Caution! Nasdaq, Dow, Sp, Nikkei, Hang Seng

[Harmonica]

Harmonica:  I remain a deciple.  Fundamentalists (hereinafter "fundies") whether they be of the religious stripe or the stock market stripe display the same "attitutde" toward others.  They alone are right and if you don't "believe" in their way, you will go straight to hades. (crash and burn).

One cannot discuss rationally a subject with someone who is irrational by definition, ie a fundie.

I am still following my "plan" which you were so kind to start me on, but in a sidewise market, recovery is a bitch when my benchmark is so high.

Your last posted chart seemed so "right on", I am awaiting your advice regarding the start of stage C.

My latest take on the market is that I may have a chance to sell my QQQQ at 39.5 and not suffer a loss up to and including year end, with a sigh of relief.  Then it is short time in spades.

I am reminded of your oil play of some months back.  Such a dangerous area with all the speculation and politics involved.  I am surprised at the market strength in spite of the oil price surge.

I suspect the market is the market and those who point to "inidicies" or "reasons" for any market move are just linking indicies to market moves without any underlying rationale.

"No upward movement in the market while oil prices continue to rise" "Upward pressure on oil prices drive the market lower".  etc.  so much crap!!

I have been able to distance myself somethat, not enough, by the daily news of market performance.  Whenever I get depressed on the markets downward day, I remind myself that I have a year to sell and break even or even make a tad.  With a 3% return on savings accounts, losing that amount by not being so invested is very tolerable.

Please keep up your very informative and valuable, to me a least, posts and charts.  The GM play was a choice of mine, however, being fully invested, I was not in the mood to go on margin to buy GM.

Over the past 30 years, I have reached a conclusion that any company that has worldwide scope and substantial "bricks and mortar" on their balance sheet, usually recovers to some degree.

Chrysler, Bank of America and GM are in that category in my view.  MSFT at 20, GE at 30, Boing at 35 etc. are all no brainers to me.  This is a basic fundamental play in my view, but my world view is broad enough to acknowledge some good in most things.

That is a beautiful, uplifting & insightful post, PTE.

Regarding your comments about "fundamental" players/analysts, I really do wish that someday there will be a rapprochement between them and us techies. We are after all trying to decipher Ms. Market's messages and profit from the signals/knowledge etc. We should be doing this as a team, in harmony and together instead of just blasting each other to smithereens.

I would love for it to be this way but we techies are a tiny minority and we have NO rights & many of us suffer from perennial loneliness & dismay when even our friends sometimes say, "but billionaire experts disagree with your stance" etc., etc., .....

OK, enough feeling sorry for myself

Market insight follows .....

[Harmonica]

OK PTE,

QQQQ

Note that Volume has been steadily diminishing thru' the entire rally. This in itself is a sobering fact, but most players will miss it entirely.

So let us take another look at the A-B-C rally that I mentioned in a previous post -- this, as you have well understood, as per your post, is what I believe and still do believe the market is doing.

Now right here I must state that a statement such as this one at this particular juncture is quite dangerous due to the fact that I have already taken profit (and am NOT SHORT) but you are still in and relying heavily on wave © to bring you upto the $39.5 bail-out level.

What if I'm wrong and the market just caves in and does not give us a wave C rally? What if the depicted wave (a) is all we're gonna get?

Please give these items due consideration as they are very real -- one must be able to turn on a dime and recognize one is wrong when the market indicates such and this is actually my forte -- when wrong I bail and apply iodine to my wounds, pass out and am ready for the next battle with absolutely no residue.

OK?

Onwards then -- we appear to be in wave b down. It is too early to tell whether June 15th was a wave b bottom or not?

We will know soon enough.

Next post will have some vital data about wave Cs -- stuff you should know so you don't get caught with your pants down.

[Harmonica]

Wave Cs are stunners usually and defy the imagination. They wield tremendous power and the market can surge forward with powerful gap-ups. They are wonders to behold.

Generally!

I have however, seen some very short wave Cs. So one must be prepared for this event too.

Generally then the lengths of wave C can be 0.618, 1.618 or 2.618 times the length of wave (a).

The length of wave (a) is $4.33 -- so do your calculations on schwab Logarithmic charts from the time wave C commences.

Le't see if all this plays out!

I will post as I understand .... as the market progresses.

Goodluck!

[Harmonica]

It appears that the market is playing out my a-b-c call -- thus far anyway.

It is too early to celebrate and get cocky, so we shall maintain our humble poise ( ) and continue -- what do you say, PTE?

We are therefore in wave B down for the QQQQ and have been so for quite a few days.

And voila! .. my beloved Technology has forced both the mighty Dow Jones and superfluous S&P500 into completing their respective wave A's and plunging voraciously into wave B.

Are we all onboard then?

We're laughing ... but the market is going down -- and going down hard, hehehhehehe. Yeah, that's life in LOS; one big serendipitous, sybaritic thrill!

For PTE (and others if interested) notes and analysis follow.

[Harmonica]

See chart below.

I've marked my May 24th exit with a red arrow on both the QQQQ and Dow Jones charts. QQQQ is in the top window and Mr. Jones in the lower one.

That is, as far as the QQQQ is concerned, I got out 4 trading days before the actual top on June 1. Why did I not get out at the actual top? .... Because I'm not good enough yet, simple ... hehehehe. But I'll get there; count on it!

But here's the interesting thing to note. On a Rate of Change chart of the QQQQ's upward climb it reveals that I got out just 2 days prior to the upward acceleration's peak and it thereafter slowed down dramatically. This fact is clearly visible also on the Dow Jones chart where the mighty Dow just went sideways for almost a month before finally making a new high.

My point? ... my fortuitous exit allowed the flow of money into other entities that were still demonstrating a high and increasing Rate of Change (aka upward acceleration) as opposed to just sitting there gaining zip and gathering dust.

Did I know this at the time of my exit? I suspected it, but wouldn't have put money on that bet. It was just a hunch, that's all -- a hunch that played out quite positively.

Then observe that Dow Jones went on upward while QQQQ had already turned down. My friends were bothering the daylights out of me (again, as usual) and pestering me to jump in again because the Dow Jones was going to take off to 12,000.

I declined. Why? Because it was only wave A and wave B would kick in soon and tear my amigos a new a*shole. That has occurred!

Finally notice how violently the Nasdaq 100 caused both Dow and S&P to give up the ghost and complete their respective wave A's. The Dow gave up one month's gains in just one day, Thursday and wiped out another significant portion yesterday, Friday.

My friends will be walking bow-legged for the rest of wave B. They will need the potency of wave c to get closure (literally! )

Caveat: all of this is still assuming that the market is actually rallying in an a-b-c pattern. If this is wrong, well I personally will not suffer as I have already taken profit -- but PTE (and perhaps others who are still in based on my evaluation) will; and that is never good news to me. I sincerely hope I am right so everybody comes out smiling.

OK?

[ProThaiExpat]

I have never ever coveted anything with a C in front of it, but now I sure do.

Thanks Harmonica, I hope QQQQ makes sweet music for me according to your tune.

[Harmonica]

I have never ever coveted anything with a C in front of it, but now I sure do.

Thanks Harmonica, I hope QQQQ makes sweet music for me according to your tune.

Enjoy the rest of the weekend, PTE -- no sense in bothering with this stuff until tuesday morning, LOS time.

Lord knows that the US markets have the potential to give one big, painful headaches and a break is always welcome.

[Harmonica]

Homework for PTE:

Has wave B fired six shots or only 5? .. perhaps only 3?

Reason for asking -- yesterday's rally sure looked like, felt like and even sounded like the beginning of wave C.

But is it? I ask this question way before the the next trading day resumes, so nobody can fudge.

The only other person who has the answer is Clint Eastwood!

When this is over I certainly hope you do not choose to live the rest of your life this stressfully, PTE?

Lesson for next time: in a 3-legged rally (most are esp. after big drops) sell at wave A's top, buy again at wave B's bottom and hit it hard and start selling very gradually after wave C has taken out 0.618 of wave A. Recover losses and tack on some big gains -- all in one fell swoop during the 3-legger!

Easier said than done? Maybe, but one's got to try!

[ProThaiExpat]

Harmonica: I will believe it is wave C after QQQQ goes above 38.5 and continues. Probably too late to be a prognosticator but so be it. I suspect that wave C doesn't have a upside limit on your chart, but if you want my "soothsayer" designation, you will tell me now what the top will be of wave C when it comes!!!!

I will be a happy camper when I can go short with my stake locked into long for now. I am absolutely confident we will see a 33 level in the next year and half on the QQQ and would sure like to ride it down from above 39.

Cheers

[Harmonica]

Harmonica:  I will believe it is wave C after QQQQ goes above 38.5 and continues.  Probably too late to be a prognosticator but so be it. I suspect that wave C doesn't have a upside limit on your chart, but if you want my "soothsayer" designation, you will tell me now what the top will be of wave C when it comes!!!!

I will be a happy camper when I can go short with my stake locked into long for now.  I am absolutely confident we will see a 33 level in the next year and half on the QQQ and would sure like to ride it down from above 39.

Cheers

Amen!

My take is that we are still in wave B and that we will either go down fast to complete it or the Dow and S&P will slow us down by forming a wave B triangle, an absolutely exasperating option -- but it exists.

If wave C has already started, it has done so without me.

When we do get to wave C it will not be the time to get too cute because of what comes after its completion -- catastrophic drops, amigo.

The exit will take precision, responsibility and balls of steel or in your case, brass!

I'm on a road trip back to Chiang Mai -- see you Tuesday!

Shown below are possible shapes of wave B. There are several more versions of triangles that it can evolve into, but the idea is similar. QQQQ is doing the first type, but its best to wait and see what develops.

[Harmonica]

An internet connection deep in the jungle, hehehehe

So, wave B was still in effect at the end of thursday EST.

Looks good to me -- go lower if want; gives us a bigger whopper for wave C.

[Harmonica]

An internet connection deep in the jungle, hehehehe

So, wave B was still in effect at the end of thursday EST.

Looks good to me -- go lower if want; gives us a bigger whopper for wave C.

Odds are suggesting that wave B ended at 11:00AM Eastern Standard Time, 7th July, 2005, USA.

If correct, then wave C is now already underway.

Does not affect PTE as he is watching from above, from his throne way up in the clouds!

But it does affect anyone else who is waiting to get in.

My recommendation is: why be the first to get in? Wait for a couple days to verify that my call on the odds is correct! There's plenty of juice to be had if the call turns out to be correct!

Adios!

[Harmonica]

An internet connection deep in the jungle, hehehehe

So, wave B was still in effect at the end of thursday EST.

Looks good to me -- go lower if want; gives us a bigger whopper for wave C.

Odds are suggesting that wave B ended at 11:00AM Eastern Standard Time, 7th July, 2005, USA.

If correct, then wave C is now already underway.

Does not affect PTE as he is watching from above, from his throne way up in the clouds!

But it does affect anyone else who is waiting to get in.

My recommendation is: why be the first to get in? Wait for a couple days to verify that my call on the odds is correct! There's plenty of juice to be had if the call turns out to be correct!

Adios!

I am exiting wave C today. Closing out my QQQQ LONG position.

We have already reached the 61.8% Fibonacci retracement level and actually surpassed it yesterday by a noticeable margin.

There might be a little more juice left in wave C, possibly to the previous closing high of 38.66 -- but I don't want to hang around.

It seems to be one of the short varieties of wave C -- could be wrong but that is how it appears to me at this time.

Adios!

[bakachan]

Don't you find qqq a bit boring to trade?

The ^soxx (semi conductor) index is about to break out of what looks like

a 52 week trading range

lots of interesting technology out there to invest in...

like a company that says its going to launch solar powered stationary blimps (stratolites)into the stratosphere to broadcast broadband at a fraction of the cost of satellites.

and a pharmacutical co. that is working to jump the bloodstream to brain barrier

with a super memory drug. im watching this one with personal interest since

my short term memory is horrible and getting worse.

[Harmonica]

Don't you find qqq a bit boring to trade? 

The ^soxx (semi conductor) index is about to break out of what looks like

a 52 week trading range

lots of interesting technology out there to invest in...

like a company that says its going to launch solar powered stationary blimps (stratolites)into the stratosphere to broadcast broadband at a fraction of the cost of satellites.

and a pharmacutical co. that is working to jump the bloodstream to brain barrier

with a super memory drug.  im watching this one with personal interest since

my short term memory is horrible and getting worse.

QQQQ boring to trade?

Volatile tech stocks are my forte but I cannot post these plays here .... for well known/understood reasons -- dig?

Volatility in the QQQQ is far less than in regular technology issues -- that's one reason to love it. Profits or losses are relatively much lower than when trading hotshot stocks that rocket up or down like missiles.

But the QQQQ is a wonderful place to hold your CORE money instead of in a bank or in most other investments.

The only reason I appear to be getting in/out of the Q's is due to a changing of trend charateristics -- that's why the trading!

Once the turn is in, its back to medium-term for me.

[ProThaiExpat]

Following all the sage advice regarding knowing the product and catching it early in th cycle, I bought a big stake in Equal while it was still virtually unknown, in the U.S. or internationally. My recollection is hazy now, but the stock of its manufacturer remained fairly static until it was bout out by Monsanto and very little if any premium. Still no movement as Monsanto marketed the product and hid its earnings in its overall balance sheet.

I finally got out, seeing little or no profit after really calling a product before it became a staple and popular the world over. So much for my individual stock picks. I have gone the value route, the mometum route, the timing route all to no avail. I also have a black thumb, everything I try to grow dies.

QQQQ is the place for me, I love to be bored, as I make money.

The shoe fits and I have put it on.

For those who enjoy risk, go for it, there is room for everyone.

Harmonicat: Tonight should prove interesting, if the past is any lesson, this mini-rally will "peter out" in the mid 38s, but you do know what I am hoping. The volume is average, however, so momentum doesn't seem to be there. I would stay up all night if the trading range was a dollar or so, but its rarely been 50 cents. There has been much talk about a "real" rally challenging and surpssing highs one last time before year's end. How I love to hear what I love to hear!!!!

Edited July 13, 2005 by ProThaiExpat

[Harmonica]

Following all the sage advice regarding knowing the product and catching it early in th cycle, I bought a big stake in Equal while it was still virtually unknown, in the U.S. or internationally.  My recollection is hazy now, but the stock of its manufacturer remained fairly static until it was bout out by Monsanto and very little if any premium.  Still no movement as Monsanto marketed the product and hid its earnings in its overall balance sheet.

I finally got out, seeing little or no profit after really calling a product before it became a staple and popular the world over.  So much for my individual stock picks.  I have gone the value route, the mometum route, the timing route all to no avail.  I also have a black thumb, everything I try to grow dies.

QQQQ is the place for me, I love to be bored, as I make money.

The shoe fits and I have put it on. 

For those who enjoy risk, go for it, there is room for everyone.

Harmonicat:  Tonight should prove interesting, if the past is any lesson, this mini-rally will "peter out" in the mid 38s, but you do know what I am hoping.  The volume is average, however, so momentum doesn't seem to be there. I would stay up all night if the trading range was a dollar or so, but its rarely been 50 cents.  There has been much talk about a "real" rally challenging and surpssing highs one last time before year's end.  How I love to hear what I love to hear!!!!

Yes my friend, wise men love to play the QQQQ -- low risk, slow, steady and consistent earnings!

39.5 would be music to your ears, I know!

I'm very interested to see where this rally will end -- but, I am staying out for now!

I'm satisfied.

[Harmonica]

Notice the lowvolume and the flagging momentum.

[ProThaiExpat]

Alas, the summer doldrums. Not much expecttion for movement until after Labor Day. Mai Pen Rai.

Edited July 14, 2005 by ProThaiExpat

[ProThaiExpat]

Harmonica: Your needed now!!! What do you make of the last couple of days on the Nasdaq? QQQQ?

My take on it is very favorable. Steady rally, volume increasing and negative news yesterday overcome after a low opening and rise continuing unabated.

I am now at my breakeven point and need your take on how much more a rise we can expect before a top. Upward potential in percentages appeal to my sense of proportion.

You once posted various levels on the upside with percentage of likelyhood of peak at that level. Can you do it again?

My current plan is to make a sell order at my breakeven of 39.5 when QQQQ reaches 39.80 and then move up my sell order as QQQQ moves higher. Once we reach the high of 40.50 I would place sell orders 20 cents below the market level to decrease my downside loss of profit.

You comments and insights will be very much appreciated.

At what level would you go short in the QQQQ?

Your devoted student.

[Harmonica]

Harmonica:  Your needed now!!!  What do you make of the last couple of days on the Nasdaq? QQQQ?

My take on it is very favorable.  Steady rally, volume increasing and negative news yesterday overcome after a low opening and rise continuing unabated.

I am now at my breakeven point and need your take on how much more a rise we can expect before a top.  Upward potential in percentages appeal to my sense of proportion.

You once posted various levels on the upside with percentage of likelyhood of peak at that level.  Can you do it again?

My current plan is to make a sell order at my breakeven of 39.5 when QQQQ reaches 39.80 and then move up my sell order as QQQQ moves higher.  Once we reach the high of 40.50 I would place sell orders 20 cents below the market level to decrease my downside loss of profit.

You comments and insights will be very much appreciated.

At what level would you go short in the QQQQ?

Your devoted student.

PTE, you cannot imagine how happy I am this morning to see that QQQQ hit a high of 39.57 and a closing for the day @ 39.46 and that you have therefore been granted your wish and are in a position to recover all your losses.

Your patience has paid off in spades. Take a bow; you've earned it!

I am thrilled at your success!

[Harmonica]

Moving on to your questions then and getting down to the business of extraction from behind enemy lines:

will review the action and post some thoughts later in the day.

[Harmonica]

Wave Cs  are stunners usually and defy the imagination.  They wield tremendous power and the market can surge forward with powerful gap-ups.  They are wonders to behold.

Generally!

I have however,  seen some very short wave Cs.  So one must be prepared for this event too.

Remember this post from June 20th, PTE?

Well, we are in wave C, aren't we?

And she is a wonder to behold, ain't she? Powerful, nascent strides thus far.

[Harmonica]

I am NOT even thinking about going SHORT ! I am focusing only on wave C up. I have no position in the QQQQ -- as you may recall I sold out a few days ago-- but I do have 2 Tech. stock positions and they are firing on all cylinders like missiles.

[Harmonica]

Insurance strategy for QQQQ :

If my analysis is flawed and things go south, remember that fortification exists @ the following demand levels where buyers are bound to step in and support the market -- unless a terrorist event takes us lower. Regardless,

38.37

37.48

37.40

Catastrophic insurance level STOPLOSS (terrorist attacks causing market to crash) should be placed @ 37.21

This is considerably lower than 39.5 but its better to get out with limited losses rather than losing all capital and then waiting for 10-20 years for the market to get back up to where she left you in the dust.

Keep in mind that one should never place a STOP @ whole numbers -- Goldman Sachs and other 800-lb gorillas take great pleasure in blasting traders out of their positions by bombarding regions close to well recognized STOP levels. That is why you should avoid whole numbers.

This is the reason I selected 37.21 as a catastrophic level -- it is just below 2 heavy duty supports and even if gorillas blast those, they themselves will buy just below those levels and not HARM your STOP, where you will be sitting in comfort and untrammeled -- lonely, but in peace and tranquility!

[Harmonica]

So, pick your own personal STOPLOSS level -- only you know what sits right with you when you're alone and with your own thoughts. Pick it wisely so that if the market is just correcting a bit, it does not easily trigger your STOP and cause you to exit, after which it takes off like a rocket again -- leaving you behind to ponder your folly!

OK?

[Harmonica]

Keep in mind this very important piece of data:

I don't know yet whether wave C is evolving in a regular fashion or whether it is going to form an ending diagonal triangle . The former gives larger gains, whereas the latter struggles. Just don't know yet! Need more time.

Will know in a few days.

[Harmonica]

That's it then, amigo.

Read thru' the posts and then make your own decision.

Keep in mind that momentum readings give good solid confirmation that the rally is strong.

But I always examine the worst case scenario. Hence the "Insurance" post.

Goodluck!

[dee_jai_maak_maak]

I very much appreciate this thread...

Then I think you are on your own

I'm sure the OP is happy, and good luck to him, but what the f*** is he on about?

[ProThaiExpat]

Thursday's market was essentially "sideways" but with greater than average volume of late. This is encouraging if it is viewed as consolidation at the mid 39 level. There was a lot of "unsettling" news on Thursday that caused its own market uncertainty, but nonetheless, the market closed fractionally higher despite it.

I am hopefull that the rally has more "legs" so we get comfortably above my break even so I can get my stop loss orders in. Even though the Yuan devaluation was quite limited, it does augur well for the future as the closer that the Yuan gets to is true value, the better for U.S. business.