Saturday, Jan 09, 2010
But there is no resemblance between the late 1920s and the noughties!!!
EWI: A Tale of Two Charts ... ... With One Message
so which is which? and yes very simplistic view..... or is it? Apologies since this is a marketing piece - i have no affiliation and no financial interest in a subscription blah blah
Posted by techieman @ 10:50 AM (1514 views) Add Comment
21 Comments
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1. techieman said...
oh yea and the real question then is what happened next?? Any ideas:
a. How much the fall will be if we follow 1929-1932?
b. How likely we are to repeat the look of that?
2. tick tock said...
It does look very similar doesn't it?
I don't know what the next bit of charting looks like exactly, but I think we all know that stock market bulls will not likely enjoy any replication.
I would guess that with shorting options so much more readily available, and given the now reasonably well held view that we are probably going down again very soon, that the fall, when it comes,will be both rapid & spectacular .
3. techieman said...
tick tock - i will post the answer to a. later - although its quite easy to find out. As for b., i would be the first to admit that its open to debate, and it might be completely different - even opposite, although in my view i concur with your thoughts.
Just to clarify by b. i mean not the exact form, but the general % move.
4. bellwether said...
Techie over the past couple of months my strategy has become clearer. I think valuations are all that really matter and while there are many elements of the market which are overvalued after the rally eg banks, consumer discretionary, most mining and resource stocks, there are many that seem undervalued eg utilities, supermarkets, pharm, certain IT stocks - all which tend to pay decent yeilds eg National Grid is about 5%. I also think that certain indices are more overvalued than others so while I think the s and p and ft are significantly overvalued I actually think the Dow is about right.
On this basis I plan to increase my equity holdings which are only about 30% at present to something closer to 60/70%, with continued focus on the US. I like the US compared to a lot of places partly because its housing correction is further advanced but principally because I see usd denominated stocks as an insurance policy if the market double dips. In 2008 when stocks when down the dollar soared against sterling and just about everything else I don't see why that won't happen again.
I do have a considerable fear of a further down, and in particular finding I have tied up my capital so can't exploit new lows. But with CFD's there is a great opportunity with limited capital to short the market, to short specific stocks and to buy close to the lows and ride the up wave.
5. techieman said...
hi b/wether : "and in particular finding I have tied up my capital so can't exploit new lows.". Yes I absolutely agree with that, and with yr views on the dollar as previously discussed. Although of course i would rather just trade the forex than the assets which are based in those denominations. That sounds far too difficult to me to chose the right ones. But thats probably because i started my career working for a jobber of traded options on the LSE floor.
Of course i dont agree with you on the dow, but we are entitled to our own views and either may be right or wrong. Personally i would rather miss an upmove than be involved in a downmove.... and you thought i was a guns blazing speculator!!
You have been developing your strategy for a while now and originally you complained (not in a moody way) that you had been squeezed out of your positions because initial moves had forced you out of your position only for your original view to prevail. I assume your venture into CFDs have changed that? I am genuinely interested in your experience.
6. magnaman said...
Techie - didnt Bob forecast a huge drop in the S&P a few months ago too - still waiting...forgive my ignorance but I would be grateful for your comments
7. bellwether said...
Hey Techie I don't have time to actively trade, and in any event I think I'd be terrible at it as it seems to create too much emotion for me which hampers decision making.
Now I won't tend to take a CFD position unless I'm very sure and usually only as a hedge against something I have invested in eg I have a short on the FT at 5200 that has been losing me money for weeks but I'm not prepared to drop it as it balances certain long positions and net I'm up. I also have a sneaking feeling that the short will either become profitable or at least there will be exit point that won't lose me much so I just hold it.
Noticed that GS are seeing the £ at $1.85 in the next 3 months. Completely contrary to my view but if that were to happen it would be an incredible oppotuntiy to swap the remainder of my £ out of sterling. As it is I swapped about 60% at or about $1.70 months ago but only got $1.67 cos of exchange commission, then used about half of it to buy us equities with the other half sitting in currency.
Would like to get a little expsoure to gold in case my deflationary scenario doesn't play out but can't find an entry point I like at present.
8. bellwether said...
As for stockpicking I don't think it could be easier just now. Most of the stocks that are value are the mum and dad stocks MCD to Johnson and Johnson, to Pfzier to Tesco or Walmart,Verizon all seem good value. I'd actually include BRK in that trading at $3200 for a b share and about to be split which should drive up share price
9. techieman said...
b/w i did say about gold that an entry point of around $1100 - or just below up to around $1150 looked like a good trade to me. Aside from that i wouldnt like to comment much further - i dont trade it myself anymore and am just holding onto what i havent liquidated from way back when. I have posted some gold charts now and again, but i cant easily find them.
As for $ - yes you know that i think we will have a decent move back soon, but perhaps after new lows and no i dont think it will take out the prior (aug 08) highs. If it does then that might say get more bullish. Basically i would like first the Euro to get to around 1.46 then sell that then look for a new low in the Euro (from the first move down) then a bigger move back up, and only then to get in short again if there is confirmation. I think that the Euro will move more or less in tandem with £ v. the greenback and thats my premise.
10. hpwatcher said...
Great graph; what will happen next is a continued decline - for both scenarios.
11. hpwatcher said...
As for $ - yes you know that i think we will have a decent move back soon, but perhaps after new lows and no i dont think it will take out the prior (aug 08) highs. If it does then that might say get more bullish.
Lots of economists have predicted some kind of a rally in the dollar, which seems about right, but then a continued decline. One economist - I subscribe to - thinks that a dollar collapse is now inevitable in either deflation or inflation scenarios, it is simply too late to do anything about it.
12. techieman said...
magnaman
Yes he did see : http://www.housepricecrash.co.uk/newsblog/2009/12/blog-printing-money-always-creates-inflationor-does-it-27079.php
I have said that i find he is often a bit early - basically he will explain in the interview(s) - if you look at the others per my first comment. The model allows for retracements to be between 23.6 to 89% - so there is a fair amount of leeway for him to be technically right but still look very stupid!!
If you follow the Daneric blog you will get some insight. Look at this http://danericselliottwaves.blogspot.com/ and go down a bit for the "Elliott Wave Update ~ 8 January (Update 6pm)". and maybe some prior posts - the charts will help.
Basically we are all looking for the end of Primary 2. Which then leads to the P3 down, which is the huge move you refer to. "Bob" called it early in August 09 - i cant remeber the exact level - i think between S&P 1000 and 1100 (which to be fair was the call for the idealised extent of the bull retracement in Mid March).
13. techieman said...
hpwatcher @10 - just to clarify - these arent 2 scenarios. 1 is the graph of the dow with a 1929 high the other is the graph of where we are now. Obviously the 1929 scenario has happend.
@11 - possibly right which is why i said "and only then to get in short again if there is confirmation." i believed that the $ was oversold and therefore was happy to go for the $ longs. After this first move (off the top for the Euro) i think it will retrace to around 1.45 - 1.46 and then new Euro lows. After that i think the Euro will strengthen quite a bit and then another move up in the dollar. That move in the dollar will be the strongest - but i will only get in after more confirmation. After that???? Well then i think the jury is out, and could see it either way. However i do favour (slightly) dollar bullishness with b/weather.
The point is then it may not be the apple of my eye - have always been fickle!!
14. hpwatcher said...
hpwatcher @10 - just to clarify - these arent 2 scenarios. 1 is the graph of the dow with a 1929 high the other is the graph of where we are now. Obviously the 1929 scenario has happend.
Thanks, but in any event 'down' is the new 'up'.
15. magnaman said...
Thanks Techie
16. debtfree said...
What a pile of dog.
Could be 42.6% or 50 % or 38%, it would still look similar.
This is pure sales talk trying to sell you subscription to some jargon about 'Elliot Wave' - the miracle hair cream for those going bald or some herbal medicine that cures everything.
Utter dribble, this guy has called the gold market wrong for years.
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences.
17. techieman said...
Happy New Year debtfree.
18. hpwatcher said...
Utter dribble, this guy has called the gold market wrong for years.
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences.
I do actually see some value in, but only along with other methods; I don't think I would rely on E Wave analysis alone.
19. mountain goat said...
More comparisons with the past
Zero Hedge - Rosie: "Why This Is Not The Onset Of A New Secular Bull Market"
20. mountain goat said...
sorry this is the table
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