobra, can you provide the blog address of uempel so that we can take a closer look at his other articles? Thanks!

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  16. I'm sorry but as far as I know Uempel has no blog.

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  17. You are wrong about never averaging down. If you have the right trading plan and position sizing then averaging down works well. If you are a moron and start with 25% of your account for a position and your plan is to average down with your next 50%...then yes...never average down because you will blow out....

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  18. If the 5% pullback occurs, where does that take the SPX to?

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  19. In the great crash 1929 the DOW made a final low volume low about 48 % below its peak, then rallied about 52 %.

    In the "great" crash of autumn 2008 the DOW made its low in March '09 at a loss about 54 %. So the rally after the final low "should" get higher than 52 %, to about 58 % or so.

    The deeper they fall, the higher they bouncce!

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  20. SPX now at 930. So 930 * 95% = 883.5

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  21. I’m in agreement with both Jeff and ADD… Yes, it’s a conspiracy theory! But, there is nothing we can do about. If you’re a bear, and you are trend trading not day trading, then you had better sit this summer out. They will continue to take the market up, even if it see-saws back and forth for awhile.

    Yes, I think we will go down a little, right after OPX next week. But, I think it will be brief, maybe a couple of weeks? Remember, these crooks, (I mean bankers) just received a ton of money from the government. They of course have been buying up the market, (instead of freeing up the credit market and giving more loans out to people like they were supposed too do).

    It’s going to take them awhile to burn through all this new money. They will let the market correct a little bit, and then buy it back up again. Each time it happens, more and more retail investors will come back into the market, thinking that the bad times are behind us. While that is happening the banks will be selling into each rally.

    Since people usually feel good in the summer months this will continue until late summer, when the commercial real estate time bomb comes to the forefront. By then, all the banks, and other crooked gangsters will have sold all their shares, and are now short the fall market.
    As we all know, September is not usually a good month for the market. It fact... it, as well as October, are historically bad months. This will be when the major wave 5 down will occur. Specially, according to astrologer Adrian Fourie (http://www.luckydays.tv/stock_markets.html) … August the 14th, 2009 is a really, Really, REALLY BAD DAY for the Stock Market!

    I’ve been talking with Adrian for quite awhile now. I ignored him in January when he said the market was going down. I bought calls, (and lost money of course). I then ignored him again and was long during the March collapse.

    I then went short during the latest rally, when he told me that “the sky’s look clear and market should go up”. I have been very successful at losing money here lately. (Maybe I should apply for a CEO position for any major bank. I’m more then qualified at the art of losing money. LOL!).

    Well, this time I’m going to listen to my astrology friend. I’m going to prepare myself (and my available funding) for the next big drop, starting around August 14th and continuing for several months.

    Even though I think the market will pull back here next week, I think we are going into that whipsaw area for the next few months. That’s a tough market to play, and my track record is pretty poor now. So, I’ll going to sit on the bench for this inning.

    Cobra, you have be “spot on” for many months now. This little time period right now that makes everyone confused won’t last forever. Keep up the good work. Your TA is usually correct, and very helpful. But no one is always right! LOL!

    Dan Black

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  22. Wow, another very good comment area, I cannot say enough thanks for all you guys!

    Good luck trading, guys!

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