Tuesday, January 8, 2008
Dow Theory Sell signal confirmed
I know most investors dismissed the Dow Theory sell signal when the market didn't follow through and bounced last month. Today the markets confirmed that sell signal again. Remember the average decline from the point where the signal was given is between 20 to 30%. Of the 30 Dow Theory sell signals in the last 110 years only three have resulted in no or minimal declines in the market. It's pretty hard to argue with an indicator that has been correct 90% of the time. Oh and by the way the COT has shown massive liquidation of longs over the last 3 months. The signs have been there it just depends on if you want to pay attention to them.
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25 comments:
What were those 3 years that resulted minimal or no decline? thx
Gary:
Thanks for pointing that out, feels like just another brick in the wall. The market totally rolled over into the close. As NASDAQ down 8 days in a roll, I naturally am looking for some quick rebound plays, but as the things going right now, I start to feel that the knives are getting sharper as they fall, maybe I should just give up that idea....
Looks like that call buying in UAUA was a bit ill timed.
I got to say that you can listen to all the other posters with all their reasons for why the market is going to do this or that but Gary always ends up being right. I'm done trying to fight him.
Anon,
I'll say it again nobody is going to be right more than 50-60% of the time in the long run. That definitely includes me. Just because I think such and such is going to happen doesn't mean there is really any better chance of it actually happening. Just watch your position size so you don't get hurt when you're wrong.
Gary,
Hope you do this for a very long time, you run a great blog and subscription service. Definitely recommend to those that haven't subscribed yet.
Chris
Thanks C. Don't know about a very long time but I'll hang around for a while anyway :)
Well Gary I finally signed up for the subscription service.
I look forward to your emails. I have been reading your posts since February back in the old days on L's site. You were always the level headed one and always there to help the inexperienced. You hammered me about postion sizing at the time and guess what, you were right. Lesson learned and I have recovered some of last years losses this year, but by using correct postion sizing and good stops.
Keep it up, my guess is you are helping a lot of people navigate this crazy market.
That's why I'm recommending to all...be harder for you to back out then.
Seriously though, you don't have to do a letter every night if it gets time constraining, maybe just during unusual market moves.
Looks to me like you actually enjoy doing this more than you want to let on.
Chris
A,
Good to hear you are making money. That's the name of the game. Not whether one is right or wrong.
Gary -
the day you want to start your own hedge fund, I'll be there (with my money).
Mr. T.
TRS --
Sorry, been working harder than usual last couple of days, while letting my shorts make money for me.
Nice surprise on the Cubes, today, when I left for a meeting I was expecting my stops on my puts to get hit... when I got back, they'd doubled instead!
As for Ags (your question from two threads back)... I'll always love MON, and VMI looks good too, but I will not touch anything until this storm has passed.
I like MON and VMI best, though, when it does pass.
T,
LOL I'm sure if I was responsible for anyone other than myself I would freak out.
Dow Theory sell confirmed again? Good, now we can rally to new highs via yet another powder keg of bearish sentiment.
BH
BH,
Anything is possible but there's hardly bearish sentiment. The Vix has barely moved despite breaking the Aug. lows and the retail put call ratio is still showing the little guy is buying twice as many calls as puts.
slosh report?
just my observation, but i get the sense that the public has lots of buy orders waiting for the open each day.....the indexes get a positive pop and then the bigs spend the rest of the day seeing how much they can unload w/o causing a stampede. and some days, of course, it does turn into a stampede.
and i agree that the sentiment is anything but bearish....and this indeed provides a clever oppty for the bigs to unload before everyone else wises up (100 points lower).
Mr. T.
T,
Here is the link to the Slosh report.
Anyone long this shit is gettin' CRUSHED!!!!!
Sorry bulls....every dog has his day and unfortunately if you did not listen to Gary U R F'ed...
f
Get ready for a wicked rally between now and friday...!!!
WIth Options Ex. week next week there is going to one hell of an up day between now and next Wednesday or so. It will come out of no where. Of course the overall trend is down so just trying to catch that will be a bit crazy, but fun to watch.
Two more of the high flyers are breaking ISRG & FSLR.
Commodities are next on the chopping block...GET out now...Where is beanie when you need him...at least take some off!!!
f
Day 4 < DMA (400)
well, day 4 - like Oct. 2000 - was a big up day. If the carbon copy holds, we will be up a little more tomorrow followed by two wicked down days.......
then we go up 80 points and above the DMA (400) for a few days....
and so on and so on.
i'm at least looking for one more downdraft concluding next Monday or so to take off my QID trade.
this market went up today for no reason other than there is support at 12,500 for the DOW...... as best i can tell, anyway.
after 12,500 is taken out it will be a free fall.
Mr. T.
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