is mid-June 2009 and should support the extreme bear.
Consider first a quick overview of the market. From its high in October 2007 to a low point in March 2009, the SP500 has dropped nearly 58%. away (this is the beginning of June 2009) The SP500 has nearly one third of this loss to understand. The SP500 has been recent high in early January, the high for the year audited. Since then, public opinion has become considerably more optimistic. In fact, a general level seen at the top of the market, and certainly the kind of level of bullish enthusiasm, you’d expect to see at the top of the bear market rally. Well, there seems to be much more remains of the wall of worry – you probably have
the view that “rising markets climb a wall of worry” to hear. At least for the retail investor is concerned.
And so, if there is a rally in bear market, and I think it is then available quickly reached unsustainable levels. But why am I so pessimistic? Why am I guess I have not passed a new bull market, and we are only through a normal bull market correction? Why the collapse scenario; This is a good question – and I answer to a chart. You It’s kind of table you do not know, let me first offer an explanation to be here.
This is an example of what I call a time value of land. This diagram shows a normal bar graph in the foreground, which happens to be 1 minutes chart futures SP500 emini, and let value-time profile, the distribution of the amount of time devoted to each value.
And it shows you can use this chart, most of the years he spent just over 930, see – this is the red horizontal line here. This is a very important level, it shows you what price attracted most of the time. And as you can see above, time is an important component of this type that I can come back in one second. You can use these cards for any any time period. Here is a chart made the week of activity in the bar 5 minutes, and here we see that most of the time spent only at the level of 940 during this week. For To learn more about these charts, we had to search from Google “Market Profile” to start and begin the work of Peter Steidlmayer. This is where I want to do (here is a graphic based on hourly bars a long time is extended with the index SP500 cash, all the way back in 2003) – one of the useful things with this kind of diagram is that we say, you can insert the card, which value is in the form:
value = value + years
This makes sense if you think through it.
Value is just where the plot and spends more time with this type of chart you can clearly see when the value is a value and where it was at different times. For example, in 2005, the line value was just below the level of 1200 to 2006 was in 1270 -. You can see that very clearly
The thing is, after I have this chart, look at these charts for many, many years and it is my opinion, my discovery that these lines really appreciate one another in relation to stand.
There is a relationship between the levels where these lines formed by the value of the card.
not going to say that in this video, but when the SP500 is finding value, to the extent I, for one, is very, very bearish.
It is not suggesting that the bear market that ended in March low. It actually shows that the March low is low enough. In fact, a move Below 500 is what this chart shows, this is obviously a very gloomy picture indeed. And then again, why the collapse scenario? If the market will eventually go below 500, why should not wants to do all the time to get there? Why not say a low of less than 500 within three years; The next chart shows what I believe a major factor WD Gann time and again should google ” The WD Gann “for more information. I think Gann Master time factor is the 60-year cycle. And this is what we see here. The blue line shows the Dow 1947 – 1949 and the brown line shows the Dow 2007 to date. It is not the same, but I’ll give it to me is very similar, and I’ll tell you why. Look here in the middle of “8″ year. Now, a year ending in ‘ 8 “, as you say each Gann analyst is usually a good year. Gann, he said in the first half of last century. If you are off the charts in 1958, 1968, 78, 88, 98 appearances, one sees that it is generally good year – but not in 1948, was unusually flat, and certainly not in 2008, and this is why 60 years cycle that happens to believe, is active. look at this chart for me, this strongly suggests a final yet to come small and very fast. By the way, in 1949, was low here is the absolute low. The Dow never went down. So this is the second piece of evidence I have great confidence in this current cycle, and this makes me very nervous about the market. I mentioned earlier that the “wall of worry” had almost disappeared, and I want a little more on the marketing and talk. The bull market requires pessimism, which is a kind of contrarian statement – requires a good supply of bears that are still available to enable confident and provide more fuel (purchasing power) for a further rally. And it is my belief that at this time in mid-June that the fuel runs out. So this rally runs out of steam? I would think so, yes. There are many media optimistic this time, many optimistic sentiment, many investors come back into the market right now, the fear of missing the next big step that has to say
And in one. Bear market rally, if measured from the extreme investor optimism, which is probably looking at a peak.
Let’s introduce some evidence of this “extreme optimism”. Here is one of the charts available to me. The indicator at the bottom here, compares with a total volume of NASDAQ’s total NYSE. We call this the NASDAQ / NYSE volume ratio. In fact, this shows a 10-day moving average of this ratio, which is the black line. So there is a 10-day moving average of the total volume of Nasdaq, NYSE total public and displayed as a percentage. Speculative activity is more characteristic of the Nasdaq market from the NYSE, and so tries, this indicator measures the amount of speculation in the market today. And you can see that the red marker on the table where the index (below) is more than 150 performances. You can see that if the index is above 150, the lines for the S & P index chart in red. And you can clearly see that usually precedes a sell-off, and I think especially in a bear market. So if this is still a bear market to a greater extent, and this is one rally in bear market, as this index is above 170 is a big warning. Here is another indicator of sentiment. This is the ISE Index Change of International Securities Exchange. This is an option for the money and I use only the equity options. It is a measure of volume and volume compared to the ISE market maker trades and company excluded, as they say on the website, put “a more accurate measure of true investor sentiment than traditional licenses / sales ratios”. And I
pursuit of the 10 days moving average data, the black line is here to straighten and as you can see, there was the March low the index The index is moving higher. Basically, that is bullish investor sentiment increases rapidly as the market rally. And as you can see, by this measure, the public is more optimistic than they were in January, before the market and sold more than once was upward in May 2008 before the market sold.
you’ve probably heard of the index VIX, here it is. Often described as the fear of the tongue, the SP500 index returns volatility in the mid-twenties back in the eighties have high in October last year. Not so much afraid when compared with readings over the past nine months. One point I make here is that these indicators are generally used as indicators contrarian. looking for extreme public optimism or pessimism, is the point that in these extreme readings are usually a good time to fade, or go ahead, that the mood. You
The last indicator to show you that I am the public is up My version of the equity capital ratio Rydex fund. This compares to assets of Rydex fund investors. I take the total assets of a selected number of Rydex Funds optimistic and share these assets with the assets of a selected number of downward funds. index appear at the top. This is a great sentiment indicator because it shows what investors really do, not what they say. And what they do at the moment, it changes from downward to upward funds and funds. As you can see, because the ratio has recently climbed to levels not very fast, because the market in 2007, we saw above. It
recently a large increase in public enthusiasm for the stock market.
But what about the smart money : move to commercial businesses, markets, how optimistic are? Can we measure the atmosphere; This is my smart money index number 1 This is based on the commitment of trade data. commitment to market data for futures SP500. a brief explanation, if you are not familiar with these data. Every Friday the CFTC reports forward positions (in various markets), held by various groups. Here is an example of the old report shows SP500 data. Believe it or not, a list shall be provided each week the number of contracts for some time and held there, the number of short-term contracts with each of these groups: advertising, non-commercials and non-fresh vegetables report (which is <- next page -> small businesses). One of these groups is called the commercial register. ads are very worried that they use futures markets to offset the risk. By analyzing the ads equity (which contracts are long minus short contracts), we can track the amount of compensation costs and gain insight into current opinion of the underlying market. Advertisements group often referred to as the “smart money.” Usually it is wise to follow this group, especially if it is unusually large or small. So
behind the chart. The blue line represents the Commercial (smart money) equity as a percentage of total open interest for the expression of
So what are we saying? tells us that the smart money is declining. And you can see that the market rebounded from its March low, in fact is the increase of net short position of the smart money. You are at least decreasing, as was low in March and have expressed no interest in participating in this rally. Far from it. This tells us that, contrary to the public is bearish, the smart money.
smart money index numbr 2 is another option, but the relationship is based on the S & P 100 index options. There is a very strong sense that these options, particularly trade in the smart money. Thus, in contrast to the proportion of choices YOU I showed earlier, the reason is not confirmed is a contrarian indicator, but one indicator. Once again, I’ll show a 10-day moving average of call, this time as a percentage of total options
.
So what happens? Now, unlike YOU Climate Index as the market is rallying in the bottom of the screen. Again, this indication is bearish smart money.
If I told you these two figures together option, a representative of public opinion and the other representing smart money show emotion, you can clearly see the difference between their behavior. Okay, I’ll conclude with a summary of the case for the extreme bear as follows:
1 My analysis of the distribution of prices shows that in March not so much the absolute low for this bear market.
2 The most reliable course of time I know points to another leg down very soon. 3 the smart money is not optimistic . 4 in the not-so-smart money is very optimistic. For me, color overall, a very bad picture indeed. And there are some other things. In First, a plane. 870 is a very important level for the index SP500. I think if this rally can hold above this level for the next few weeks, then I’m probably wrong in this analysis, but I do not think that happen. But, I think this is more likely when the SP500 falls below this level a very quick downward movement is likely to follow. And finally this. If the index is not below this level , less than 870 and less category will hear you scream for the majority of market commentators, the fall “correction” or “testing the expected” or “a great buying opportunity” We could even say “this is the right shoulder of an inverse head and shoulder formation. “In other words, as the market falls, expect bullish climate will remain high. This type of comment is fueling the decline continues. This is a copy of the audio content of the video market collapse of 2009 The original content of Bob Debnam.