Stock scream room

[Ad Orientem]

Capture.JPG

As long as they don't cut their dividend.

[Vil]

I would expect the next leg down to start *if* we are going to get it

What I will say has nothing to do with technical analysis (and presumably you are way much better than me in recognizing things on charts).
Hate to cite WB, but he has nailed it with saying "The stock market is a device for transferring money from the impatient to the patient.".
While it's still true that Wall Street and Main street are different kind of things, still the Wall Street inhabitants live on the same planet. So, if and when those same guys recognize the fact that recovery from Covid will take longer than initially anticipated and that quick reopening may bring more issues than positives, the next drop is expected. But as long as many politicians care too much for the economy rather than people lives, I am more leaning towards the scenario of a "hard face punch due to quick reopening". But still that's my personal belief not supported with any stone-written statistics or data i.e. obviously 100% biased opinion.
Personally, I am sitting on my VP cash and waiting. Still you're better than me, as I have to invent ways to make my cash utilized as just keeping it idle at my broker account makes it a subject of 'penalty' due to negative rates (oh yeah) - as with any cash amounts over some limit ...

[pmward]

I would expect the next leg down to start *if* we are going to get it

What I will say has nothing to do with technical analysis (and presumably you are way much better than me in recognizing things on charts).
Hate to cite WB, but he has nailed it with saying "The stock market is a device for transferring money from the impatient to the patient.".
While it's still true that Wall Street and Main street are different kind of things, still the Wall Street inhabitants live on the same planet. So, if and when those same guys recognize the fact that recovery from Covid will take longer than initially anticipated and that quick reopening may bring more issues than positives, the next drop is expected. But as long as many politicians care too much for the economy rather than people lives, I am more leaning towards the scenario of a "hard face punch due to quick reopening". But still that's my personal belief not supported with any stone-written statistics or data i.e. obviously 100% biased opinion.
Personally, I am sitting on my VP cash and waiting. Still you're better than me, as I have to invent ways to make my cash utilized as just keeping it idle at my broker account makes it a subject of 'penalty' due to negative rates (oh yeah) - as with any cash amounts over some limit ...

Technical analysis is definitely more of an art than a science. There is no fail safe indicator or system. It's all about probabilities. Using charts to find high probability trades with a promising risk/reward, and then using risk management strategies to choose the proper size, stop, hedging, etc to protect your ass in case you're wrong, haha. Anytime I am looking at a trade, I both have to know what I will do both if I'm right and if I'm wrong before I push the button. This is why I, like you, am in cash... but I'm also keeping an open mind and have an unbiased rules based signal of when I will buy back in if I'm wrong (and if I buy back in, when to sell if that in turn proves false). I still think the probabilities favor another leg down, but those probabilities have definitely decreased in the last week, as has the probable bottom if we do get the next leg down. Things always can change with emerging info though.

[Vil]

Technical analysis is definitely more of an art than a science.

Indeed, for me it's even more than art - it's like a fiction . Even though being profitable with my VP, still the market continue to surprise me. Maybe it's partially due to the fact that I tend to be a bit too emotional in some of my decisions.. Certainly its a bit tougher due to my decision to trade only on European markets - there are no decent scanners and the couple of available screeners are far from perfect, too. Last but not least liquidity is times less than the liquidity on US markets. It may sound a bit strange to what I am gonna ask you here (you can reply on PM if you like) - can you recommend me some good (from your perspective) book(s) on technical analysis ? I've read quite some of those, but honestly the vast majority appears to be quite a marketing fluff. Thanks !

[pmward]

Technical analysis is definitely more of an art than a science.

Indeed, for me it's even more than art - it's like a fiction . Even though being profitable with my VP, still the market continue to surprise me. Maybe it's partially due to the fact that I tend to be a bit too emotional in some of my decisions.. Certainly its a bit tougher due to my decision to trade only on European markets - there are no decent scanners and the couple of available screeners are far from perfect, too. Last but not least liquidity is times less than the liquidity on US markets. It may sound a bit strange to what I am gonna ask you here (you can reply on PM if you like) - can you recommend me some good (from your perspective) book(s) on technical analysis ? I've read quite some of those, but honestly the vast majority appears to be quite a marketing fluff. Thanks !

Haha, well it's only fiction if you're not trading based on the technicals and instead are trading off of emotions and your own opinions, haha. Technical analysis is basically the study of sentiment. More times than not, the sentiment today is going to be close to the sentiment tomorrow. Trends tend to come in place and play out on different time frames. Technical analysis is not about finding a fool proof indicator or system, it's simply a way of judging sentiment, finding those trends, and getting an idea of probabilities.

Honestly, the best place to get a decent idea of the basics of technical analysis is stockcharts.com. You can sign up for a free account there. The first 30 days you have access to their extra tier. With that free trial of the extra tier you can download all of their curated "chart packs", which give a good well rounded look at the markets. Their "Chart School" with tons of articles and videos on indicators and strategies, as well as their regular YouTube videos give a good understanding of how professional CTA's look at the charts. Most of their authors and streamers are more on the intermediate to longer term timeframe as well, which is the best place to start for most beginners. Most technical analysis books and videos you will find out there are are more tailored for very short term day and swing traders. If you're going to do the short term route or use leverage, you also will need to do a lot of studying in risk management, gambling strategies, etc. Risk management is more important than technical analysis the shorter your time frame and the more levered you are.

[dualstow]

Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power.[46]

https://en.wikipedia.org/wiki/Technical ... l_evidence

[shekels]

Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power.[46]

https://en.wikipedia.org/wiki/Technical ... l_evidence

I am still Looking for that perfect technical stock/bond indicator that will tell me today, what will be up tomorrow.

Ideas?

[dualstow]

Yeah, stop looking, shekels.
Become a long term investor, even if things look pretty grim right now.

[pmward]

Whether technical analysis actually works is a matter of controversy. Methods vary greatly, and different technical analysts can sometimes make contradictory predictions from the same data. Many investors claim that they experience positive returns, but academic appraisals often find that it has little predictive power.[46]

https://en.wikipedia.org/wiki/Technical ... l_evidence

Precisely why I say it's more of an art than a science. You really cannot do a real academic study on technical analysis. Hell, most people struggle to even define what technical analysis is and is not. How can you study something if you cannot even come up with a static agreed upon definition of what it is? So I put 0 weight in anything academics say on the matter. Academics can do better job studying quantitative analysis than they can technical. Things like market cap weighting, factors, buy and hold, asset correlations, rebalancing, etc that everyone is familiar with here are all examples of quantitative strategies. To muddy the waters a bit though... most technical analysts do use quantitative strategies as well. The line between the two can get murky in some ways.

[dualstow]

pmward, I can’t remember: Do you do technical analysis for work, or is that completely separate and just for your own investing?

[shekels]

Yeah, stop looking, shekels.
Become a long term investor, even if things look pretty grim right now.

I have been "investing" since the early 90"s and have found 1 super secret indicator but was looking for another.

[dualstow]

Ok, tell us yours and we’ll tell you ours. ;-)

[pmward]

pmward, I can’t remember: Do you do technical analysis for work, or is that completely separate and just for your own investing?

Just for my own investing. A lot of very interesting data can be drawn simply by looking at charts, comparing them to each other, and comparing them to past historical times. There is a lot of value in technical analysis. Unfortunately, there are a lot of snake oil salesman that have kind of given it a bad name. Like anything in life, if you split the difference between both extremes, there in the middle is about where the truth lies. There is nothing magical about technical analysis, and it cannot accurately tell you for sure what is going to go up or down tomorrow. But it can give you a lot of information that you otherwise would not have had, so that you can make a better and more informed decision on what to buy, hold, or sell.

[shekels]

Ok, tell us yours and we’ll tell you ours. ;-)

[pmward]

S&P futures are screaming up near 2900 right now. For real breakout or blowoff top? That is the 64 trillion dollar question.

[shekels]

S&P futures are screaming up near 2900 right now. For real breakout or blowoff top? That is the 64 trillion dollar question.

Gilead Sciences has Positive results for Rona.
IMHO I am Guessing Blow off top
Until everybody is working again.

[Vil]

Their "Chart School" with tons of articles and videos on indicators and strategies, as well as their regular YouTube videos give a good understanding of how professional CTA's look at the charts.

Thanks for the thorough explanation. I have couple of more books that I've planned to cover those days (Orthodox Easter) and also to look on the Chart School section that you recommended. Already had a look - list of topics covered is good enough, and I liked the clear and concise style (no blah blah and melodrama).
It's maybe I am just a bit too pessimistic those days given I have too much to do on my regular job. Zig-zag markets since a month are also making me a bit unnerving, as definitely the lack of clear trend is not my friend. Again, I am profitable and maybe I am expecting too much of 'output' on what I give as 'input' (in terms of time and focus spent). But that's a different story, thanks for the resource, that's appreciated.

[Vil]

I have been "investing" since the early 90"s and have found 1 super secret indicator but was looking for another.

Is it profitable ? My understanding is that once you get the stocks of the day, a decent way to play the game is to rely on not-that-secret indicators..

[ochotona]

S&P futures are screaming up near 2900 right now. For real breakout or blowoff top? That is the 64 trillion dollar question.

What's the ratio of upside vs downside? Not a favorable ratio in the short term.

[pmward]

S&P futures are screaming up near 2900 right now. For real breakout or blowoff top? That is the 64 trillion dollar question.

What's the ratio of upside vs downside? Not a favorable ratio in the short term.

Well as of the moment it's still failing at that big 2850 resistance level I've been talking about for weeks here. If we fail to close above that, or if we close right around it and drop on Monday, that would be a double-top which is a bearish pattern. Also, interesting divergence in that QQQ is actually slightly down today while S&P is up, and small caps are big time up. Oil keeps plummeting to new lows though, and I just don't know if we can really get a true break above 2850 as long as oil keeps selling off. There are also SO many gaps on the chart on the way up, and most gaps get filled. Having 3 large gaps on the daily chart not get filled would be very unusual.

Futures last night and the open this morning felt like panic buying to me. I think that the odds are higher that this is a blowoff top instead of a real breakout. With dealers rolling off lots of gamma today and no longer putting a strong wind in the shorts face, I think next week is the now or never moment for the shorts. The longer the market consolidates the more it will start to favor the bull case.

[ochotona]

Ned Davis Research

Leading indicators plunge
Today’s Takeaways:
LEI falls by a record, implying a sharp economic contraction ahead.
CFO optimism sinks, leading to reduced capex and hiring plans.
In Brief:
LEI plunges, implying sharp contraction ahead
The Conference Board’s Leading Economic Index (LEI) plunged a record 6.7% in March, although slightly less than the
consensus of -7.2%. Seven of the ten LEI components made negative contributions, led by a record surge in jobless
claims and a sharp drop in equity prices.
Breadth has deteriorated, with only 40% of LEI components up from six months ago, the smallest share since May 2016.
The downside momentum was captured by the six-month rate of change of the LEI, which sank 6.6%, the most since May
2009. Both indicators are consistent with an economic contraction.
The Coincident Economic Index fell 0.9%, the most since January 2013, led by sharp declines in industrial production and
nonfarm payrolls. The Coincident-to-Lagging (Co/Lag) Index, an alternative leading index, fell 2.1%, also the most since
January 2013.
On a y/y basis, the Coincident Index was barely up just 0.3%, the least since March 2010, while the LEI was down 6.5%,
the steepest drop since October 2009. Our composite leading index, which is the average of the LEI and Co/Lag, fell 1.4%
on a y/y trend basis, the most since November 2009. All these indicators suggest that not only did the economy hit the
brakes in March, but the outlook is for a steep contraction over the next six months.
Separately, our Economic Timing Model sank a record 24 points in March to 1, its lowest reading since June 2009, barely
holding above zero, which historically has coincided with recession.
CFO optimism sinks
According to the latest Duke/CFO Magazine Business Outlook Survey, CFO optimism about the U.S. economy sank a
record 15.7 points in Q1 to 50.9, its lowest level since Q4 2012. The survey was conducted over six weeks, starting
February 25. The report noted that in the second half of March, responses were much more pessimistic, with sentiment
hitting its lowest point since the Great Recession.
CFOs were equally pessimistic about the prospects for their own companies, with sentiment falling 15.3 points, also a
record, to 59.7, the lowest level since Q2 2009. Prior to March 15, 40% of executives considered their company’s financial
risk from COVID-19 as medium to high. After March 15, that share doubled to 80%. CFOs expect a significant hit on
revenue growth from the pandemic, and have pared back both their capex and hiring plans for the coming months.

[ochotona]

Scott Minerd today
https://youtu.be/2m7dQaj0T-8

[pmward]

The bears really need to jump out of the gate next week, or it's over. It's starting to look like the Fed did indeed have the firepower to cause stocks to go up in spite of all the economic damage.

[stuper1]

After the first big drop in late 2007/early 2008, stocks went up for two solid months, March to May 2008, before they really started dropping.

[pmward]

After the first big drop in late 2007/early 2008, stocks went up for two solid months, March to May 2008, before they really started dropping.

But that rally failed at the 50% retracement. We have now broken above that line and closed on the weekly chart above it. That is a big difference.