I'm going to do a fast study of the week around christmas.
2007:
Christmas was on a Tuesday, The week Before Christmas was a Rally, The week of christmas was a decline, then a long decline into socgen weekend.
2006:
Christmas was on a Monday, Before christmas week there was a Decline, The week of Christmas ended up, but Rallied 2 days, declined for the remaining 2 days, then declined for another week.
2005:
Christmas was on a saturday, The week before was a Slight rally, the week after was a decline.
2004:
Christmas was on a Friday, We rallied right into it, and all the way to the first of the year, then jumped off a cliff.
2003:
Christmas was on a thursday, Rally right into it, and right out of it.
(2003 and 2004) were strong bullish legs, where the market had rallied for over a month just about every day.
2002:
December of that year was just about a decline every day of the month. Christmas was on a wed, and we rallied monday and tuesday, declined the rest of the month.
Well, I say this is inconclusive.....
Can I hedge? I say there is a bias toward a rally the week of, leading into christmas day, for a day or 2, Now that I've said that, there seems to be a down bias in bear markets, and an up bias in bull.
Saturday, December 20, 2008
Christmas Rally!
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Notice T.Lo is recommending short HCBK and other regionals. Also, the other buy-stops (or shorts) are fairly conservative sectors: Treasuries and consumer staples.
Her sell-stops (or longs) represent a wide range of sectors: airlines, materials, pharma, tech, etc.
Is this a call for some broad based strength and a move away from safety, or am I reading too much into this list?
I've been cautious about the regionals, that "Bear Run" about commercial real estate is due any quater now. (it is a smaller shoe to drop)
I havn't looked at the list, Watch out for materials, cause that all is inflation related. even some of tech is based on "weak Dollar", so as the dollar reverses, cause europe is even more messed up than we are. The crisis with the euro is segnificant; german economics vs. fiat currencys.
Always watch out, some of those buy and sell signals are short term. The buy signal will be kicked off after the "Valuations are good" stage(which is middle of the decline).
you will also get one after the panic stage.
all of these stages can be short lived.
but it's purely technical.
but... Pharma is a bull at this point, and probably airlines till oil turns.
Sentiment vs technicals?
I'm assuming the notation "sell below" is to be used like something of a sell-stop, which is what T.Lo used to call it.
I notice that the smaller spreads from recent price to sell-stop are near the top, ie, the smaller negative numbers in the far right column. This would correspond to the "mo-mo" stocks to which you have referred.
The spreads from closing price to sell-below are wider near the bottom of the list. That's technical analysis.
Pete referred to 80-20 in the podcast on the buy signals- sell signals. That's sentiment.
Pete, says it works like this, that the rule of thumb(be clear it's a rule of thumb), is that there get to be 70 buy signals, and in general, that is a Sell signal for the Market.
That doesn't mean that we couldn't get a spike to 80.
I'm going to wait for 4q earnings to pick up any banks, that is in Mid Jan.
So Tony, When the list gets to "All Sell Signals"... Does that mean? that you should go agressivly short?
Does it call for "impending weakness."?
Sounds like, you have it all figured out, why are you asking me.
If this was easy.... it would be easy.
Actually, I was asking if this is how it should be interpreted.
I hardly have it all figured out... didn't mean for it to sound that way.
If all the signals change to "all sell signals", then I would say the technicals are weak and the sentiment would be bullish.
Just thinking out loud.
The technicals-- what T.Lo cryptically calls "market internals"-- would include things like trend, breadth and momentum and she measures them with new high-new low ratios, etc.
Just trying to understand all the squiggly lines.
One thing is that there are "Technicals" and there is "What the quant says",
The quant is what the computer spits out, and if that worked, we could just buy what is said to buy, sell what it says sell, and we would all be rich.
Right now we could be in "Wall of worry" or "Buy the dip" or we were in subtable warning, and have moved on to Overt warning.
Thing is we are in sort of an indecisive stage, it could go both ways. But... we feel more toward the top than the bottom... Though we could go higher.
I was reading some EWT stuff yesterday, I can draw some lines that show we will go Up, or that we will go down, and both Very valid EWT. And that is where the pretend techincals are... the chart astrology ones.
But T.Low... we are still for all purposes "in the wedge".
It's hard to put in words, but maybe the secret is to do "Risk management." Based on sentiment. When euphoric, sell some, when fearfull buy some.
Even if we break this wedge, I still think there is a chance we will make a higher low.
but the Despair phase... well, I'd like to see a better one, I'd like to see Exhaustion and futileness on the fast money desk. I'd like to see them just too bummed to trade....
that would feel like a good bottom.
but that could be in 6 months.
Since sentiment seems to be "Rally Rally Rally"... To me, my risk management says "Sell the rallies" Cause that is better than, trying to ride out the music of the game of musical chairs till the last moment.
I read something from a trader who was like "If oil can't rally" we can't rally.
With all the "weak dollar/ Inflation trades" getting beaten as the dollar rallies back (which it has been), all those trades will unravel, and the market should go down.
That second rally was all materials, and it's just waiting to unwind.
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