The Stock Market

[lannarebirth]

They shouldn't have left that big gap. It's a giant sucking whirlpool.

[Gambles]

Been trekking in the Himalayas for a few weeks and missed the real time market plunge. My personal losses were large though the last 10 days. This ludicrous thread put me in good spirits. The markets drops after climbing nearly 50% in a little over a year and self proclaimed investment gurus are predicting a financial meltdown.

Get a grip over your irrational thoughts. Do you really think we weren't due for a major correction? If your wet dreams consist of conspiracy theories, monetary policies ( believe me – most of you no nothing about ) and total financial collapse, it is time to check yourself into clinic.

The sun came up today and the lady is sweeping the dust in front of her shop across the street. Life is moving along much the same it did prior to the economic correction. Nations across the world, from the US to Australia are struggling with the excesses of the last 20 years and beginning to comprehend that living within your means is healthy. Developed nations have been in worse financial shape before and rebounded robustly. The preceding cycle of prolonged global expansion created unhealthy consequences. In the end it is just an economic cycle that will come to an end and most likely we are already in the very early stages of the next economic bubble.

Anyhow, things aren't really that bad. This coming from an investor with a portfolio consisting of BP (2nd largest position) and GS.

You need help!!

[badge]

The same comment that was made about Soros when he wrote about his "reflexivity theory" and "reading the mind of the Market".

Most people just didn't understand - nor believe. Too "Highbrow"?

As mentioned on the forum, 'reading the mind of the market' is certainly within reach of many mere mortals.

I have no doubt the infamous Hungarian can 'read the mind of the market' to a degree.

However, judging by the recent market-mind-deciphered insight below, I just dont think Parvis can.

Watch out for the turn around - potentially tonight. I don't want to have to tell you "Told Ya".

[...]

[Parvis]

Badge - as is so often the case you are quoting without proper context.

1) look up the word "potentially" for your understanding

2) I made reference to the Market being flat the next day - which it was

3) The Market needs to be essentially "flat" before it can turn around

4) Perhaps you saw in my other comments that I was off to Europe - therefore couldn't watch nor take advantage of it anyhow.

But I realize - your effort is just an attempt to "equalize". - Often critical, deprecating comments are signs of jealousy caused by an interior sense of "inadequasy" (inferiority complex).

I suspect Soros looked at similar parameters as I do - with the substantial difference I also look at intraday changes for short term trading along the trend (oscillations). I may post a chart of my "oscillations" sometime - just to see if any of your "experts" are able to "interpret" the parameters used. Soros theory of "reflexivity" I also use (as interpreted and modified by me) but this is for "defining trends" on a longer term basis.

For your info - so you can quote me again - we are potentially changing directions again.

"Potentially" is normally defined as: It may occur - but not necessarily - but there are indications of its possible occurence - but more info is necessary to assure if its occurence.

Edited May 15, 2010 by Parvis

[Gambles]

Badge - as is so often the case you are quoting without proper context.

1) look up the word "potentially" for your understanding

2) I made reference to the Market being flat the next day - which it was

3) The Market needs to be essentially "flat" before it can turn around

4) Perhaps you saw in my other comments that I was off to Europe - therefore couldn't watch nor take advantage of it anyhow.

But I realize - your effort is just an attempt to "equalize". - Often critical, deprecating comments are signs of jealousy caused by an interior sense of "inadequasy" (inferiority complex).

I suspect Soros looked at similar parameters as I do - with the substantial difference I also look at intraday changes for short term trading along the trend (oscillations). I may post a chart of my "oscillations" sometime - just to see if any of your "experts" are able to "interpret" the parameters used. Soros theory of "reflexivity" I also use (as interpreted and modified by me) but this is for "defining trends" on a longer term basis.

For your info - so you can quote me again - we are potentially changing directions again.

"Potentially" is normally defined as: It may occur - but not necessarily - but there are indications of its possible occurence - but more info is necessary to assure if its occurence.

Parvis,

I have great respect for what you seem to do - It's not what I do, it's not even in the same language but if it works for you that's what really matters and as before I continue to wish you good luck with it but having met Soros and having spoken with him, read a great deal of his output and more importantly watched his MO closely and with an interest for many years, I think that there are some very significant differences in approach here. Good luck with your own approach.

Maybe this is of interest to readers (from earlier this week - actually Thursday and yesteray were more sspecifically equity markets so I'll try to dig those out lkater and add those too unless there's a huge groundswell agaisnt that)?

Dear all,

Please find below the latest update from MBMG International.

Two weeks ago during his trip to Bangkok, MBMG's affiliated portfolio manager Scott Campbell made a small allocation to an ETN (exchange traded note) on the VIX (The S&P Volatility Index) tracking stockmarket volatility. At this time market volatility was down towards historic lows and to Scott seemed like it could only go one way and boy has it! The Greek crisis, NYSE 10 minute collapse and the bouncy start to this week has seen implied and actual volatility double, yielding a very nice quick profit for the master.

This echoed recent comments by Pure Capital's Anthony Limbrick - "we think there is a massive opportunity right now in the things we trade, namely kurtosis, serial correlation and volatility. It may require moving one’s point of perception in order to see this. We had one of the largest rallies in implied volatility and volatility into October 2008. We also saw one of the biggest moves in terms of kurtosis into October 2008, while serial correlation made a high in the equity markets in March 2009. All of these things peaked almost around the same time, and from that point it has been essentially a crash in those measures. We are focused on this as we trade in this sector, but this is probably not something that a lot of people think about. We have had the biggest monthly fall in implied volatility in history, one of the biggest falls in kurtosis in history, and serial correlation is now at the bottom end of historical ranges."

In plain English this means that in October 2008 assets prices moved more during each minute of each day than they ever had done before; assets, funds and businesses failed at a rate like they never had before and less than 6 months later directional trends reached an all time high. These conditions were very supportive for managers and funds like Man AHL Diversified.Since then these measures have crashed with volatility falling to the low levels that enticed Scott back into the markets, virtually nothing failing and clear trends disappearing. This has clearly been bad for these types of funds -

"a very well-known CTA fund run by one of the world’s largest asset managers based in London, is a good example of a fund that has not done very well over the last year. If you look at how they invest, you would probably find that they also trade a lot of these quantitative measures I mentioned before as well. As I said this fund has been subject to one of the nastiest environments in history for their strategy. The quant measures I have been talking about, they are now near the bottom end of historical ranges. Therefore, we strongly believe that one of the biggest opportunities of the next year to two years is to be long serial correlation, long volatility to a lesser extent, as that is not quite as cheap, also long kurtosis as well."

This message is clear to us and alongside Scott buying vol could indicate that Man AHL is about to yield rich pickings while equity, property and commodity markets face the risk of implosion, providing the volatility and kurtosis -

"How would this crash correct itself? Well, In terms of the measures I had mentioned, global equities look cheap, that is in terms of volatility, kurtosis and serial correlation, but also gold and US treasuries look very cheap. That in fact means that there could be very, very large moves coming in those markets. We don't know the direction, but we do have a strong belief in these markets starting some time over the next couple of months. We believe that is a significant opportunity.indication there could be big moves to come in these markets starting some time over the next couple of months. We believe that is a significant opportunity."

So a strong move in these markets is expected but in equities, commodities and property this is more likely to be to the downside. While there are always pockets of value, the Dow Jones in general needs to fall not juts below 10,000 but actually below 6,000 before it's a clear sign to return to traditional long only equity exposure. We see this taking place in reasonably short order considering the scale of the move. Against such a backdrop a very significant double (or possibly low triple) digit rise in Man AHL might be expected.

Long vol, kurtosis and trends; short equities, commodities and property - this could be the standout trade of the next few years, putting even Scott's stunningly successful VIX trade in the shade....

Enjoy your day!

Once again, very best regards,

MBMG International

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG International cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG International. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

[midas]

So a strong move in these markets is expected but in equities, commodities and property this is more likely to be to the downside. While there are always pockets of value, the Dow Jones in general needs to fall not juts below 10,000 but actually below 6,000 before it's a clear sign to return to traditional long only equity exposure. We see this taking place in reasonably short order considering the scale of the move. Against such a backdrop a very significant double (or possibly low triple) digit rise in Man AHL might be expected.

I have to say that makes much more sense than oscillations

[Parvis]

Now from a shorter perspective - a chart of "oscillation" attached. This Intra day chart is of 9 day duration ending Friday. "Oscillations" start (reverse) BEFORE the Market advances and end (reverse) BEFORE the market declines. NYA Chart for same period - right above. The "long term trend" on which these waves "oscillate around" is the horizontal line in the center of chart.

You may notice present "oscillation" show a "potential" reversal to up - but are not clear yet.

However - the experienced trader is well aware that a bottom is RARELY (if ever) established after "one wave down only". It typically takes 3 waves - 1 down - 2 essentially sideways - 3 down. That "rule" of course tends to be for a "Bull Market". For a Bear Market there tend to be 5 waves. According to recent "wave counts" we are still in a Bull Market.

Essentially a similar chart can be constructed for Daily Charts (not shown) - which at the present time show a "potential" bottom. This Daily Chart is of course for longer term trading.

It would be very interesting to find out if anyone can "decipher" how these "oscillations" are created - and what - if any - significance that entails

5_14_10.bmp

"Potential" is defined as possible - but in this case "unlikely".

Edited May 15, 2010 by Parvis

[midas]

Now from a shorter perspective - a chart of "oscillation" attached. This Intra day chart is of 9 day duration ending Friday. "Oscillations" start (reverse) BEFORE the Market advances and end (reverse) BEFORE the market declines. NYA Chart for same period - right above. The "long term trend" on which these waves "oscillate around" is the horizontal line in the center of chart.

You may notice present "oscillation" show a "potential" reversal to up - but are not clear yet.

However - the experienced trader is well aware that a bottom is RARELY (if ever) established after "one wave down only". It typically takes 3 waves - 1 down - 2 essentially sideways - 3 down. That "rule" of course tends to be for a "Bull Market". For a Bear Market there tend to be 5 waves. According to recent "wave counts" we are still in a Bull Market.

Essentially a similar chart can be constructed for Daily Charts (not shown) - which at the present time show a "potential" bottom. This Daily Chart is of course for longer term trading.

It would be very interesting to find out if anyone can "decipher" how these "oscillations" are created - and what - if any - significance that entails

5_14_10.bmp

"Potential" is defined as possible - but in this case "unlikely".

No offence but I would rather believe what David Rosenberg says than " You may notice present "oscillation" show a "potential" reversal to up "

Rosenberg: The Market SCREAMS Onset Of A New Bear Market

http://www.businessinsider.com/rosenberg-t...r-market-2010-5

[Parvis]

No offence but I would rather believe what David Rosenberg says than " You may notice present "oscillation" show a "potential" reversal to up "

Rosenberg: The Market SCREAMS Onset Of A New Bear Market

http://www.businessinsider.com/rosenberg-t...r-market-2010-5

No offense taken - you may notice I do not claim to be an "Investment Advisor". In fact to call me a "Trader" would even be somewhat "farfetched" - although I do trade occationally - mostly derivatives. (And I do not have the 2nd largest BP holding - as someone claimed recently).

I think you should have posted my complete quote - so it cannot be taken out of context again

It is quite possible that "Rosenbergs" scream of "Bear Market" will be "echoed" by me - but only approx. 1-2 weeks BEFORE the decline actually starts. Who will be more accurate and timely? Only time will tell.

Edited May 15, 2010 by Parvis

[Gambles]

Following on from my post yesterday - first this fundamental argument -

Alphen AM’s Shaun Le Roux has a take which isn’t a million miles away from our own advice to expect the unexpected;-

“2010 has commenced and the mood is significantly improved on this time last year. A few clients have remarked to us that 20I0 will almost certainly be better than 2009. They may be right as far as the general confidence of the man on the street is concerned but we see things very differently as far as the market is concerned. This time last year we were far more focused on the opportunities for handsome returns that the stock market was providing and were less concerned about the timing of the rally. When the rally came it was impressive and 2009 ended up being a fantastic year for stock pickers, ourselves included. So, when we look at the market today we are significantly less excited than we were a year ago. Sure, the global economy has stabilized and is recovering nicely, but the stock market has largely factored this in over the past few months.

Our sense is that 20I0 could end up being a much trickier year than most expect.

It is very apparent that there are highly divergent views on the outlook for global equities. Some highly respected fund managers are noticeably bearish. At the same time there is a camp that is becoming increasingly optimistic about the opportunity for equity returns over the year ahead, as always championed by the sell-side. Why the divergence in views?

There is no doubt that economic fundamentals the world over have improved in recent months. We are no longer worried about staving off a depression and keeping zombie banks alive. Instead, our attention is focused on just how strong and sustainable the recovery is going to be. This is where the difference of opinion lies.

After the rally of last year equities are no longer cheap. Strong gains from here over the next two years will require a surge in corporate profits, or a bubble. Some market participant see a healthy profit growth cycle developing, some don't.

The recession of the past three years has been a balance sheet recession as opposed to the usual income-related recession. A balance sheet recession starts with excessive debt and sustainable trend growth only resumes once debt levels have normalized. The bears argue that 2008-2009 just saw a shifting of debt from banks and consumers to the government and the experience of the Great Depression and Japan tells us that growth will be at best anemic until the original problem - excessive debt - is resolved.

Whichever way you look at it we are in uncharted waters here.

The recent recession was not normal. But, policy response has hardly been normal either. The level of intervention to stave off the financial crisis and stimulate the economy has been extraordinary not only by virtue of its size but also by its co-ordination in a globalized fashion.

So, if we are all honest we need to admit that we are grappling with several unknowns here.

The world abounds with risk. This year and the next will shed further light on several burning questions. Will sovereign nations be able to service the recently acquired mountains of debt? Has the Chinese growth miracle of the past year been a lesson in economic policy or another chapter in the Greenspan textbook on how to fuel credit bubbles? What do the Western banks still have lying on their balance sheets? How much will bond yields have to rise to entice investors into treasuries once quantitative easing starts to tail off?

Yet, with monetary policy as accommodative as it is at the moment, the opportunity cost of sitting in cash and earning next to nothing can be high. Global central banks seem single-mindedly focused on keeping the monetary taps open and will almost certainly prefer to err on the side of normalizing policy too late rather than too early. They are very mindful of the policy errors of the Great Depression and in Japan over the past two decades. This speaks to the environment for risky assets remaining favorable until the markets stare down the barrel of policy normalization, which is likely to be some way off.

So, we have these conflicting forces of easy money and a potentially fragile economic recovery. Whilst confidence is high, markets will feed off the former, but sentiment remains susceptible to reminders of just how fragile the recovery could be. As Roosevelt put it: ‘AII we have to fear is fear itself.’ ”

Thanks Shaun good take.

[Gambles]

and then this one -

Following Steven Le Roux’ recent equity overview his colleague, Neels van Schaik also reinforces the points “Despite the bumpy ride we experienced early in 2009, market valuation levels in the market towards the end of the first quarter in 2009 were low enough to arrest the implosion in equity prices that started in mid-2008. As a value investor one therefore should not have had any problems purchasing high quality companies at exceptionally good prices.

Investors have entered 2010 on a completely different tone though with a state of relief and optimism prevalent. The global media is swamped with positive news about the synchronised global recovery and the resultant uplift in earnings - the complete opposite of 2009 when gloom and doom reigned. Not dissimilar to the euphoria that prevailed in early 2008, China is once again leading the way on the commodities front with its almost insatiable demand for raw materials and consequently, commodity currencies and commodity markets are firmly in vogue. By extension, emerging financial markets have continued with their star performances relative to their developed peers as their economies are in much better shape and likely to stay that way for quite some time.

What concerns us this year as against last year, however, are the high valuation levels of various markets across the globe. Companies are no longer priced for Armageddon as was the case in late 2008-early 2009, which made stock selection much easier. Earnings yields of many companies are not looking that attractively priced relative to bond yields and cash yields anymore. In 2008, we found companies that we purchased at or below the value. of their net assets. Now many of these same companies trade at almost double those levels. Our view is that the margin of safety in equities for most of the market has largely disappeared. With this in mind, we firmly believe that once investors start paying for growth, the risk of capital loss increases significantly.

Capital preservation is for us a key component of our investment philosophy and we therefore deem it prudent to take money off the table as the market moves higher.

We are cautious, on the market in general though, as very aggressive growth and recovery expectation are being discounted. With that said, markets can however certainly move higher in 2010. The extreme stimulus measures that have been implemented in recent years by Central Banks across the global are likely to overstay their welcome and will be supportive of equity prices. The more realistic growth paths for individual countries though will unfortunately only be witnessed with hindsight, once these artificial stimuli disappear.

Our objective as always is to own the right stocks for the right reasons and at the right valuations, and to keep some powder dry when mouth-watering opportunities come to the fore again; and they will.”

Enjoy your day!

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG International cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG International. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

Edited May 16, 2010 by Gambles

[Abrak]

Gambles,

One of the problems one has today is the very low 'nominal' and 'real' interest rate environment.

So for instance I think you think that fair value for the Dow might be around 6000. That would be a reasonable conclusion based on say a 10 year MVA of earnings and a 50 year PE.

You have also implied that property may well be overvalued by 30% which again if you did a long run - say 100 year - price/income ratio would be about right.

More to the point, I think that if you were actually looking for bear market lows, your price targets could come in well below that.

The underlying problem though is zero/negative real rates combined with record low nominal rates. If you start pencilling those into your equations you end up with very fancy valuations in both property and equities (inflation impacting earnings growth.) Theoretically if you have negative real rates and a risk premium lower than that, valuations become infinite.

So an environment of very low nominal rates and negative real rates is a massive boost to valuations of assets - a perfect storm or just really another asset bubble.

Where I agree with much of your negative asset valuation analysis is this. Either inflation will rise so much that nominal rates will rise and negative real rates cannot persist or else it would be totally illogical to save.

Put simply, an asset bubble problem has been solved by recreating the bubble. When interest rates are near zero and inflation expectations are positive that is by definition an asset bubble.

[midas]

.

So an environment of very low nominal rates and negative real rates is a massive boost to valuations of assets - a perfect storm or just really another asset bubble.

Where I agree with much of your negative asset valuation analysis is this. Either inflation will rise so much that nominal rates will rise and negative real rates cannot persist or else it would be totally illogical to save.

Put simply, an asset bubble problem has been solved by recreating the bubble. When interest rates are near zero and inflation expectations are positive that is by definition an asset bubble.

Where are these asset bubbles then ?

This explnation makes more sense to me i.e. that there is asset deflation and only monetary inflation :-

Global Deflation, Global Inflation and Australia's Gold Tax Grab

http://www.safehaven.com/article/16696/glo...s-gold-tax-grab

[PCA]

No offense taken - you may notice I do not claim to be an "Investment Advisor". In fact to call me a "Trader" would even be somewhat "farfetched" - although I do trade occationally - mostly derivatives. (And I do not have the 2nd largest BP holding - as someone claimed recently).

I think you should have posted my complete quote - so it cannot be taken out of context again

It is quite possible that "Rosenbergs" scream of "Bear Market" will be "echoed" by me - but only approx. 1-2 weeks BEFORE the decline actually starts. Who will be more accurate and timely? Only time will tell.

So you are not an IA and also not a trader, hmmmm. What is your point then, do you think the markets can be handled with a scientific approach when applying oscillation and wave studies based on mathematics and do you really believe that you or anybody else on this planet can predict perfectly timed price levels?

You mentioned inferiority complex in another post which is somehow describing yourself don't you think?

[Parvis]

No offense taken - you may notice I do not claim to be an "Investment Advisor". In fact to call me a "Trader" would even be somewhat "farfetched" - although I do trade occationally - mostly derivatives. (And I do not have the 2nd largest BP holding - as someone claimed recently).

I think you should have posted my complete quote - so it cannot be taken out of context again

It is quite possible that "Rosenbergs" scream of "Bear Market" will be "echoed" by me - but only approx. 1-2 weeks BEFORE the decline actually starts. Who will be more accurate and timely? Only time will tell.

So you are not an IA and also not a trader, hmmmm. What is your point then, do you think the markets can be handled with a scientific approach when applying oscillation and wave studies based on mathematics and do you really believe that you or anybody else on this planet can predict perfectly timed price levels?

You mentioned inferiority complex in another post which is somehow describing yourself don't you think?

Yes, you might say I apply "scientific methods". Perhaps you are aware that all Scientists, Economists etc. etc. in most respects use mathematics and create charts to "connect the dots" and prove/disprove a theory. Perhaps you are aware that almost anything - even Human Nature - can be charted by a scientist - which leads to better understanding - but not necessarily to "perfect knowledge". The "parameters are forever changing".

You might say it becomes necessary to simplify the complexity of opinions and long "babbling citations" to something that can be analysed logically. "Too many words obscure a problem rather than elucidate it".

Therefore simply put - as it pertains to the Stock Market - and some of it had been stated on this Forum by others: The Market reflects the sentiment of the General Public and the Investor. Any change in sentiment can be seen/predicted with Charts choosing proper parameters. "Doom and Gloom" are parameters marking a bottom rather than a top.

I think - I am certainly not a "frequent trader" - 2-3 times per month - but with derivatives - the potential is as good as your charts. No change to move a Market longer term comes "suddenly".

Edited May 16, 2010 by Parvis

[badge]

"Watch out for the turn around - potentially tonight. I don't want to have to tell you "Told Ya"."

Parvis - Final word from me on your favourite subject - Parvis. I have spoken English all my life, but I couldnt expect you to be aware of this, so I applaud your benevolence in explaining the definition of the word 'potentially'.

However, I really dont think theres any ambiguity here; you suggested equities(US benchmarks was the topic at the time) were potentially to turn around from down to up, hours before the recent sell off not only continued, but culminated in one of the most visceral intraday crashes in decades.

We all get thinsg wrong, theres no shame in that. Being wrong is'nt a choice, relying on semantics to claim you were'nt, is.

Thank you for the graph. Shame theres no labels on the axis or details? Are we still discussing equities? US benchmarks?? In my experience, your misconception about the number of waves in a bear market is enough for me to disregard anything further, however to humour your graph it looks from first glance your oscillators may be standard oscillators, customised?

I helped establish a website called www.tradingthecharts.com several years ago, where the founder put great stock into customising oscillators - typically simply speeding or slowing them. Its not something I have need for.

Good luck, and keep us posted of anymore potentials

[PCA]

No offense taken - you may notice I do not claim to be an "Investment Advisor". In fact to call me a "Trader" would even be somewhat "farfetched" - although I do trade occationally - mostly derivatives. (And I do not have the 2nd largest BP holding - as someone claimed recently).

I think you should have posted my complete quote - so it cannot be taken out of context again

It is quite possible that "Rosenbergs" scream of "Bear Market" will be "echoed" by me - but only approx. 1-2 weeks BEFORE the decline actually starts. Who will be more accurate and timely? Only time will tell.

So you are not an IA and also not a trader, hmmmm. What is your point then, do you think the markets can be handled with a scientific approach when applying oscillation and wave studies based on mathematics and do you really believe that you or anybody else on this planet can predict perfectly timed price levels?

You mentioned inferiority complex in another post which is somehow describing yourself don't you think?

Yes, you might say I apply "scientific methods". Perhaps you are aware that all Scientists, Economists etc. etc. in most respects use mathematics and create charts to "connect the dots" and prove/disprove a theory. Perhaps you are aware that almost anything - even Human Nature - can be charted by a scientist - which leads to better understanding - but not necessarily to "perfect knowledge". The "parameters are forever changing".

You might say it becomes necessary to simplify the complexity of opinions and long "babbling citations" to something that can be analysed logically. "Too many words obscure a problem rather than elucidate it".

Therefore simply put - as it pertains to the Stock Market - and some of it had been stated on this Forum by others: The Market reflects the sentiment of the General Public and the Investor. Any change in sentiment can be seen/predicted with Charts choosing proper parameters. "Doom and Gloom" are parameters marking a bottom rather than a top.

I think - I am certainly not a "frequent trader" - 2-3 times per month - but with derivatives - the potential is as good as your charts. No change to move a Market longer term comes "suddenly".

I agree with some things you stated but not with some others. Anyway if your approach creates profitable trades there is no point to discuss it any further.

I see things much more simple but that's a must considering trading is the only thing I do to make money. So which derivatives are you trading if I may ask?

[Parvis]

Badge

If you know what my "oscillator" is - please inform me. I will not make an offer - in this case - since I know there SHOULD BE traders who are able to decipher my "oscillator". My interest is actually more on what the "general puplic" knows/is aware of. Yes in a bull market the "down waves" consist of 3 "oscillations" and the "upwaves" consist of 5 "oscillations".

Therefore if you know how to count 'till 5 you will notice - so far in theory - according to these rules - we are still in a Bull Market. But, since I probably had an interest in the Market for longer than you are old - this is not a very reliable rule.

Since you appear to be aware of the meaning of the word "potential" you may recall in my description of the chart I mentioned - the Market is "potentially" going up for Monday. However, I also suggested before we have another "wave up" - we need another "oscillation" down.

For your info - believable or not - this is no standard "oscillator". Therefore I would very much welcome for anyone to tell me what exactly it is. Take a guess - after all - all the Market consists of is Stocks - Volume - Investors.

Edited May 16, 2010 by Parvis

[Parvis]

I agree with some things you stated but not with some others. Anyway if your approach creates profitable trades there is no point to discuss it any further.

I see things much more simple but that's a must considering trading is the only thing I do to make money. So which derivatives are you trading if I may ask?

PCA

What you should be aware of is that my interest goes beyond "making money". In theory - I have not need for that - but of course .......!

I do appreciate your input - including any criticism.

I also see things much more "simple" than apparently most posters in this thread. But some of my ideas - not all of them stated so far - tend to be "controversial" - but certainly not "conspiracies". As you mention - as a trader you cannot be indecicive - fully realizing - some times you MAY be wrong. That is of course the danger of even posting a "potential" prediction - one will be criticized - correctly/incorrectly - forever.

My interest is primarily the U.S. Stock Market and Index derivatives - but in theory I could apply my "oscillation theory" to other Markets.

Edited May 16, 2010 by Parvis

[PCA]

I agree with some things you stated but not with some others. Anyway if your approach creates profitable trades there is no point to discuss it any further.

I see things much more simple but that's a must considering trading is the only thing I do to make money. So which derivatives are you trading if I may ask?

PCA

What you should be aware of is that my interest goes beyond "making money". In theory - I have not need for that - but of course .......!

I do appreciate your input - including any criticism.

I also see things much more "simple" than apparently most posters in this thread. But some of my ideas - not all of them stated so far - tend to be "controversial" - but certainly not "conspiracies". As you mention - as a trader you cannot be indecicive - fully realizing - some times you MAY be wrong. That is of course the danger of even posting a "potential" prediction - one will be criticized - correctly/incorrectly - forever.

My interest is primarily the U.S. Stock Market and Index derivatives - but in theory I could apply my "oscillation theory" to other Markets.

I think you are a hobby trader tending to perfectionism. I don't mean this offensive but since you do not experiment with the real forces dominant in the markets (simmulation and observation alone does not allow to face the truth) you will only see lies in the charts without recognizing them. Not to mention distractions through technical indicators and studies which were just created from people (failed traders) who wanted to force logic into the future of something that is too complex and fast to even let one think about the why. As soon as you try to predict you are either too late or too early. Instead of predicting there is only one possible approach for a retail trader who needs a decent move into his favor in order to get paid and that is anticipation based on probabilities. Probabilities are S/R levels for example or trends or mostly dominant consolidations and therewith random price action.

Consider there is a way to master the markets in a way as good as unfailable; this could be only possible when a higher force (somebody big enough to move the market) is doing exactly the thing that you are running after since probably years. Would this not kill any ambition for a scientist to find something that has already been discovered(you said for you it's not about the money)?

I know there is a structural law to be found in any chart and it can be used as an anatomic fundament until it changes and becomes useless which is going to happen with each and everything by time, not only stocks. If you would watch more markets you would find many more interesting things but for instance would you probably give up running after the perfect trades.

[Parvis]

PCA

I am definitely not a "hobby trader" - but your comment about "perfectionism" is certainly accurate. For instance you cannot fault a "scientist" for experimenting for years to prove a theory about some idea he may have had during his sleep. Example: Einsteins theory of relativity. You also cannot fault someone for just not needing to "earn an income". The part that is therefore missing in my Market analysis/experiment is the psychological issues normally facing a trader - not my ability to read and modify formulas for charts created mostly by myself - until my sense of "perfectionism" is reached - (and then what ?).

My theory (which I really have not even mentioned directly) is certainly not as "far reaching" - but just may be as complex. The description that comes to my mind is "cryptography". I have previously mentioned "Reading the mind of the Market". However - while to develop a functional theory may be complex - creating/reading a functional chart thereafter is simple.

In other words - when I describe using charts - what comes to your mind (I think) is the traditional "Technical Analysis". When seeing my posted chart - the reference by someone was made as "modifying an existing oscillator". An oscillator as used in technical analysis has a defined range with upper and lower limits. I mention "oscillating along a trend line" which im my intraday chart is a horizontal line. My daily chart differs significantly - from my Intraday chart.

What may be complex for someone to understand - is why I even discuss this on this forum. Well - I have always learned more from criticism than from compliments - and criticism on this forum abounds. There appears to be a belief (by some) that nothing new beyond their knowledge can ever be created.

Edited May 16, 2010 by Parvis

[PCA]

PCA

I am definitely not a "hobby trader" - but your comment about "perfectionism" is certainly accurate. For instance you cannot fault a "scientist" for experimenting for years to prove a theory about some idea he may have had during his sleep. Example: Einsteins theory of relativity. You also cannot fault someone for just not needing to "earn an income". The part that is therefore missing in my Market analysis/experiment is the psychological issues normally facing a trader - not my ability to read and modify formulas for charts created mostly by myself - until my sense of "perfectionism" is reached - (and then what ?).

My theory (which I really have not even mentioned directly) is certainly not as "far reaching" - but just may be as complex. The description that comes to my mind is "cryptography". I have previously mentioned "Reading the mind of the Market". However - while to develop a functional theory may be complex - creating/reading a functional chart thereafter is simple.

In other words - when I describe using charts - what comes to your mind (I think) is the traditional "Technical Analysis". When seeing my posted chart - the reference by someone was made as "modifying an existing oscillator". An oscillator as used in technical analysis has a defined range with upper and lower limits. I mention "oscillating along a trend line" which im my intraday chart is a horizontal line. My daily chart differs significantly - from my Intraday chart.

What may be complex for someone to understand - is why I even discuss this on this forum. Well - I have always learned more from criticism than from compliments - and criticism on this forum abounds. There appears to be a belief (by some) that nothing new beyond their knowledge can ever be created.

hmmm.... I must admit that I don't understand your point to discuss here considering that you don't really explain what's the purpose behind it. Since you started your series of posts with claims and predictions the only reason I could sense so far is showing off in front of amateurs which most people participating in this thread are. Again I dont say that to offend but I have seen and read so many losers, liars and pretenders in this business that your statements did just match.

The market always moves to where the orders are because that is it's nature and purpose. Any theory based on technical indicator studies is not working more often than it doesn't in the long run and I am happy to prove that to you in case you are willed to unveil your theories. I dont think about classic Technical Analysis at all because I know that it does not work as well. Trading is much more art than science and every profitable (retail)trader will confirm that.

Oh yeah and I almost forgot to mention that the most destructive characteristic for profitable trading is perfectionism so you can consider yourself very lucky that you don't have to make money trading

Edited May 16, 2010 by PCA

[lannarebirth]

Oh yeah and I almost forgot to mention that the most destructive characteristic for profitable trading is perfectionism

"Just 2 more ticks and I'm out" dam_n!

[Irene]

PCA & Parvis,

Lovely to read your posts. As a seasoned investor in property and stocks, I am no fan of technical analysis especially in time when past statistical records could mislead you. The financial and economical world have been subject to unprecedented alterations, I now wonder whether there will be a double dip. I now watch the Greek tragedy like a hawk. With one more country among the PIIGS to go default, then I expect world confidence would go back to the situation in 2008. Economists who were right in 2008 seem to have this fear as well. Under the present environment, I rely more on macro than history.

[Parvis]

PCA - I find your comments very appropriate and useful for me to understand what trading entails - from your viewpoint. I had thought - perhaps incorrectly - that most posters on this thread were traders and was "somewhat disappointed".

I don't necessarily resist the idea of explaining "my concept" to you - but this would require "discussions - give and take - show and tell - etc. etc." beyond what I am willing to show on a public forum - at this point.

I agree with your "perfectionism" comment - which I have experienced - but for me this perfectionism always resulted in missing a perfect opportunity and then "refusing to chase" rather than - getting out too late. But - as with anything new - it takes time to trust your tools - which my innate sense of "perfectionism needed to shine to perfection". So in a way it was a "psychological hurdle".

I also take any claims I read here or elsewhere with a "grain of salt". I have no incentive to "show off". If I were to meet you in the street - I wouldn't know you from Adam - and vice versa.

In a way - I have accomplished what I set out to do and still have not explained what my real "agenda" is/was.

Thank you and Good Luck.

Edited May 16, 2010 by Parvis

[Gambles]

Gambles,

One of the problems one has today is the very low 'nominal' and 'real' interest rate environment.

So for instance I think you think that fair value for the Dow might be around 6000. That would be a reasonable conclusion based on say a 10 year MVA of earnings and a 50 year PE.

You have also implied that property may well be overvalued by 30% which again if you did a long run - say 100 year - price/income ratio would be about right.

More to the point, I think that if you were actually looking for bear market lows, your price targets could come in well below that.

The underlying problem though is zero/negative real rates combined with record low nominal rates. If you start pencilling those into your equations you end up with very fancy valuations in both property and equities (inflation impacting earnings growth.) Theoretically if you have negative real rates and a risk premium lower than that, valuations become infinite.

So an environment of very low nominal rates and negative real rates is a massive boost to valuations of assets - a perfect storm or just really another asset bubble.

Where I agree with much of your negative asset valuation analysis is this. Either inflation will rise so much that nominal rates will rise and negative real rates cannot persist or else it would be totally illogical to save.

Put simply, an asset bubble problem has been solved by recreating the bubble. When interest rates are near zero and inflation expectations are positive that is by definition an asset bubble.

Abrak,

I wouldn't disagree with your analysis. What you then do with it becomes a matter of emphasis - Would it be fair to say that while my focus is that this sweetspot can't persist much longer so look out below, yours is more about making as much hay while the sun shines? You would be making more hay than me right now but your exposure is obviously greater - however I know that you feel that you control your exposure through the intrinsic value of the underlying asset; an approach that most investors aren't really in your position to exploit?

I think that we're both looking at the same situation but your primary goal is to make money while preserving long term capital while perhaps mine is to preserve capital while making money long term?

[Gambles]

No offense taken - you may notice I do not claim to be an "Investment Advisor". In fact to call me a "Trader" would even be somewhat "farfetched" - although I do trade occationally - mostly derivatives. (And I do not have the 2nd largest BP holding - as someone claimed recently).

I think you should have posted my complete quote - so it cannot be taken out of context again

It is quite possible that "Rosenbergs" scream of "Bear Market" will be "echoed" by me - but only approx. 1-2 weeks BEFORE the decline actually starts. Who will be more accurate and timely? Only time will tell.

So you are not an IA and also not a trader, hmmmm. What is your point then, do you think the markets can be handled with a scientific approach when applying oscillation and wave studies based on mathematics and do you really believe that you or anybody else on this planet can predict perfectly timed price levels?

You mentioned inferiority complex in another post which is somehow describing yourself don't you think?

Yes, you might say I apply "scientific methods". Perhaps you are aware that all Scientists, Economists etc. etc. in most respects use mathematics and create charts to "connect the dots" and prove/disprove a theory. Perhaps you are aware that almost anything - even Human Nature - can be charted by a scientist - which leads to better understanding - but not necessarily to "perfect knowledge". The "parameters are forever changing".

You might say it becomes necessary to simplify the complexity of opinions and long "babbling citations" to something that can be analysed logically. "Too many words obscure a problem rather than elucidate it".

Therefore simply put - as it pertains to the Stock Market - and some of it had been stated on this Forum by others: The Market reflects the sentiment of the General Public and the Investor. Any change in sentiment can be seen/predicted with Charts choosing proper parameters. "Doom and Gloom" are parameters marking a bottom rather than a top.

I think - I am certainly not a "frequent trader" - 2-3 times per month - but with derivatives - the potential is as good as your charts. No change to move a Market longer term comes "suddenly".

Investing + physics = LTCM

Economics + maths = Credit crisis

Mathematicians and Physicists need to be kept as far away from monetary policy as possible but there have been some very successful mathematician investors - and some real disasters too

[Parvis]

You forgot to mention: - All successfull Economists are typically also successfull Mathematicians. Some of those successfull Mathematicians have received the Nobel Prize in Economics.

Edited May 17, 2010 by Parvis

[j_cheung]

Agreed with Gambles & Irene above, jumping from one financial eruption to an economical crisis (including a possibility of a political later on) seems to be the new "normalcy" the past few years.

Still, just looking at the political turmoil & violence in BKK over the past few weeks, I would have thought that the SET market would have retested the late 2008/ early 2009 lows by now. Why, the resilience so far?

[j_cheung]

Investing + physics = LTCM

Economics + maths = Credit crisis

Mathematicians and Physicists need to be kept as far away from monetary policy as possible but there have been some very successful mathematician investors - and some real disasters too

It's purely "Physics Envy" ...