A much beautiful picture than US.
Is this a decision time or what?
Tuesday, March 17, 2009
Is China Gona Have a Trend Change?
A much beautiful picture than US.
Is this a decision time or what?
Sunday, March 15, 2009
Is This the Final Low?
I am finding it harder and harder to keep up my planned pace to update this blog. I have so many chores to finish in the evenings and weekends. I can't do much during the day time weekdays. Before I change to full time trader/money manager, I have to behave at my full time job. I have to finish some work related essays today (it has been delayed for couple months now, each time I started writing, I ended up looking at the market), but today I find it compelled to put up my thoughts here in my blog at this important market juncture.
Wall Street participants are obsessed with calling for market bottoms. Eventually they will get it right after they have been wrong so many times in the past (I bet when you ask them, show me the money? they have red all over their balance sheet). Ridiculously, people in Wall Street (or Main Street) seem heedless of these callers' past credibility. When they finally get it right, they will soon be dubbed as the new Wall Street Prophesiers (who correctly predicted the end of the miserable 2008 recession).
Is this the Final Low? No one knows, only the future market development can tell you if this is THE FINAL low.
There are lots of notorious Wall Street Cliches, their only purpose is to fool the mass. I consider the worst two of them are the followings,
The rule number two says, the fact you are lack of financial know-hows (you will never know them all) and you are always late and ignorant (or at least partially) to understand economic/social events, You basically can't do it successfully in the stock market. Having your money managed by "professionals" is the only way to outperform.
I will elaborate in separate essays in the future on why these cliches are misleading and they will lead you no where in your financial well being.
There are some basic facts, however, that the Wall Street never wants you to know, one of them is that YOU DON'T NEED TO CATCH/KNOW THE EXACT MARKET BOTTOM TO MAKE A TON OF MONEY.
Over the weekend, I was looking at the 2000-2003 market bottom. I find some interesting comparisons, let's take a look of the following charts and see what kind of information it provides us.
There are some striking similarities and I will show you the significant differences as well. After vicious down move, Mar 2002 -- Jul 2002; Sept 2008 -- Nov 2008, both market entered a low volume one to one and half months bear market rally. After they were sold off and the new lows were both taken out. Although in 2002, it was only marginally.
The next piece of the news is more important. After the final low put in Oct 2002, the market went on with heavy accumulation. Do you see all green tall volume bars? Clearly, it is not average joe is buying.
If down the road, the market can not rise in high volume and pull back in low volume, instead, distribution days soon piles up, then this is clearly NOT the low. I think this is likely the case, we have to wait and see.
The second important piece of the puzzle is the leading stocks. For any market to have staying power, leading stocks (growth companies with new product, new services, new economic conditions with sound technical charts) need to form proper bases and break out to new highs one after another. Right now, we see almost NONE.
What did we have in Oct 2002 back then? Take a look of the following stocks,
They are absolutely gorgeous. They are the stocks which can make you filthy rich, not buying junk-from-the-bottom stocks.
All of them are in clear uptrend and heavily accumulated during (even BEFORE) the Oct bottom.
We have NOTHING like them NOW in this market. Could leaders emerge soon after ... yes, they could, but until you see them, don't bet your money.
The message is clear. If no leading stocks are setting up and breaking out, and the market continues to rally in low volume and distributes in high volume, This is NOT the FINAL LOW. Hoard your cash or short the rally continues to be the more profitable actions.
Now I need to get back to my essay writing. I probably need to burn the midnight oil tonight.
Thanks for reading.
Wall Street participants are obsessed with calling for market bottoms. Eventually they will get it right after they have been wrong so many times in the past (I bet when you ask them, show me the money? they have red all over their balance sheet). Ridiculously, people in Wall Street (or Main Street) seem heedless of these callers' past credibility. When they finally get it right, they will soon be dubbed as the new Wall Street Prophesiers (who correctly predicted the end of the miserable 2008 recession).
Is this the Final Low? No one knows, only the future market development can tell you if this is THE FINAL low.
There are lots of notorious Wall Street Cliches, their only purpose is to fool the mass. I consider the worst two of them are the followings,
- If you want to outperform the market in the long run, you have to be invested at all time and you need to sit through the market downtimes, like we are experiencing now.
- In order to be on top of the market, you need to follow the economic/political news (or you should watch CNBC, because you get it all?). You need to be very sophisticated and knowledgable in finacial knowhows, e.g. understand and interpret correctly what SEC is doing -- they are removing uptick rules; or what the congress is doing, e.g. they are revising the mark-to-market accounting rules.
The rule number two says, the fact you are lack of financial know-hows (you will never know them all) and you are always late and ignorant (or at least partially) to understand economic/social events, You basically can't do it successfully in the stock market. Having your money managed by "professionals" is the only way to outperform.
I will elaborate in separate essays in the future on why these cliches are misleading and they will lead you no where in your financial well being.
There are some basic facts, however, that the Wall Street never wants you to know, one of them is that YOU DON'T NEED TO CATCH/KNOW THE EXACT MARKET BOTTOM TO MAKE A TON OF MONEY.
Over the weekend, I was looking at the 2000-2003 market bottom. I find some interesting comparisons, let's take a look of the following charts and see what kind of information it provides us.
There are some striking similarities and I will show you the significant differences as well. After vicious down move, Mar 2002 -- Jul 2002; Sept 2008 -- Nov 2008, both market entered a low volume one to one and half months bear market rally. After they were sold off and the new lows were both taken out. Although in 2002, it was only marginally.
The next piece of the news is more important. After the final low put in Oct 2002, the market went on with heavy accumulation. Do you see all green tall volume bars? Clearly, it is not average joe is buying.
If down the road, the market can not rise in high volume and pull back in low volume, instead, distribution days soon piles up, then this is clearly NOT the low. I think this is likely the case, we have to wait and see.
The second important piece of the puzzle is the leading stocks. For any market to have staying power, leading stocks (growth companies with new product, new services, new economic conditions with sound technical charts) need to form proper bases and break out to new highs one after another. Right now, we see almost NONE.
What did we have in Oct 2002 back then? Take a look of the following stocks,
They are absolutely gorgeous. They are the stocks which can make you filthy rich, not buying junk-from-the-bottom stocks.
All of them are in clear uptrend and heavily accumulated during (even BEFORE) the Oct bottom.
We have NOTHING like them NOW in this market. Could leaders emerge soon after ... yes, they could, but until you see them, don't bet your money.
The message is clear. If no leading stocks are setting up and breaking out, and the market continues to rally in low volume and distributes in high volume, This is NOT the FINAL LOW. Hoard your cash or short the rally continues to be the more profitable actions.
Now I need to get back to my essay writing. I probably need to burn the midnight oil tonight.
Thanks for reading.
Sunday, March 1, 2009
Two Months into the Year, the Market Traded a New 12 Year Low
The Waterloo campaign continues, the market is on retreat. The bear coalition is defeating the once mighty Wall Street.
The market registered a major technical break down. On monthly, SPX500 broke decisively the year 2002 low. The market dropped all the way back to 1997. You don't think buy-and-hold (or buy-and-hope) strategy should be thrown to the garbage?
The technical picture is NOT pretty. Where is the ultimate low of this bear market?
The market continues its vicious cycle of deleveraging. The big boys are selling, and they are selling hard.
The market can't even muster a decent bear market rally. In the last bear market from 2000-2003, on three occasions, the market went on with a multi-month ~20% bounce. Each happened when the full stochastics on Monthly registered a major oversold signal. Since the mid of 2008, the monthly full stochastics went below 20 and has been under 20 since. Guessing when the market turns is a loser's game. CANSLIM investors don't catch falling knifes.
Looking at the performance chart of the sector Spiders, the nine funds representing 10 industry sectors within S&P 500, Financials continues to be the biggest loser with -39% return year to date. Technology shows the best relative strength with -8% loss.
In bear market, no sector is immune. Bears will eventually attack all the remaining sectors. Up to last week, Medicals and Health Care had been showing the best relative strength. Many leading stocks showing good fundamentals and technical merits were in Medical and Health Care sectors. Health Care and Medicals were creaminated last week (Thank you, Mr. President)
Take a look one of the leading stocks in Biotech, Gilead Science (GILD). Since the low made in the Nov of 2008, some institution money has been piling back to GILD. GILD recovered within 8% of its all time high on early February 2009. It rolled over last week, breaking below 200MA on big volume. 200MA is flatting and rolling over. A lower high is in the making. This is a classic long term topping pattern.
Looking at the 10 year weekly chart of GILD, GILD has been on steady up move for many years. If this is the final top, it could easily drop back to 20s.
Disclosure, I am holding a short position on GILD. I am going to hold and looking to add more short positions as it goes down.
Cash is still the KING; Shorts are QUEEN; Hard Metals are PRINCE and PRINCESS.
The market registered a major technical break down. On monthly, SPX500 broke decisively the year 2002 low. The market dropped all the way back to 1997. You don't think buy-and-hold (or buy-and-hope) strategy should be thrown to the garbage?
The technical picture is NOT pretty. Where is the ultimate low of this bear market?
The market continues its vicious cycle of deleveraging. The big boys are selling, and they are selling hard.
The market can't even muster a decent bear market rally. In the last bear market from 2000-2003, on three occasions, the market went on with a multi-month ~20% bounce. Each happened when the full stochastics on Monthly registered a major oversold signal. Since the mid of 2008, the monthly full stochastics went below 20 and has been under 20 since. Guessing when the market turns is a loser's game. CANSLIM investors don't catch falling knifes.
Looking at the performance chart of the sector Spiders, the nine funds representing 10 industry sectors within S&P 500, Financials continues to be the biggest loser with -39% return year to date. Technology shows the best relative strength with -8% loss.
In bear market, no sector is immune. Bears will eventually attack all the remaining sectors. Up to last week, Medicals and Health Care had been showing the best relative strength. Many leading stocks showing good fundamentals and technical merits were in Medical and Health Care sectors. Health Care and Medicals were creaminated last week (Thank you, Mr. President)
Take a look one of the leading stocks in Biotech, Gilead Science (GILD). Since the low made in the Nov of 2008, some institution money has been piling back to GILD. GILD recovered within 8% of its all time high on early February 2009. It rolled over last week, breaking below 200MA on big volume. 200MA is flatting and rolling over. A lower high is in the making. This is a classic long term topping pattern.
Looking at the 10 year weekly chart of GILD, GILD has been on steady up move for many years. If this is the final top, it could easily drop back to 20s.
Disclosure, I am holding a short position on GILD. I am going to hold and looking to add more short positions as it goes down.
Cash is still the KING; Shorts are QUEEN; Hard Metals are PRINCE and PRINCESS.
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