Market Far Below Trendline - NOT

I was watching the Larry Kudlow show and Don Luskin made a comment about the economy being far below the trendline.  This brought to mind a chart of the stock market which I constructed several months ago.

This shows the Dow Jones Industrials being far above the long term trendline NOT below.  The market peak in 1929 is clearly above.  The peak in 1966 is still below the upper trendline and in 2000 and 2007 was clearly above.  Based on this, we are probably due for 6 to 8 more years of sideways to down movement with possible correction to Dow 4000.  Remember, this is a semi-log chart showing the normal long term economic growth.  Why anyone would think more than this is possible is beyond me.  Maybe things "ARE DIFFERENT THIS TIME".

DJIA and Utilities Divergence

Here is a chart of the DJIA with the DJ Utilities in white.  Notice the divergence on the head and shoulders.  Many trading books show this as a sign of lower prices ahead.  Clues, Clues...

I went long with TNA

I bought a small amount of TNA yesterday.  I think we may move up soon.

Near term bottom Near?

I was studying the daily and hourly charts and considering the comments on CNBC and Bloomberg.  I mentioned in one of my previous posts that the Elliot wave count on the hourly chart looked to be early in this move down.  I agree with the previous post about not relying on predictions exclusively and I try to remain flexible in my opinion since THE MARKET IS ALWAYS RIGHT.  Anyway, subtle clues do exist as to the line of least resistance of the price trend.  The hourly Elliot wave count still looks incomplete.  The TV experts are all talking about a bottom any time and I still see no clear divergence in the daily or hourly chart.  Combined with this I am ALWAYS early in my prediction of a reversal and I see a reversal any time now.  In the past, I have noticed a reversal hits me in the head like a hammer.  When it does happen I don't believe it since I am so beaten up by my previous attempts at finding a bottom.  Therefore I believe the market has further down to go.

Violating Trading Rules

I have been day trading with small positions to prove to myself I can do it over the long term and some days make about $40 some days lose about $40.  Today I made 2 mistakes.  I traded against the trend and I moved my stop away from my standard 1% and lost $107.  I heard a webinar with Larry Levin and remember one idea distinctly.  He said he violated his day trading rules twice in the first 5 months of 2010.  He said you must follow your rules.  Today I violated 2 rules in a row and lost.  In 2010, I must have violated good trading rules hundreds of times and my account is smaller because of it.  Every day I find it difficult not to chase prices and buy at a high and wind up selling lower.  This is my Achillies heel, my weakness.  Unless I can stop myself from chasing I may may have to go back to work.

SP500 back to 1150?

This is just my thinking, not advice. If you want to make money do the opposite.
I'm looking for a return to SP1150 starting near 7/2/10. If I see any strength by the close I may buy some TNA or BGU. An extended trendline from the January highs through the May lows may provide support. Also, the McClellan Summation Index is showing positive divergence indicating more stocks are advancing than declining relative to the June lows. The chart shows the McClellan Summation Index plotted in the upper window in white.  It is higher now than at the June lows.  This is divergence(the price made a new low but the indicator did not).  This effect can be seen at the February lows between price and RSI plotted in the lower window.  RSI is currently not showing divergence.  These indicators are not always correct so beware.  They should be used as a guide showing how the trend of price might be turning.  Price will not turn until it actually does.

SP1150 in near future

This is just my thinking, not advice.  If you want to make money do the opposite.  I'm looking for a return to SP1150 starting near 7/2/10.  If I see any strength by the close I may buy some TNA or BGU.  An extended trendline from the January highs through the May lows may provide support.  Also, the McClellan Summation Index is showing positive divergence indicating more stocks are advancing than declining relative to the June lows.

MARKET WILL BE UP THIS WEEK THEN DOWN AFTER-BE CAREFUL

MARKET WILL BE UP THIS WEEK THEN DOWN AFTER-BE CAREFUL.

This is not investment advice just my opinion

MARKET WILL BE UP FOR ABOUT THE NEXT 5 DAYS

I have been studying the markets for the past month since I was obviously VERY wrong in my previous posts.  I THINK THE MARKET WILL BE UP FOR ABOUT THE NEXT 5 DAYS.  Then maybe down for 1 to 2 days, then up for about 5 days.

This is only my opinion not investment advice.

Trend may now be up

The trend may now be up.

I sold all my short ETFs.
I think the market will be higher in the next few days.

Trends will last longer than you think.
The trend is your friend; stick to it.
STAY WITH THE TREND UNTIL PROVEN WRONG.

Only time will tell if the trend is still down.

This is not investment advice, only my opinion.  I take no responsibility for gains or losses except my own.

Market down until end of March

I now own QID at 19.8 in several accounts.
I will add more on rallies.
My 2 month target for QID is 22.5
I think the SPY may decrease to 104.0 .  It is now at 109.4

Trends will last longer than you think.
The trend is your friend; stick to it.
STAY WITH THE TREND UNTIL PROVEN WRONG.

Only time will tell if the trend is still down.

This is not investment advice, only my opinion.  I take no responsibility for gains or losses except my own.

Markey may rally for 1 more day then DOWN

I now own QID at 19.8 in several accounts.

Trends will last longer than you think.
The trend is your friend; stick to it.
I think the SPY may decrease to 104.0 .  It is now at 110.7
STAY WITH THE TREND UNTIL PROVEN WRONG.

I may be proven wrong on Friday.  Only time will tell.

This is not investment advice, only my opinion.  I take no responsibility for gains or losses except my own.

Trend is now DOWN

 SPY
The trend is now DOWN
I will be using any rallies to buy short ETFs ( QID, SDS).
Trends will last longer than you think.
The trend is your friend; stick to it.
I think the SPY may decrease to 104 .
STAY WITH THE TREND UNTIL PROVEN WRONG.

This is not investment advice, only my opinion.  I take no responsibility for gains or losses except my own.

Trading ETF

SPY
Current Market Trend UP
Trends will last longer than you think.
The trend is your friend; stick to it.
I think the SPY may increase to 114 before correcting.
STAY WITH THE TREND UNTIL PROVEN WRONG.

This is not investment advice, only my opinion.  I take no responsibility for gains or losses except my own.

Stock Trading after Layoff

I was recently notified I will be laid off from my job as an analytical chemist. Since I will have some free time soon, I thought I would share my experiences in stock trading over the past 26 years. I will try to make bold any text which I consider important factors in making money in the market. Ideally, I would like to make money by trading my 401K. If I could turn this into a trading business, I could gracefully slide into retirement. I realized several years ago that I had been training for this my whole investing career. My employer's plan allows me to make one trade a day. This gives the flexibility to get out of bad trades quickly before losses become too large.
Since this is my first post I thought I would relate my initial investing experience. I started in 1983 with an IRA account at Fidelity Investments in the Magellan account. At that time it was no load meaning it had no sales charge. The market fell over the next six months but it seemed to be a good time to be in the market after interest rates had just fallen from the mid teens to single digits. In 1984, I invested additional money in a non IRA Magellan account and in the Overseas fund. The market was up in 1984. I tried to talk my dad into putting money into some mutual funds but he was a Certificate of Deposit man and would not do it. I told him I would guarantee his principal but no go. I continued to add new money to the funds in 1984 and 1985 and things were great. I found out I could borrow money on margin and buy twice as many shares, which I did. In 1986, the price of oil fell from $36/barrel to the teens and stocks took off like a rocket. I did not know why but I was happy. In early 1987, my dad said he would like to put some money into mutual funds. I told him that I wasn't sure it was a good time. He did it anyway. I should have listened to my own advice. I was fully margined during the 1987 crash and I was introduced to the margin call. I was able to scrape enough money together to meet it. The market bounced up and down for 3 months and I finally decided to sell most of my shares and repay the margin loan. This was an important lesson. When people who normally have no interest in the stock market suddenly do, it is time to get out.

I take no liability for any losses anyone may sustain by reading this. The stock market is a tremendously difficult place to make money and each individual is responsible for their own investment decisions. I give no investment recommendations, only relate the factors that I consider important in making the decision of how to invest.
I will relate more in my next blog.
(c) 2009 - William Jones - All Rights Reserved