09-10-11 Stock Market Trends & Observations

Stock Market Trends & Observations
Stock Market Trends Weekly Update 09/10/11

P os tedSeptember1 0 ,2 0 1 1 byBob Categories:WE E KL Y U P D A T E
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WEEKLY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading this in a PDF file, click on the following link for better formatting Stock Market T rends & Observ ations WAVE COUNT S SIMPLIFIED There are 3 peaks to a completed wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3
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In a downtrend the same rules apply ex cept y ou are counting 3 v alley s instead of 3 peaks. Each step must stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the market breaks a channel (regardless of the perceived wav e count), the current step has been terminated. A single wav e may sub-div ide into another 3 wav es. I will also call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps. (The charts will help y ou understand this concept.) Sometimes I will use the terms step and wav e interchangeably , but usually a wav e is considered to be larger than a step. Wav e Counts In Charts Numbers of the same color represent steps within the same wav e. For instance, red 1 , red 2 and red 3 are steps within the same wav e. Different colored numbers represent steps in totally separate wav es. For instance, a red 1 occurs in one wav e while a blue 1 occurs in a totally separate wav e (refer to charts for ex amples). Reading the glossary helps a great deal in the understanding of this blog. Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TNX = Toronto Stock Ex change (blue chips) NY SE = New Y ork Stock Ex change
09/07/11 DailyStockMarketUpdate#2 09/06/11 RenewedBuySignal 09/06/11
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CHART S MY CHART LINK (updated constantly ) This link has my charts, which are alway s current and constantly updated during market trading. They dont lag market trading by 1 5 minutes which is true of many charts. There are 9 pages of index charts. Each page consists of (1 ) the same stock market index es, and (2) the same time frame. The time represented by each v ertical bar is the same on each page but increases in length on each succeeding page. The v ertical bars on the 9 pages ranges from 1 minute to 1 month. The final pages of these charts consists of growth stocks. These are stocks that hav e constantly risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 990. This giv es a good perspectiv e to how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts).
Wall Street Quotes

Theessenceofinvestment managementisthe managementofrisks,notthe managementofreturns.Well managedportfoliosstartwith thisprecept. BenjaminGraham Thetimeofmaximum pessimismisthebesttimeto buyandthetimeofmaximum optimismisthebesttimeto sell. JohnTempleton Buyonthecannons, sellonthetrumpets. OldFrenchProverb Rule#1:Neverlosemoney. Rule#2:Neverforgetrule#1 WarrenBuffett
Thefourmostdangerous ************************************************************************************ wordsininvestingare "Thistimeit'sdifferent". WEEKLY UPDAT E JohnTempleton
CLICK ON CHART S T O ENLARGE Short T erm Uptrend Questionable

"Thistimeit'sdifferent"was prevalentduringthebubble of2000.In1929itwascalled "NewEconomics". Bob
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August 9, 2011 T o Present Multiple Bottom s Dating From August 9th Support Break Will Confirm Downtrend Last Action Status Sell Signal On Septem ber 9th T actical Change T ake Profits On Day Following Surge (conditional)
Historyalwaysrepeats,only thedetailschange. EdsonGould Ifyouhavetroubleimagining a20%lossinthestock market,youshouldn'tbein stocks. John(Jack)Bogle Stockareboughton expectations,notfacts. GeraldLoeb Emotionsareyourworst enemyinthestockmarket. DonHays P/EratioThepercentageof investorswettingtheirpants asthemarketkeeps crashing. Anonymous HerdMentality Men,ithasbeenwellsaid, thinkinherdsitwillbeseen thattheygomadinherds, whiletheyonlyrecovertheir sensesslowly,andoneby one. ExtraordinaryPopular DelusionsandtheMadnessof Crowds HerdMentality
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CasessuchasTulipomaniain 1624whenTulipbulbs tradedatahigherpricethan goldsuggesttheexistence ofwhatIwoulddub "Mackay'sLawofMass Action:"whenitcomestothe effectofsocialbehavioron theintelligenceofindividuals, 1+1isoftenlessthan2,and sometimesconsiderablyless than0. ExtraordinaryPopular DelusionsandtheMadnessof Crowds Imademoneybysellingtoo soon. BernardBaruch Ifallyouhaveisahammer, everythinglookslikeanail. BernardBaruch Themainpurposeofthe stockmarketistomakefools ofasmanypeopleas possible. BernardBaruch Thehardestpartofabull marketisstayingon. Abubbleisabullmarketin whichyoudon'thavea position.
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Abuyandholdstrategyisa shorttermtradethatwent wrong. October,thisisoneofthe peculiarlydangerousmonths tospeculateinstocks.The othersareJuly,January, September,April,November, May,June,December,August andFebruary. MarkTwain
0 9 -1 0 -1 1 1 0 SHORT T ERM
Economistshavepredicted14 ofthelast3recessions. MarketCorrectionTheday afteryoubuystocks. In2008stockswereagood buy.....Goodbye Mercedes,goodbyeyacht, goodbyevacationhome, goodbye... Marketscanremainirrational longerthanyoucanremain solvent. JohnMaynardKeynes Moneytalks,butallmineever saysis"goodbye" Don'tgamble.Takeallofyour savingsandbuysomegood stockandholdituntilitgoes up,thensellit.Ifitdon'tgo
SHORT T ERM COMMENT S T actical Change The inability of the market to rally sev eral hundred Dow points (or more) on consecutiv e day s has been a killer to our profits. If we had been selling on the day following a surge, we would hav e achiev ed v ery good profits. Because of the continuing upside failures I hav e modified our present tactics. In the near future, if the market is significantly lower on the day following a surge we will be taking short term profits. T he Positiv es: In the abov e chart, sev eral of the index es show the market at a higher low than the Dow Industrials creating a non-confirmation to the downside. The semiconductor index (SOX) has shown superior strength ov er the last week. This index can lead the market.
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It appears that we hav e 5 steps down on the Thursday -Friday decline. If v alid, we should hav e a rally beginning on Monday . This rally could range from minimal to significant (Europe remains the problem area) Prior support has not been broken and we do not hav e lower lows. Without broken support the market could be building a base. We will watch the support lev els for further clues. The NY SE Up Down V olume Index has confirmed the price mov ement of the index es by not breaking through the prev ious v olume lows. This index can lead the market up or down. It created multiple peaks beginning in February while most of the market index es continued to adv ance to new highs. Its possible the up down v olume index is signaling the opposite situation with its current basing action.
up,thensellit.Ifitdon'tgo up,don'tbuyit. WillRogers Returnofprincipalismore importantthanthereturnon principal. Hopeisyourworstenemyin themarket. Don'tcatchafallingknife. Spendatleastasmuchtime researchingastockasyou wouldchoosingarefrigerator. PeterLynch Whenyourealizethatyou areridingadeadhorsethe
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areridingadeadhorsethe beststrategyistodismount. SiouxIndianProverb Dontevermakethemistake oftellingthemarketitis wrong. JamesDines WallStreetneverchanges, thepocketschange,the suckerschange,thestocks change,butWallStreetnever changes,becausehuman natureneverchanges. JesseLivermore LetWallStreethavea nightmareandthewhole countryhastohelpgetthem backinbedagain WillRogers Bullsmakesmoney,bears makesmoney,pigsget slaughtered. MyGrandfather Neverbuyastockthatwon't goupinabullmarket.Never sellastockthatwon'tgo downinabearmarket. WallStreetisastreetwitha riveratoneendanda graveyardattheother. Nevercheckstockpricesona pdfcrowd.com
0 9 -1 0 -1 1 NY SE UP DN V OL INDEX
T he Negativ es: The market failed to make a higher high on its most recent upside breakout and has fallen back into an area of prior support. If we break these support lev els the market could fall significantly lower. The American stock market can not adv ance while the threat of
sov ereign default looms as a possibility in Europe. This threat will continue to dominate our market until its resolv ed. A head and shoulders has possibly formed since August 9th. Its not complete until a break of the neckline takes place. Measurement is approx imately another 1 ,000 Dow points down. This indicators v alidity at a market low is not as powerful as when seen at a market peak. Its more of a continuation pattern at a market low. ECRI, leading economic indicator of the economy continues to weaken. See chart.
Nevercheckstockpricesona Friday,itcouldspoilyour weekend. Nobodyismorebearishthan asoldoutbull. Thepublicisrightduringthe trendsbutwrongatboth ends. HumphreyNeill Thosewhocan,do. Thosewhocant,teach. Thosewhocantteach,work forthegovernment. Neverselladullmarketshort. Iselleuphoriaandbuy panic. Thewayhedeterminesthat istowaituntilpricesstart gappinginthecharts. Gappingontheupsideis euphoria,whilegappingon thedownsideispanic. JimmyRogerscourtesyofJeff Saut "Cutyourlossesandletyour profitsrun." Don'tmarryastock.Every stockmustbesold.
ECRI-W LI-g r ow t h -sin ce-2 0 0 0
OftentimesWHENyoutakea positioncanbemore
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The threat of a sov ereign default in Europe continues to rule our stock market and appears to be our primary stock market threat. The fear is that a European default could become a cascading economic ev ent. Presently , Greek two y ear notes are y ielding 55% while a US Treasury 2 y ear note is y ielding .1 7 %. Thats a big y ield spread and we all know the bigger the y ield, the bigger the risk. Germany is presently taking steps to bail out their banks with gov ernment support should a default occur. It doesnt seem likely that the German gov ernment would be taking these steps unless they believ ed a default was inev itable. One big question. Will a default in Europe be like a 2008 Lehman Bros. ev ent? When Lehman Bros. filed for bankruptcy in September 2008 the U.S. stock market crashed from about Dow 1 2,000 to 6,500 (the peak was 1 4,200 in October 2007 ). Many believ e that if the Treasury Dept. hadnt allowed Lehman to default, the 2008 crisis might hav e been av erted. Hindsight is alway s 20-20. If a default creates a waterfall decline, we would watch for either a selling climax or a continuing decline. The selling climax in 2008 occurred in October with almost ev ery stock on the New Y ork Stock Ex change hitting a 52 week low. The 2008 panic decline didnt conclude for 5 more months. The message is that selling climax es are not alway s the end of the decline. Historically y ou will hav e one more plunge after a climax . The secondary plunge usually ends lower but in the area of the climactic bottom. It didnt happen that way in 2008.
importantthanWHATyou takeapositionin. Bob
About T his Blog

ObservationsofStockMarket Trendsusesseveral proprietarytechnical indicatorsdiscoveredbythe author.Theobjectofthisblog istonotifyyou(preferablyin advance)oftheimportant topsandbottomsinthestock market.Weknowthat's impossible,butnevertheless, it'sattemptedinthisblog. Theweeklyoverviewof "ObservationsofStock MarketTrends"ispublished eachweekend.Adailyupdate islikelywhenIhave somethingtosayorweare nearastockmarketinflection point.
Ifyoufindtheblog interesting,pleasebecomea followerbyenteringyour emailaddressinthesection If we are faced with a continuing waterfall decline, that would signal "EmailSubscription"(topof thiscolumn).Youmustalso more sov ereign defaults than Greece. If not more defaults, it would confirmyouremail certainly indicate that things are bad. subscriptionbyclickingona linkintheconfirmationemail, ************************************************************************************
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************************************************************************************ Interm ediate T erm Downtrend February 2011 T o Present Step 3 Down Underway The rally that began in July 201 0 is finished. The peak of that rally was May 201 1 although some index es peaked in February 201 1 . We are in step 3 down of the decline that began in February 201 1 .
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Disclosure
Thecontentonthisblogis meanttobeentertaining informationandshouldnotbe construedasinvestment advice. Nostatementbytheblog's authorshouldbeinterpreted asarecommendationtobuy orsellanysecurity,financial instrument,ortoparticipate inatradingorinvestment strategy. Anyinvestmentdecisionby anyonethatresultsinlosses orgainsbasedoninformation fromthisblogisnotthe responsibilityoftheblog's author. Theblog'sauthorwillmake statementsaboutcertain investmentvehiclesand strategies,butIt'ssimplythe authorexpressinghis opinion,oraction,regarding hisowninvestments.These opinionsarenevertobe construedasinvestment advice.
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About Me
With55yearsofstudyingand investinginthestockmarket, Iamsharingthese experiencesandknowledge bywritingastockmarket blog.Thisblogrelieson severaluniqueand proprietaryindicators. Ihavebeencorrectatsome ofthebiggestmarketturnsin thelast40years.Iwasshort formostof19731974, 0 9 -1 0 -1 1 1 0 INT ERMEDIA T E T ERM reversedcourseandbecame abuyerduringtheweek beforeChristmas1974.Iwas alsoshortformostofthefirst halfof1982butbecamea buyeronAugust4,1982.This wasfivedaysbeforethe August9,1982blastoffon thehistoricbullmarketrunof the1980sand1990s.In 1999Ibegantollingthebell onthestockmarketknowing thattheendwasnear(no onelistened).InMarch2003, priortothebeginningofthe 0 9 -1 0 -1 1 1 0 INT ERMEDIA T E T ERM-2 IraqwarIturnedintoabull becauseIcouldn'tseeone ************************************************************************************ reasonwhyIshouldbuy stocks.Shortlyafterthe Long T erm October2007peakIbecame
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Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . (notice a pattern?) Large step three up will begin when the decline beginning in February /May is finished. Large step three up may ex ceed the October 2007 peak. This seems like a possibility when looking at the V ery Long Term megaphone scenario.
October2007peakIbecame asellerandbear.Daysprior totheMarch2009bottom,I boughtstocksinanticipation ofaverygoodrallythat turnedintoabigbullrun.In thelaterstagesofthe FebruaryMay2011topping process,Ibeganwarningof animportantmarket correction. Onemanwasresponsiblefor myeducation,EdsonGould, thegreatesttechnicianthat everlived. Afterreadingmanyofthe booksonstockmarket technicalanalysis,Ifound thatallofthesemethodshad highfailurerates.Isearched foraformulathatworked consistentlyandin1973I subscribedtoEdsonGould's "Findings&Forecasts".HereI struckgoldwiththemaster technicianofthe20th century.Extendinghis methodsIdiscoveredseveral proprietaryindicatorsthatI usetoday. Ifyoufindmyobservationsof interestpleaseaddyour emailaddresstothesection, "EmailSubscription". pdfcrowd.com
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0 9 -1 0 -1 1 1 0 LONG T ERM
************************************************************************************ Very Long T erm Downtrend Jan 2000 T o Present Step 2 Down (of 3) Com pleted
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0 9 -1 0 -1 1 1 0 V ERY LONG T ERM
VERY LONG T ERM COMMENT S We hav e 3 possibilities for the future. We hav e entered a v ery wide swinging market (megaphone formation) similar to that of 1 966 to 1 97 4. During that era we had three bear markets with two interv ening bull market rallies. Each
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bear market had a lower low than the prev ious bear. The interv ening bull market rallies saw new all time highs before the nex t bear market began. We also hav e formed a huge head and shoulders formation since 1 998. If this formation is v alid, the downside measurement calls for a bottom around Dow Jones Industrials 1 ,000. We began a v ery long term bull market that began in March 2009. Each subsequent min-bear markets will result in higher lows than the prior major low. Since 2000 we hav e had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1 966 to 1 97 4, the recov ery from the first bear market saw a new all time high (2007 peak). Its possible that we may ex perience another all time high during the present recov ery period. This would support the megaphone formation. A failure to make new highs would support the head and shoulders argument. In both formations the conclusion of the present recov ery would call for a third and final bear market. An estimated time for the conclusion of the final bear market is approx imately 201 8. The lesser downside target of both formations is the megaphone formation as it likely calls for a bottom 1 ,000 to 2,000 points below the 2009 low, which would be around Dow 5,000. In the head and shoulders formation the measurement calls for a bottom around Dow Jones Industrials 1 ,000. This is almost an unimaginable ev ent as I try to v isualize the fundamentals inv olv ed. If this did happen, ev ery thing that could go wrong would hav e to go wrong. The reasons range from the absurd to the absurd. This scenario is so dark that it doesnt seem possible but nev ertheless, the head and shoulders formation is there and will be waiting until we pierce the all-time highs of
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October 2007 . Remember these are simply possible scenarios and are not embedded in fact. Whatev er the outcome, it nev er hurts to be a little cautious with some of y our money . But in the worst case scenario, ev ery thing that we take for granted as being safe . . . . would not be safe. This is something to nev er forget in the ev ent things go v ery badly . Hopefully we will nev er hav e to think about worst case scenarios other than to hav e a good laugh at them presently . ************************************************************************************ EDSON GOULD Edson Gould, Prem ier Stock Market Strategist I hav e posted some of his ideas and writing on this blog. He had a profound influence on the dev elopment of my techniques and proprietary indicators. I will post more of his writing at a later date. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Edson Gould Link ************************************************************************************ T RANSACT ION SIGNALS ALL ACTIONABLE SIGNALS (buy or sell) ARE ONLY FOR SHORT TERM TIME FRAMES. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be
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achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read a few day s prior to a formal buy /sell signal. I often buy /sell in my personal account based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MY CHART LINK (updated constantly )
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This link has my charts, which are alway s current and constantly updated during market trading. They dont lag market trading by 1 5 minutes which is true of many charts. There are 9 pages of index charts. Each page consists of (1 ) the same stock market index es, and (2) the same time frame. The time represented by each v ertical bar is the same on each page but increases in length on each succeeding page. The v ertical bars on the 9 pages ranges from 1 minute to 1 month. The final pages of these charts consists of growth stocks. These are stocks that hav e constantly risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 990. This giv es a good perspectiv e to how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). INDEX Page 1 Indicators (shorter time frames) Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars
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Page 7 Index es With Daily Bars (shorter) Page 8 Index es With Daily Bars (longer) Page 9 Index es With Weekly Bars Page 1 0 Index es With Monthly Bars Page 1 1 to Page 1 2 Indicators (longer time frames) Page 1 3 to End Growth Stocks (daily and weekly time frames)
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Daily Stock Market Update SELL 09/09/11

P os tedSeptember9 ,2 0 1 1 byBob Categories:SE L L /BU Y A C T I O N U P D A T E
DAILY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading this in a PDF file, click on the following link Stock Market T rends & Observ ations WAVE COUNT S SIMPLIFIED
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There are 3 peaks to a completed wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 v alley s instead of 3 peaks. Each step must stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the market breaks a channel (regardless of the perceived wav e count), the current step has been terminated. A single wav e may sub-div ide into another 3 wav es. I will also call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps. (The charts will help y ou understand this concept.) Sometimes I will use the terms step and wav e interchangeably , but usually a wav e is considered to be larger than a step. Wav e Counts In Charts Numbers of the same color represent steps within the same wav e. For instance, red 1 , red 2 and red 3 are steps within the same wav e. Different colored numbers represent steps in totally separate wav es. For instance, a red 1 occurs in one wav e while a blue 1 occurs in a totally separate wav e (refer to charts for ex amples). Reading the glossary helps a great deal in the understanding of this blog. Glossary Link
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ABBREVIAT IONS DJI = Dow Jones Industrials SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TNX = Toronto Stock Ex change (blue chips) NY SE = New Y ork Stock Ex change CHART S MY CHART LINK (updated constantly ) This link has my charts, which are alway s current and constantly updated during market trading. They dont lag market trading by 1 5 minutes which is true of many charts. There are 9 pages of index charts. Each page consists of (1 ) the same stock market index es, and (2) the same time frame. The time represented by each v ertical bar is the same on each page but increases in length on each succeeding page. The v ertical bars on the 9 pages ranges from 1 minute to 1 month. The final pages of these charts consists of growth stocks. These are stocks that hav e constantly risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 990. This giv es a good perspectiv e to how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). ************************************************************************************ DAILY UPDAT E
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CLICK ON CHART S T O ENLARGE Short T erm Uptrend Questionable August 9, 2011 T o Present Multiple Bottom s Dating From August 9th Last Action Status Sell Signal On Septem ber 9th Y esterday afternoon San Diego County had a cascading sy stem failure of its electrical utility . Power did not come back on until the middle of the night. That was much quicker than what we had been told. We had initially been told the power wouldnt be on for 24 hours. With no power there was no internet and consequently no update of the blog. Beginning y esterday we had an upside failure that I alluded to in my last blog. The downside action seems to be much more than anticipated. Today s continued decline caused me to be stopped out of my position. I am forced to step aside and watch what happens nex t.
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0 9 -0 9 -1 1 DJI 5 MIN BA RS
I think that the lows of August 9th hav e a chance of being penetrated on this decline. If it holds in the neighborhood of August 9th, there wont be any serious damage done but a waterfall decline will be another thing.
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Daily Stock Market Update 09/07/11

P os tedSeptember7 ,2 0 1 1 byBob Categories:D A I L Y U P D A T E
DAILY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading this in a PDF file, click on the following link Stock Market T rends & Observ ations WAVE COUNT S SIMPLIFIED There are 3 peaks to a completed wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3
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v alley s instead of 3 peaks. Each step must stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the market breaks a channel (regardless of the perceived wav e count), the current step has been terminated. A single wav e may sub-div ide into another 3 wav es. I will also call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps. (The charts will help y ou understand this concept.) Sometimes I will use the terms step and wav e interchangeably , but usually a wav e is considered to be larger than a step. Wav e Counts In Charts Numbers of the same color represent steps within the same wav e. For instance, red 1 , red 2 and red 3 are steps within the same wav e. Different colored numbers represent steps in totally separate wav es. For instance, a red 1 occurs in one wav e while a blue 1 occurs in a totally separate wav e (refer to charts for ex amples). Reading the glossary helps a great deal in the understanding of this blog. Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TNX = Toronto Stock Ex change (blue chips)
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************************************************************************************ CLICK ON CHART S T O ENLARGE Short T erm Uptrend Still Intact August 9, 2011 T o Present Multiple Bottom s Dating From August 9th Last Action Status Buy Signal On August 29th Renewed Buy Signal On Septem ber 6th Obv iously today was a fun day for the bulls. The market adv anced all day showing good strength and closed on the high for the day . The chart below shows the wav e count and a possible channel. Well hav e to wait a few day s to see if this channel is going to work. The narrow channel will obv iously fail and is simply to show the current step. After another buy signal y esterday morning, were going to sit tight and wait for the market to unfold on the upside. A small correction is possible after an adv ance tomorrow morning. If the correction doesnt materialize, or is much smaller than anticipated, that would be good news indicating a subdiv iding wav e.
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0 9 -0 7 -1 1 DJI 5 MIN BA RS
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Daily Stock Market Update #2 09/06/11

P os tedSeptember6 ,2 0 1 1 byBob Categories:D A I L Y U P D A T E
DAILY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading this in a PDF file, click on the following link Stock Market T rends & Observ ations
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WAVE COUNT S SIMPLIFIED There are 3 peaks to a completed wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 v alley s instead of 3 peaks. Each step must stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the market breaks a channel (regardless of the perceived wav e count), the current step has been terminated. A single wav e may sub-div ide into another 3 wav es. I will also call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps. (The charts will help y ou understand this concept.) Sometimes I will use the terms step and wav e interchangeably , but usually a wav e is considered to be larger than a step. Wav e Counts In Charts Numbers of the same color represent steps within the same wav e. For instance, red 1 , red 2 and red 3 are steps within the same wav e. Different colored numbers represent steps in totally separate wav es. For instance, a red 1 occurs in one wav e while a blue 1 occurs in a totally separate wav e (refer to charts for ex amples). Reading the glossary helps a great deal in the understanding of this blog.
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Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TNX = Toronto Stock Ex change (blue chips) ************************************************************************************ CLICK ON CHART S T O ENLARGE Short T erm Uptrend Still Intact August 9, 2011 T o Present Multiple Bottom s Dating From August 9th Last Action Status Buy Signal On August 29th Renewed Buy Signal On Septem ber 6th Today the market opened down about 31 0 Dow points and improv ed from there to finish down 1 01 points. As ex pected the opening v olume was heav ily slanted towards the sell side and was 95% down. By the close the v olume had improv ed to 80% down. Ov er the preceding 24 hours we had a small triple bottom with the first and second low coming in the ev ening Monday . The third bottom came at Tuesday s open and since that lev el wasnt v iolated later, it was an inv itation to buy . The rev ersal point came where it was ex pected, almost ex actly at the August 22nd low. The first chart below, which cov ers the period from July 5th through
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today in 30 minute increments has a double bottom at the lows of August 9th and August 22nd. We also hav e another double bottom at a slightly higher lev el on August 26th and again at today s low. Ov erall it looks like a quadruple bottom but today s low needs to hold otherwise there will be an assault on the August 9th lows. Multiple bottoms can occur in the neighborhood of prev ious bottoms. In the neighborhood means bottoms can be higher or lower than prior bottoms but not separated by a significant amount. As I write this blog update the SP 500 futures are adv ancing in after hours trading, presently in a range of 5 to 6.5 points higher. I would like to see today s rally continue tomorrow but it would be disappointing if we only manage a 50 point rally instead of 200 points or more. Our last bottom on August 22nd had strong one day rallies with the following day showing tepid market action. Good market uptrends normally hav e substantial back to back rallies. Since August 9th we hav e narrowly higher lows with higher highs and that is the definition of a slow uptrend. One should consider the possibility that the market could trend higher with large interv ening corrections, 3 steps forward and 2 steps back. If we do trend higher, an erratically higher market could certainly be the case when y ou consider the continuing problems in Europe. But if Europe manages to control their problems, we could easily morph into a solid uptrend. Im not holding my breath waiting for Europe to solv e their problems.
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0 9 -0 6 -1 1 DJI 3 0 MIN BA RS
The second chart shows the small triple bottom that occurred today and the subsequent rally .
0 9 -0 6 -1 1 SP5 0 0 FUT URES 3 MIN BA RS
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Renewed Buy Signal 09/06/11

P os tedSeptember6 ,2 0 1 1 byBob Categories:D A I L Y U P D A T E ,SE L L /BU Y A C T I O N U P D A T E
DAILY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading a PDF file, click on the following link Stock Market T rends & Observ ations WAVE COUNT S SIMPLIFIED There are 3 peaks to a completed wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 v alley s instead of 3 peaks. Each step must stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the market breaks a channel (regardless of the perceived wav e count), the current step has been terminated.
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A single wav e may sub-div ide into another 3 wav es. I will also call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel has widened and (3) instead of a total of 3 steps, there will be 5 steps. (The charts will help y ou understand this concept.) Sometimes I will use the terms step and wav e interchangeably , but usually a wav e is considered to be larger than a step. Wav e Counts In Charts Numbers of the same color represent steps within the same wav e. For instance, red 1 , red 2 and red 3 are steps within the same wav e. Different colored numbers represent steps in totally separate wav es. For instance, a red 1 occurs in one wav e while a blue 1 occurs in a totally separate wav e (refer to charts for ex amples). Reading the glossary helps a great deal in the understanding of this blog. Glossary Link Abbrev iations DJI = Dow Jones Industrials SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TNX = Toronto Stock Ex change (blue chips) ************************************************************************************ CLICK ON CHART S T O ENLARGE Short T erm Uptrend Still Intact August 9, 2011 T o Present Double Bottom Possible With August 9th
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Last Action Status Buy Signal On 8/29/11 Renewed Buy Signal OK The stock market found support this morning and began to rally . The market stopped its decline at the Fibonacci 61 .8% retracement of the rise from August 9th to the recent high. Whether this is the last bottom we will hav e to wait and see. When it becomes obv ious that the market has made a successful retest of the August 9th low, it should take off to the upside with good strength. As I write this the market is down about 1 00 Dow points after being down 31 0 points at the opening. We would hav e a strong one day rev ersal if we can close positiv e for the day . We will wait and see about that.
0 9 -0 6 -1 1 T NX DA ILY BA RS
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0 9 -0 6 -1 1 DJI DA ILY BA RS
Today I found an interesting chart regarding the serv ice industry v ersus manufacturing. This info should come as no surprise but I like to see it laid out in a graph especially when the chart begins prior to WWII. The following chart and facts are from Doug Short.
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EMPLOY MENT - SERV ICES V S. MA NUFA CT URING
During WWII, manufacturing employ ment rose dramatically , but it began returning to its pre-war pattern after the war ended. Thereafter, manufacturing employ ment has had a complex history with a peak in the late 1 97 0s and a secular decline thereafter. Here are some observ ations about manufacturing and serv ices ov er the past sev en plus decades:
Manufacturing is far more sensitive to the business cycle. Compare, for example, the relative behavior of manufacturing and services relative to the recession bars.
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Grow th in services began accelerating in the 1 960s and accelerated at an increasing rate after the double-dip recession in the early 1 980. Manufacturing accelerated at a slow er pace in the 1 960s and then oscillated around a flat line in sync w ith the four recessions from 1 97 0 to 1 982. Manufacturing employment peaked in June 1 97 9. It never recovered from the double dip recession of 1 980-1 982. The spring of 1 998 w as the an interim high for manufacturing jobs, but w ith the recession of 2001 began a 35% decline in jobs from the 1 998 peak to the trough (so far) in December 2009. Manufacturing has essentially flatlined over the past 21 months. Services industry employment began leveling off w ith the onset of the 2001 recession. Grow th began accelerating again in 2004, but the rate of grow th w as w ell below w hat w e saw in the 1 980s and 1 990s. Services employment hit its all-time peak in January 2008, the second month of the Great Recession. Services employment is slow ly improving, but it remains about 2.6% below the 2008 peak. In 1 939 the services to manufacturing employment ratio w as 2.1 :1 . Today it is 9.6-to-1 .
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Here is another interesting chart. It show s the relationship of gold to the Sw iss Franc. When the franc hits the limit of its upper red line, gold begins to trend dow nw ard. What makes this interesting is that the Sw iss government began selling francs today trying to drive the price of the franc dow n. It w as successful as the franc fell about 8 cents versus the euro (thats a HUGE one day drop).
Gold Vs . Sw is s Franc
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BlogatW ordPre ss.com .The m e :Sapphire byMichae lMartine .
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09-10-11 Stock Market Trends &amp; Observations

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09-10-11 Stock Market Trends &amp; Observations

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Stock Market Trends & Observations

Stock Market Trends Weekly Update 09/10/11

09/07/11 DailyStockMarketUpdate#2 09/06/11 RenewedBuySignal 09/06/11

Wall Street Quotes

Thefourmostdangerous ************************************************************************************ wordsininvestingare "Thistimeit'sdifferent". WEEKLY UPDAT E JohnTempleton

CLICK ON CHART S T O ENLARGE Short T erm Uptrend Questionable

"Thistimeit'sdifferent"was prevalentduringthebubble of2000.In1929itwascalled "NewEconomics". Bob

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importantthanWHATyou takeapositionin. Bob

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Daily Stock Market Update SELL 09/09/11

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Daily Stock Market Update 09/07/11

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Daily Stock Market Update #2 09/06/11

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0 9 -0 6 -1 1 SP5 0 0 FUT URES 3 MIN BA RS

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Renewed Buy Signal 09/06/11

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09-10-11 Stock Market Trends & Observations

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