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Trade Trends with Bollonger Bands and Twiggs Money Flow

Archive through April 22, 2010

Chart Forum » Hilarius' Hall Of Fame » Our Daily Bread » Archive through April 22, 2010

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rdumas
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Monday, April 19, 2010 - 01:17 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Are we in a FLAT pattern on the XJO?

Since my involvement in the study of Elliott Wave principle I have a number of little maxims that often point me in the correct direction. One of these is that if a particular wave pattern totally confuses the hell out of all of the EW experts then you are probably in a B
wave.

Naturally enough if you are in a B wave now then the preceeding wave must have been an A wave.

On that basis and looking at the pattern that has formed with those first two waves then we must then come to the conclusion that we are forming a Flat pattern. Of the 3 potential Flat patterns that are available the one that the current one appears to be making is a regular Flat pattern where waves A, B and C have similar ranges.

If that is the case then we would expect wave C to terminate somewhere near the termination level of wave A.

The comments above naturally assume that wave B has completed and doesn't have another up move left in it.








Alternately if the Flat pattern scenario is invalid then the range of wave C will have some Fibonacci relationship to the range of either wave A or B.

Note that the above pattern when viewed in the context of the patterns that preceded it appears to be forming an expanding wedge or 'Foghorn' pattern which obviously gives us more room for thought.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 01:31 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Article on Greece which I thought was worthy of sharing.. Maybe not just a 'salad affair' Eugenio..

From Money & Markets;

The economic problems in Greece have made front page news for the better part of the past three months. And I've written several columns here in Money and Markets on the ongoing drama and its influence on the global currency markets.

But with all of this incessant talk about Greece, what does it have to do with you?

That's a common question. And the answer: Potentially, a lot.

You see, Greece represents the growing mound of looming landmines in a global economy that has been damaged by the worst economic crisis in more than 80 years. And if there's anything that should have been clear from the collapse in global financial markets in 2008, it's that the world is a highly interconnected place, and so are its financial markets. So problems in Greece will likely mean problems for you and me.

Here's why ...
In a fragile economic recovery, investor and consumer confidence plays an important role in repairing economies ... and likewise, restoring investment values and opportunities.

So a hiccup in investor optimism can be a huge blow to a fragile economy. It can make businesses more defensive and consumers stingier, thus sending stock prices lower and risk premiums higher.

In short, a lack of participant confidence can mean round two of a bear market in global stocks, and potentially a double dip recession for the global economy. And that's highly possible because ...
A Sovereign Debt Crisis Is Underway

ECB Executive Board member Juergen Stark said this week that the global economy may be entering a new "sovereign debt crisis."

Respectfully, he's a bit late in admitting that.
Last November, Dubai sent tremors through financial markets by announcing it would be "restructuring" its debt. The government later offered its bondholders just 60 cents on the dollar for their investment.

Now, Greece's shaky finances represent a threat to the lifespan of the euro, the second most widely held currency in the world. And it stands on wobbly footing as the second domino in an unraveling global sovereign debt crisis. The other potential candidates include Portugal, Italy, Ireland, Spain ... even the UK, Japan and the U.S.
That's a lineup of suspects that, if under the gun of global investor scrutiny for their respective burgeoning debt problems, could mean a lot to you and me — and to the outlook of the global economy.

But the euro zone and the IMF stepped up last weekend and provided details of aggressive financial aid as a lifeline to Greece. And given the initial bounce in the euro and decline in market interest rates for Greek government debt, the hope was that Greece's default threat had finally been put to bed.

Not so. In fact ...

The Greece Problem Is Far from Over

Those initial favorable responses to the aid plan are already being reversed as Greece's bond yields and the euro are back to pre-rescue announcement levels.
For the near term, the rescue plan could plug the gap for Greece. It has 11.6 billion euros of government debt to refinance over the next month — and another 20 billion euros by the end of the year.

And funding from its fellow euro-zone countries could allow Greece to roll-over that debt, without having to pay the prohibitively high interest rate that global investors would require from such a high-risk borrower.
However, accessing those funds is no slam dunk. All sixteen member countries would have to agree to disburse the funds, and only if they deemed Greece unable to raise funds on its own.

Perhaps even more troubling, though, is if the euro lifeline gets extended, that opens up a can of worms. Because it means the euro-zone officials have breached the treaty guidelines upon which the euro was developed.
And it will also likely mean that Portugal, Spain, Italy and Ireland will be next in line for a handout — a recipe for a political and economic disaster in Europe and a potential break-up of the euro.
From there ... the other debt-burdened dominos in line could become even more vulnerable.

Greece ... a Big Deal
With the U.S. stock market climbing, almost daily, to new post-crisis highs and the U.S. economic data showing solid recovery, Greece sounds like a distant problem.
But as you can see, the drama in Greece is a big deal! Not just for Europe, but for the world economy — and for institutional and individual investors alike.

Unfortunately, the euro zone is in a no-win situation. The European monetary union countries, with damaged balance sheets and a bleak outlook for growth, are stuck. And with a one-size fits all monetary policy and currency, they lack critical tools, such as devaluation, to work their way out.
So expect the sovereign debt crisis to continue to build. And be cautious of a quick downturn in global risk appetite, which can send stock markets and global demand heading south, and global capital heading for safety.

Cheers
MM







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rdumas
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Monday, April 19, 2010 - 01:45 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



XJO gaps provide us with the target zones

The chart below speaks for itself.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Monday, April 19, 2010 - 02:03 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Eugenio,

Your bet with MM on the AUDUSD is under threat at the moment. If we have a Flat pattern forming on the AUDUSD then you could see it go down to around the 86 cents.

Your saving grace is that I do expect a rebound sometime in June and if I recall correctly your bet concludes much later than that. Mind you I doubt that it would even reach parity in the coming months but as we know even a day is a long time in politics and the share market.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 02:13 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy,

The bet runs until October this year. The bet is that the AUD is lower than $1.27 against the USD. Eugenio needs the AUD to be higher than this to win.

I'd agree that it will struggle to reach parity, time will tell though...

Cheers
MM


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ody
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Monday, April 19, 2010 - 02:17 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM and Rudy: you guys are doing the good work for one!

Which is very handy, as I have lots of other things on my plate, so I am a happy reader rather than writer.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFo278U4tgaM&pos=1

Here is an article specifying just how significant the impact of such things as Goldman and Greece (not in any sense "The Greek Goldman")is at present proving to be. Why Eugenio would think that matters of such magnitude would not infuence people's attitudes to their assets, particularly when markets are high for shares, houses, and currencies like ours, is beyond me. There is a lot of money at stake - for one thing a lot of profit to be protected - and it would not be surprising if this time we saw a bit more of a dive than just one down day.

Of course, many investors are not interested in the realities of economies, or simply know very little about them. That all works fine so long as markets go up, but it does lead, often, to far too much optimism, and people over-staying. And the T/A signs are not inspiring confidence either. So it would be brave indeed to ignore such signs.


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rdumas
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Monday, April 19, 2010 - 02:19 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

I would suspect that your bet would be an "odds on" bet at this stage so you could possibly already buy that crystal drinking glass.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Monday, April 19, 2010 - 02:24 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ody,

I think that you know that Eugenio is no fool and that he loves to throw the cat amongst the chickens for the excitement value.

I always have a good laugh when he does it (even when I am the target of his weird sense of humour) as I know he doesn't have a mean bone in his body.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 02:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi guys,

Thought this was interesting and in line with my comments from last week - full article on Yahoo Finance;

Does a Slow Uptrend Precurse a Fast Decline?

We all know that what goes up must come down. But is the speed of the ascent correlated to the degree of decline?

With the exception of the January hiccup, the major indexes a la Dow Jones (DJI: ^DJI), S&P 500 (SNP: ^GSPC), and Nasdaq (Nasdaq: ^IXIC) have been inching up a fraction of a percent every day.

Even though volume has been anemic, we haven't seen a down day of more than 1% since early February. This kind of performance is not just unusual, it's eerie. What does it mean?

In general, long and drawn out trends are unhealthy as they cause extreme investor sentiment. Extreme investor sentiment on the other hand has been a historically accurate measure of a trend reversal or significant correction.

Just as a mortal human can only exhale for so long without inhaling, the market can only go up so long without correcting. The longer one goes without taking a breath, the deeper the next breath with be.

Resurrecting the 2007 enthusiasm

Earlier this year, in January, investors were as enthusiastic about stocks as they were in 2000 and 2007. We know what happened then. The January/February correction instilled some fear but was quickly recovered.

This didn't last too long however. This week options traders were as optimistic as they haven't been in nearly a decade (more about the significance of that in a moment).

In January, investment advisors and newsletter writers recorded a multi-year record bullish plurality of 53.4%. Retail investors reached a bullish high of 49.18%. As of this week, advisors stood at 51.1%, retail investors at 48.48%. The message is clear.

Investors are bullish and option traders have thrown all caution to the wind. At one point this week, option traders bought nearly three times as many call options as put options.

Not only does this translate in an uber-bullish sentiment it also reveals what kind of decline is on the horizon once the market does change trend.

No safety net

The lack of interest for put options - which provide protection against falling prices - is no doubt caused by the market's winning streak. The lack of volatility has lulled investors into a false sense of security.

It's no secret that the 'pretend to extend market' can continue longer than expected. However, the Wednesday update of the ETF Profit Strategy Newsletter warned that this condition leads to speedily declining prices, such as today. Here's why:

Let's say you own an index ETF like the Dow Jones Diamonds (NYSEArca: DIA - News), S&P SPDRs (NYSEArca: SPY - News), or Nasdaq QQQ's (Nasdaq: QQQQ - News) without put protection. The only way to protect against falling prices is to sell your positions, which will contribute to the negative feedback loop and depress prices further.

If on the other hand your long positions are protected by puts, you are not compelled to sell your long positions as any loss from lower prices is balanced by gains from protective puts.

Historically, a low interest in puts and the lack of put-protected positions means that lower prices are likely to trigger an avalanche of selling. Like one domino triggering the fall of an entire line of dominos. Is this today's selling a one-day freak event within the larger uptrend or the new trend?

The lack of fear is evidenced by the Volatility Index (Chicago Options: ^VIX). Last week the VIX dropped to 15.23. The lowest reading since July, 2007. The VIX at levels below 20 shows that investors have throw caution to the wind. That is exactly the time to be extra vigilant as the examples below show.

In 2008, the ETF Profit Strategy Newsletter used a combination of technical and sentiment indicators to forecast a market top followed by a bottom below Dow 7,500 for 2008 (Dow dropped as low as 7,392 on 11-21-2008) and a market bottom below 6,700 for 2009 (Dow slipped to 6,440 on 3-9-2009).

One-day freak event or new trend?

What do you do before you buy a used car? You check the car's value at Kelly Blue Book. Why? Because you don't want to overpay.

There is no Kelly Blue Book for stocks but there is a way to find out if stocks at current prices are overvalued. A look at history shows that every major market bottom was accompanied by a valuation reset to fair values.

The common denominator of every major market bottom has been rock bottom P/E ratios and sky high dividend yields. No no bull market has started unless valuations were reset. This reset did not occur in 2002 or 2009, which means we are not in a new bull market.

Just as the human body isn't healthy unless it operates at 98.6 degrees, the market isn't healthy unless it resets. This reset is still to come - trust the 'Kelly Blue Book.'

Cheers
MM


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ody
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Monday, April 19, 2010 - 02:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy, - You are right, Eugenio is one of the kindest of people one could come across. And he loves playing the enfant terrible. But I fear that he actually in part also means what he says when pooh-poohing the news about Greece or Goldman, and if so I think that is unwise. So that is why I emphasise what to me seems the importance of these matters.


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rdumas
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Monday, April 19, 2010 - 02:56 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Have we seen the low for today in the XJO?

No price action moves in a straight line and even though I would expect more downward movement in the coming days the current level may be a place to have a rest and a possible bounce before continuing the trend in the prevailing direction.





One thing for sure, whatever bounce we eventually get will give us a better idea of the strength of the trend.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 03:01 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio has been very quiet today - must be busy buying up those "bargains"!!


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rdumas
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Monday, April 19, 2010 - 03:09 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The bigger picture for the S&P500

From an EW perspective a couple of scenarios are on my radar for the S&P500.




For me at this point in time we either made the top of the rally at the location I have labeled b? Z? and we are now going to make a rather large move down from the current levels or we heading down to point c?XX? after which we will head to the alternate point Z? which would then mark the end of the multi-month rally that started in March 2009.

At this stage I have a leaning towards the latter scenario in which we get a reasonably large move down to perhaps the 1050 level possibly completing in June and then rallying to a new high over a number of months (say September/October).

I will monitor the progress very carefully with both scenarios in mind.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 03:18 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy,

When you look at the monthly chart on the Dow or S&P, it looks as though we may have just completed the top of the right shoulder within a head and shoulders formation.

Look at the monthly chart along with the volume indicator and portrays a classic right shoulder going up on declining volume.

When the market was roaring up in the 1990's this was on increasing volume and again on increasing volume until the high in 2007.

Given that 'right shoulders' must occur on decidedly less volume, there is a good argument that this formation may be about ake shape in the way of a large decline in the right shoulder.

Thoughts?

Cheers
MM


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eblode
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Monday, April 19, 2010 - 03:27 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,
Not a bad after all. My stops took me out nicely with small losses but the bargains were there and I made a pig of myself. Grabbed SEK, TPM,AGO,MQG,BOQ, and only GPT kept alluding me but I finally had to buy it at .58 as it is in a very strong sector. Now I expect a recovery as the "girlie-boys" jump in to take advantage of what they have been missing out on all month.
We still have half an hour of trading and now the BIG BOYS will enter and pick up the rest of the bargains. Great day. Be even better by Friday when we head north once again. Will you be joining us MM? Or waiting for that right shoulder to drop? lol

Eugenio


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market_mad
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Monday, April 19, 2010 - 03:37 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

You are keen aren't you - no mate, I'll be sitting out of this one until the market shows it's hand. It's no given either way here but I would think after the extremely good run that we have had of late that the odds would tip this to go further down.

I do like GPT myself - should be trading a lot higher than it is but is a sitting duck as a takeover target I feel. Not sure about MQG though...

Not sure about the big boys buying for the rest of the day - we are on the lows here, but China is coming off again down 3.1% and the US futures are still down a fair bit too.

Good luck
MM


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market_mad
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Monday, April 19, 2010 - 03:45 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Make that China down 3.6% now!


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market_mad
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Monday, April 19, 2010 - 04:05 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I found it interesting that the Chinese market started futures trading last Friday - talk about timing!! Could this explain the pick up in volatility on their market today as they are down way more than any other market??


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ody
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Monday, April 19, 2010 - 04:09 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM - I think this recent long post is very much to the point. It would be impossible for the market not to "corect", if one considers the various kinds of evidence. The only question is whether the moment has "already" come.


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breaker_1
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Monday, April 19, 2010 - 04:12 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



just my 2 bobs worth previous support could become resistance


xao


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





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rdumas
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Monday, April 19, 2010 - 04:18 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

I have followed McHughs comments about the large H&S patterns that have been forming on several of the global share market indices for some time now so am familiar with that line of thinking. As you know however many potential H&S patterns remain just that..........potential. I don't even consider them until a move through the neckline has taken place on volume and there is a long time between now and when that will happen.

One of the reasons why I am not as bearish as McHugn and Prechter is work that my friend and fellow Musketeer Andrew has done for years now with his Cycles analysis based on the cycles work of Hurst. I have mentioned this before. If you are at all even vaguely familiar with Fourier Analysis you will know that any complex wave shape can be deconstructed into the component waves that make up the total wave shape.

For something as complex as the XAO (or any other index) the wave shape can be deconstructed into hundreds of individual sinusoidal waves of varying wave lengths and amplitudes. I hope that my description is understandable.

Anyway, Andrew uses Fourier Analysis software to deconstruct the XAO wave shape into a handful of the primary waves that create the final wave shape of the index.

One thing that is common is that the longer period waves (ie say multi year waves) not only have the longer cycle times but they also have the largest amplitudes. If you follow the above logic then you will understand that it would be the multi-year cycles that creates the larger moves in the index.

Andrew does an analysis of 3 or four of the main cycles for each time period (months/weeks/days). The following one gives the 4 year and 2 year cycle on the monthly chart for the XAO over a period of the last 25 years or so. This study was done back in February 2010 so it is about 2 months old. Apologies for the poor resolution of the chart but I had to put a lot of information into it.

Whilst it is not very clear I think that you will get the gist of what I am about to say. The top chart is that of the index itself using a linear scale on the X axis. The chart directly below it is the 4 year cycle and the one below that is the 2 year cycle.







Note that both the 2 and 4 year cycles bottomed at about the time of the March 2009 market low. Since that time the 2 year cycle has been rising and though it is not shown on this 2 month old chart, the 4 year cycle has also started its rise.

What does it all mean?

We can clearly see that the dramatic fall in the market was due to the combined effort of the 2 and 4 year cycle acting together in the same direction. This rarely happens.

What it means is that the larger period/larger amplitude cycles bottomed at around the market low in 2009. The rally that we have seen in the market since that time has been to a large degree due to the 2 year cycle and cycles below it (ie, small period/small amplitude cycles).

The 4 year cycle will now be into its upward trajectory and will have a significant influence on the market over the next year or so in the upward direction.

What does it mean for the XAO?

As the 4 year cycle will be on the way up for some time, the main negative influence on the market will be the 2 year cycle and the lower order cycles.

It is for this reason that I cannot see the McHugh and Prechter scenario coming to fruition in the next year or so. I hope my explanation of a fairly complex subject has been clear enough.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Monday, April 19, 2010 - 04:43 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Thanks Rudy - interesting stuff indeed! I will look more into Fourier Analysis - never heard of it before, cheers.

China is getting pummelled! Down 4.67% and below the 3000 level


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eblode
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Monday, April 19, 2010 - 05:08 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,
THE TRADING IS OVER! I'm down 1.7% over all. I can wear that OK. I did have a bit of luck though. I though I had a Stop on SEK so in early morning trading it took a big drop but fortunately it snapped back and my stop wasn't triggered. I had forgotten to place a Stop on that particular stock. Got to be lucky sometimes. I'm now fully invested and holding AGO, BLY, BOQ, DWS, ESG, GPT, ICN, IVC, MQG, MRM, MYR, OZL, SEK, TOL, TPM, and WDC. All in varying amounts. My top gun now is MQG which I feel will try to take some Goldman Sachs business while they are tied up in litigation for years. Great day, all the juices are flowing.

Eugenio


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market_mad
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Monday, April 19, 2010 - 05:23 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Fantastic day Eugenio!! - you better hope those Yanks come to the party tonight otherwise you might have to move the decimal place on your loss for today to the right

MQG getting Goldman's business??? Thought that wasn't going to be an issue earlier in the day? MQG will be the next ones up for dodgy practices..


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eblode
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Monday, April 19, 2010 - 05:50 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Relax MM.

Spoke to Ben (that guy at the Fed) and it's all under control.

Eugenio


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eblode
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Tuesday, April 20, 2010 - 07:11 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,
Many thanks for bringing your post 296 to my attention as regards "the top of the right shoulder....". After close examination of that right shoulder I followed it down the arm and finally noticed that the middle finger was upright in a vertical position. This immediately indicated to me that the DOW would reverse it's course and go into positive territory. And so it has!

Eugenio


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market_mad
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Tuesday, April 20, 2010 - 07:21 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Easy on Eugenio...

Wouldn't surprise me to see an initial rally then for us to weaken all day which will mean you can sit on that thing that is vertical

IF I'm wrong then we are going to new highs

MM


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ody
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Tuesday, April 20, 2010 - 07:32 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The futures for almost all markets are negative, including even the US, although as Eugenio says Wall Street did go up. Interestingly our ASX is strong on the futures market: but as against that markets in China and Taiwan - and a great many other markets - have fallen, with their futures in the red as well. For the moment, though, it looks as though the ASX 200 may once again defy all auguries.


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market_mad
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Tuesday, April 20, 2010 - 08:13 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

You are obviously worried about the 'right shoulder' I mentioned as you have now made reference to it twice..

If not, I don't understand why you scoff at something I have posted which I have put on here merely for discussion, not to be ridiculed.

MM


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rdumas
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Tuesday, April 20, 2010 - 08:53 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM,

I alluded to the possibility that there could still be another leg up in the rally in a previous post however the current price action is well within the bounds of a retracement within a trend down. Note from the following chart that we have ourselves another H&S pattern that has formed recently. As mentioned yesterday I only look at a H&S pattern as a possibility once the neckline is breached on volume so for now I am only looking at the strength of the retracement.

It is common in an impulse wave for the second wave to almost retrace the entire range of the first wave. So far it has not done anything like that but rather has made a more normal retracement of between the 38.2% and 50% of the down range.




As a matter of fact if you look at the pattern that has formed so far we have had an impulsive move down and we have now had a typical 3 wave corrective pattern completed stopping at a previous high. To me that is more indicative of another large move down (wave 3) than a large move up.

Let's see what happens. The rally that started in March 2009 has been one of the most complex corrective waves that I have encountered so it would not surprise me if the bugger wasn't finished yet but if it has then the move down will be pretty swift.

(Message edited by rdumas on April 20, 2010)


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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eblode
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MM,
I only attempt to stem too much negativism from the reality as I see it. We are in a strong trend and I believe it shall continue to be stronger.The constant barrage of exaggeration of seeing falling markets due to " head and shoulder" patterns, Greek financial disasters and now the Goldman Sachs drama is losing money for many investors who are frightened out of this market, when in fact we are breaking all time highs in every direction. Our market climbed over 5,000, the Dow has broken 11,000, so take advantage of these times. Yesterday I bought MQG at $50.11. I believe it will never see $50.11 again and I'm going to sell it at $60. simply because I believe we have a strong market. To keep harping on doom and gloom when clearly we should be rejoicing at our good fortune seems ludicrous. If the facts were different I would be the first to join the chorus of alarmists. However I feel I must give some hope to those investors who may be influenced in the other direction.

Eugenio


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cat_lady
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Tuesday, April 20, 2010 - 09:08 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio

you really know how to make me laugh.

MM - relax - from what I've come to understand of him through the last few years is that eugenio's mission in life (aside from making lots of money and dying in bed with a another man's woman) is to have a great time, come to think of it, those asides are covered by that point as well
although I can't be sure I think that he probably has
this:
http://www.google.com.au/imgres?imgurl=http://rlv.zcache.com/sacred_cows_make_th e_best_hamburgers_bumper_sticker-p128152866681547697trl0_400.jpg&imgrefurl=http: //www.zazzle.com/sacred_cows_make_the_best_hamburgers_bumper_sticker-12815286668 1547697&h=400&w=400&sz=17&tbnid=d2hndLi3XfT0XM:&tbnh=124&tbnw=124&prev=/images%3 Fq%3Dimage%2Bof%2Bsacred%2Bcows&usg=__rFwSqzOSM_ZGUzV4cTCiOnmlgv0=&ei=v-HMS4bwMI GUkAWctZHrBA&sa=X&oi=image_result&resnum=5&ct=image&ved=0CBEQ9QEwBA
on his bumper.....


Without my morning coffee I might as well be a dog

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market_mad
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Enjoy the laughs whilst you can...

Ok, having studied the charts this morning, looks like we may have completed the 4th wave down from the Feb lows, so this Wave 5 up should be the final advance and the end of the 1 year bull run.

I'm still targeting 5100 and will be a buyer today on the open (yes Eugenio you were right to buy yesterday - good call). However, we will see a DEEP correction once this final 5th wave advance is complete.

5100 should be reached by the end of this month.

Sell in May??

Cheers
MM

PS Eugenio, you'll see MQG below $50 in May/June - I'll actually look at taking a short CFD position on MQG at the end of this month - it will be at $40 before it gets to $60 - adios amigo

(Message edited by market_mad on April 20, 2010)


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eblode
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Tuesday, April 20, 2010 - 09:44 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,

"right shoulders" "deep corrections" Hey man, lighten up. My only problem is trying to figure out why Bra is singular and panties are plural. Now that's a problem, Not a rising market. lol

Eugenio


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market_mad
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Tuesday, April 20, 2010 - 09:53 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I'm worried about you Eugenio - first of all it's all this talk about 'girlie boys', now you're on about bra and panties....???


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eblode
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Tuesday, April 20, 2010 - 10:22 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



MM,
Good one MM. I deserved that.
On a serious note may I say that not for one moment do I take your posts for granted. Your note of caution is built on many years of experience in the market and I appreciate that. This forum is a wonderful aid to all of us with different views and it certainly guides us in areas we rarely tread.

Eugenio


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market_mad
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Tuesday, April 20, 2010 - 10:30 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio,

Thanks mate appreciate that! Different views is indeed what 'makes the market' - if we all thought the same then it would be no fun at all!

Bought into LNC and IPL and scouring the market for more...

Cheers
MM


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rdumas
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Tuesday, April 20, 2010 - 11:09 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



XJO Retracement Targets

Whilst an up leg to new highs is still a reasonably good possibility I still believe that there is no guarantee of that scenario occurring. As can be seen from the chart below the XJO retraced a typical 61.8% of the last significant up range.

The chart suggests some sensible price targets for the move up. I personally have the odds of a move to new highs at about 45% versus a continuation of the move down at about 55%.




I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Tuesday, April 20, 2010 - 04:26 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Pretty weak effort from our market today to finish only up 10 points..

Sorry Eugenio, I can't resist - looks like we saw that price you paid for MQG yesterday all day after it fell from the open!

Wait, don't tell me - you got out on the open at the very top and locked in a profit.

I must admit I did expect an opening burst up after the open and after that failed to materialise I got out of the 2 stocks I bought LNC and IGO at line ball.

Just wasn't convincing enough for me today with the lack of follow through buying a concern. I thought China might have rebounded after their massacre yesterday but they are back down again today.

'God' reports tonight so it'll be interesting to see the market reaction to the bohemoth particularly with the SEC sniffing about

Finally, you'll love this Eugenio, just out from the Wall Street Journal;

Greece may require financial assistance of as much as €80 billion ($107.92 billion) to escape its debt crisis and avoid default, Bundesbank President Axel Weber told a group of German lawmakers Monday, according to a person familiar with the matter.

The estimate, considerably more than the €45 billion that European countries and the International Monetary Fund are currently prepared to extend Greece this year if it needs a bailout, suggests that a rescue of the country may come in several stages and reach beyond 2010.

Mr. Weber, a member of the European Central Bank's governing council and a leading candidate to succeed Jean-Claude Trichet as ECB president next year, told the legislators that Greece's situation was worsening and that "the numbers are changing all the time," according to the person.

Cheers
MM


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rdumas
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Tuesday, April 20, 2010 - 05:02 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Strength of Decline in XJO Remains in Tact


The large moves down and the relatively small retracements so far both indicate that the trend strength of the decline in the XJO remains strong. Not a good sign for the Bulls at present.




My probability of a further decline now goes up to 75% with a rally now sitting at 25%.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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breaker_1
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Tuesday, April 20, 2010 - 09:14 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Goldman Sachs ,good report Dow futures up 38 pts


When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





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jaded
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baysider/any other 'chancers',

Buying the Open of IFE and/or TRF this morning may be a GO.

Seems there was some mining conference last night and news to be released to the Market this morning was 'leaked'.

IFE has scored a 'heavy' commitment Finance wise for their DSO including Mining Costs,a JV with the Chinese,it seems.
TRF as a 50% owner IFE will 'shirt tail' on any rise and as TRF is half the SP of IFE,it's rise may be 'geared' ie Rise Rate more than IFE MAYBE.

You'll have to read the Actual News Release to confirm for yourself this Barbque 'gossip'.
I'm buying the Open regardless of Gap[as long as it's 'reasonable'].Don't be put off by the 150 placement component.I don't think IFE will retrace to Placement Price in this case.

Anyway,watch for the News IFE pre open and make your own decision on whether to Giveit a Go!

Happy Trading.


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rdumas
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Price Projections for the S&P500

I've already given the bearish price targets for the rally in the S&P500 so it's time to look at price targets for the scenario where the S&P500 makes a new high. To do this I'm using what's known as Alternate Wave Projection. In this method you take the ranges of previous rally ranges and rebase them to the current range.

I have done this for two of the most recent rally ranges in the chart below. Note the confluence of Fib price targets at the current price level from the two different ranges.





As you can see the next confluence of levels occurs between the 1221 and 1224 levels. One should also remember that the 61.8% retracement level of the 2007/2008 market plunge sits at 1228.74 so that range of price levels are extremely important.


With such a good lead from the US market there is no doubt in my mind that the XJO will attempt to close the gap between 4965 and 4973 today obvious in the chart below.




I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Wednesday, April 21, 2010 - 10:42 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Current Price Action for XJO

It is interesting to see what the XJO is doing with the most obvious overhead resistance levels at this point in time.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ivor
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Wednesday, April 21, 2010 - 02:22 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hello All

Have been following
www.thedaytrader.com.au
also published in the Melbourne Sun.

Since the 9th March from when he started buying back in to the market he has bought 21 stocks, all speculative.

Has already stopped out 9 stocks at a loss, and 3 at a small profit after breaking trailing stops.

Of the remaining 9, 6 are in a paper profit and the last 3 are in a paper loss.

So after 21 buys has a win ratio of 9/21 or 43%.

All he seems to do is buy into stocks where the price has spiked up with substantial volume.

Have paper traded this system myself for 100 stocks over the last couple of months, and have a similar win/loss ratio of 42% in my case.

By the daytrader's system, he claims to have made about $4k on a bank of $270k of which he has invested around $94k.

But perhaps the rising bourse of 200 or so points has saved him. He doesn't trade unless he thinks the bourse is rising.

I know some of the forum members follow this column, and I am very interested in any and all comments you would like to make.

Regards
Ivor


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rdumas
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Wednesday, April 21, 2010 - 04:21 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



I encourage readers to look at Colin's post in the thread "Gold and Inflation".


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ody
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Gold: I entirely agree with Colin, Rudy. Which is why I am holding. With all these matters, the timing may not be that easy to predict, but the actual EVENTS that must inevitably occur are much harder to deny to oneself.


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eblode
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Ivor,
For many years I have followed Day Trader and recommended his weekly column to friends of mine who have the money but no knowledge of the market. He is indeed a keen and shrewd Trader of real talent and know how. His system is fairly simple. He sifts and finds shares that have spiked during the week. Places his stops and lets the winners run. In tight and poor markets he abstains from buying. When the market starts to run he enters modestly. But he is a winner and has put me on to several excellent buys. Stay with him. He's a professional Trader of the first order.

Eugenio


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ody
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The Overnight Report: Greece Weighs On Australia
FNArena News - April 22 2010

By Greg Peel

The Dow closed up 7 points or 0.1% while the S&P lost 0.1% to 1205 and the Nasdaq gained 0.2%.

It was a choppy session on Wall Street highlighted by mixed earnings results, but as Wall Street reflected on the previous quarter the world was watching Greece.

Officials from the EU and IMF finally reached Athens last night as the skies over Europe began to clear and flights tentatively resumed. The officials will now begin a session of talks with the Greek government which are expected to last two weeks. On the agenda will be (a) is the Greek government doing enough on its side to rein in its budget deficit and (b) is the 45bn euros currently earmarked for the (inevitable) Greek rescue enough? Many think it is not.

It is clear that when the framework of the EU and the eurozone was drawn up, no one ever contemplated putting in a rescue package clause. For starters, the ECB is dead against but resigned to IMF involvement as it undermines the perception of the EU as a solid bloc and the euro as an alternative reserve currency. Secondly, those EU nations prepared to offer Greece emergency loans (Germany and France mostly) must introduce new legislation in their own respective parliaments to do so. In Germany's case in particular, reluctance by Chancellor Merkel to commit to any rescue earlier in the proceedings, and her insistence on IMF support, could well be explained by parliamentary resistance to rescuing Greece and an upcoming provincial election that may see her party lose the balance of power.

Thus the EU has suggested it remains “committed” to rescuing its member colleague, but what if locally the rescue gets voted down?

Such considerations were no doubt behind yet another sell-off of Greek bonds last night, with the ten-year yield crossing 8% for the first time (post-euro). That's now 500 basis points over the German bond despite a common currency. As the EU, IMF and Greek government sit down for two weeks to discuss what must happen, looming is the maturity of 8.5bn of Greek bonds on May 19. This week Greece struggled to sell 2bn euro of three month bills.

And attention has once again swung to Portugal, which many in the market consider a Greece-in-waiting. Portugal's bond market has also resumed selling mode and the pattern appears ominously similar to Greece's a couple of months ago. One is reminded of the power of the market. Lehman Bros did not go down because it was insolvent. It went down because its counterparties, fearing potential insolvency, pulled their credit lines all at once thus ensuring insolvency. Bear Stearns was the smallest of the Big Five US investment banks, and Lehman the second smallest. The Treasury and Fed saved Bear Stearns but Lehman was deemed one costly rescue too many.

The end result is that while Wall Street dithered over earnings season, investors once again decided to rein some of their risk. Emerging markets are a popular risk capital destination, and by association so is Australia. The US dollar index is up only 0.2% to 81.22 but the Aussie is down 0.7% over 24 hours to US$0.9259.

The S&P 500 is down 0.2% but the SPI Overnight is down 0.7% or 35 points. BHP Billiton (BHP), also now facing its own corruption issues, was down 2.8% in London and Rio Tinto ((RIO)) followed suit.

Impeding the otherwise possible rise of the US dollar last night was both the re-opening of European airspace, which helped to hold the euro steady, and a positive surprise on British job numbers which sparked a rally in the pound. Not helping the Aussie either are the latest reports this morning that Qantas ((QAN)) planes remain firmly on the ground at Mascot. The “safest airline in the world” will not budge until it is absolutely sure the ash cloud poses no threat.

Sharp falls in the miners overnight had nothing to do with commodity prices. The relatively steady US dollar index allowed a gain of US$5.80 in gold to US$1146.20/oz. Base metals in London were mixed with aluminium down 1% but copper up 0.5% and nickel up 1.5%.

Oil should have been up last night given airlines will once again be sucking up avgas, but a jump in weekly crude and gasoline inventories led oil to a US17c fall to US$83.68/bbl for June delivery – the new front month as of today.

Further indication of risk retreat was provided by the US ten-year bond, which continues to pull back from its charge at 4% and is now down to 3.73% after losing another 6 basis points last night.

There was a lot of colour and movement in earnings results last night to keep Wall Street otherwise distracted. Apple had posted its strong result in the after-market on Tuesday and Morgan Stanley came in with a positive result before the opening bell. Boeing (Dow component) also surprised to the upside as did United Technologies (Dow).

But it was a weak night for the drug-makers. Abbott Laboratories posted a weak result and Gilead Sciences downgraded guidance. This led market leader Merck (Dow) lower in the session. Oil stocks fell along with the oil price and by later in the day financials, too, gave up gains despite the positive Morgan Stanley result.

This mixture assured a mixed close by 4pm, but then it was on for young and old with after-the-bell results.

Alleged coffee-maker Starbucks posted a very strong result and drug-maker AmGen's result was positive but guidance weak. Chip-maker Qualcomm and on-line auction house eBay also beat expectations, but both delivered surprisingly weak guidance and both are seeing their shares down 8% in the after-market.

Put it all together, and Wall Street is not looking for a strong opening tonight, further results and economic data notwithstanding. While the Street is getting the sort of upside to earnings expectations it was hoping for, it is not getting a follow-through of positive momentum from corporate guidance and general outlook. After an 80% rally there are plenty on the Street who believe now might be a nice time to take some profits. Next month is May.







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ivor
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Username: ivor

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Thursday, April 22, 2010 - 02:38 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eugenio

Thanks for your response. Still find it difficult to understand how a trader who only picks winners slightly more than 40% of the time, and pays heaps in brokerage, can make so much money.

I'm always looking for a system that produces 70% winners or more. Perhaps my expectations are too high ?

Also traded some of the Daytrader's selections at one stage, but didn't think his picks were up to much. Too many were stopped out.
But maybe that's just part of his system.

He always seems to buy into a cheap upwards moving share, so mostly it keeps on moving, up or down, but not sideways.

So he gets a quick result. Notice that sometimes he culls a share that's moving sideways.

Daytrader has a very simple system, but to follow it, you seem to need a complete lack of emotion. Very hard to do.
Particularly when a stock starts trading above it's stopped out price a week or so later.

Regards
Ivor

 
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