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drbubb

Recession or Depression? - Will Stock indices tell us?

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In fact, a double bottom might give the right base for a rather huge rally.

 

Whatever happens, I think there is an excellent chance we will see the low before the end of October.

 

 

RESISTANCE LEVELS - for the possible road back

 

aa3xt8.gif

 

After a decent rally, I reckon that Friday's lows will be retested, and maybe exceeded (eventually).

If Friday's low is broken, Major major support is near SPX-777 / SPY-77.7

 

for those who trade in the UK, here's an excerpt from GEI's FTSE thread

 

ftse-3900: a good place for a low ... update

aa2kb0.gif

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Long term this is negative for assets (including gold) and cash is king.

 

What cash though Dr B? The Fiat system seems flawed and to be breaking down. Maybe only asset-backing cash will restore confidence and allow it to function. Gold as currency / gold (and/or other suitable assets/commodities) backed cash?

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BOB MCHUGH's TARGETS - similar to my own

 

1013.h2.gif

 

1013.h1.gif

 

from:

How We Called the Stock Market Crash of 2008 To the Day

 

First, we identified a huge Declining Bullish Wedge pattern, one that started back at the October 2007 top, when the Industrials hit an all-time high of 14,198 on October 11th. The pattern had formed perfect converging trendlines, drawn from connecting decline tops with declining tops, and declining bottoms with declining bottoms over the past year, with prices now reaching position for the last leg of this pattern, a devastating drop below the bottom boundary. Prices had reached that bottom boundary, which meant the time had arrived for the necessary and expectant plunge, wave e down. That pattern is attached below.

 

Second, we had a phi mate turn date set for September 29th, which was also a New Moon. Our studies of market crashes have shown that many major declines start at New Moons. Since this was coming on our next phi mate turn date (which is a cycle pattern of major tops and bottoms arriving a Fibonacci number of trading days from previous tops and bottoms), and given the need for a coming wave e down in the Bullish Declining Wedge pattern, we concluded a stock market crash would start on September 29th.

 

Third, we knew fundamental economic conditions were deteriorating rapidly, that we were in the traditionally bad autumn season for stocks, so we were on high alert for an imminent stock market crash.

 

Fourth, we had found several Head & Shoulders top patterns in major indices that suggested we were headed for a major stock market crash, as they had minimum downside targets that were 25 percent below price levels in early September, and that momentum indicators were suggesting prices would violate the necklines of those patterns around the end of September.

 

/see: http://www.financialsense.com/fsu/editoria.../2008/1013.html

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Since cyclical bear markets in history tend to cut the S&P 500 in half over about two years, there should be more downlegs to come after this rally.

 

Zeal

 

(According to this statement by Zeal recently, I'm calling the bottom of the S&P 500 at 750-800 in Dec 2009)

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BIGGEST PCT. DOWN DAY ever! / SPX: -x%

 

But look at this chart

aa0vx0.gif

 

+ It retraced right back to the gap from the big day up (Monday)

+ Volume was markedly less than the last big down day

+ VIX was up yesterday, but never reached the record highs

 

bigji5.gif

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BIGGEST PCT. DOWN DAY ever! / SPX: -x%

 

But look at this chart

aa0vx0.gif

 

+ It retraced right back to the gap from the big day up (Monday)

+ Volume was markedly less than the last big down day

+ VIX was up yesterday, but never reached the record highs

 

bigji5.gif

 

What's your conclusion DrBubb..... mixed signals?

 

I thought we might be going into the "c" leg of an abc up on Thursday?

 

With all the bad news out there and the hedge funds scrambling for cash do you think we may see the 2003 lows some time soon?

 

Some fantastic opportunities coming up either way!

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What's your conclusion DrBubb..... mixed signals?

I thought we might be going into the "c" leg of an abc up on Thursday?

 

My best guess:

We saw a up, b down, and now c up could start, making a wave 4.

 

But for that to happen, we need to see some upwards action today.

Watch Asia and Europe, to see if they show recoveries from opening lows

 

====

 

LONGER TERM - IF SPX-777 GOES...

1015_clip_image003.jpg

look at Japan, for the importance of demographics

1015_clip_image006.gif

and then to the US

1015_clip_image008.gif

 

Chris Puplava's article:

http://www.financialsense.com/Market/cpuplava/2008/1015.html

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Hmmm,

 

Same old, same old from the Puplavas's's's. Stocks down, commodities up. I think what's been most frustrating is that commodities stocks have taken an absolute hammering. They follow the stock market more than they follow the commodities themselves.

 

Surely, if commodity prices continue their rapid ascent and gold miners/miners continue to fall with the general market something will have to give. Is this where China comes in guns blazing to snap up the world's recources for themselves?

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Hmmm,

 

Same old, same old from the Puplavas's's's. Stocks down, commodities up. I think what's been most frustrating is that commodities stocks have taken an absolute hammering. They follow the stock market more than they follow the commodities themselves.

 

Surely, if commodity prices continue their rapid ascent and gold miners/miners continue to fall with the general market something will have to give. Is this where China comes in guns blazing to snap up the world's recources for themselves?

 

They bloody ought to.

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EWI has a 64-67 week cycle

2008hw9.gif

 

Another Quarter to go to the low?

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Have you considered the Kondratiefff Wave? It is a 54 year wave with the trough around the year 2000. If this is the case, this is start of a long many years of increases in commodity prices and stocks full. But I don't understand why commodities have fallen, unless this is just whipsaws.

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Question. IMO The situation now is much more serious than when the tech bubble burst.

 

The FTSE all share is at 1964 but back in 2003 it went down to 1600 i

FTE 100 - now = 3869 - back in 2003 about 3300

Dow Jones Industrial Average is now at 8979 but hit 7286 in 2002

 

So basically in this recession could/should we not be heading back to 2003 levels and below?

 

I can see value stocks that look attractive but this thought makes me nervous.

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I'm just wondering whether I am looking at too short a time period and was thinking that perhaps it is a much bigger cycle / wave that should be looked at. Or is it a situation where technical analysis does not apply and is the exception.

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A few days out of date - but still a good listen

 

WARREN BUFFETT Making Sense in this interview with Charlie Rose:

 

http://www.charlierose.com/shows/2008/10/0...-warren-buffett

 

- - and here's - - -

 

NORIEL ROUBINI

 

http://www.charlierose.com/shows/2008/10/1...nouriel-roubini

 

No market discipline, no rules. No one listening to risk managers: The rules of the jungle.

Banks, hedge funds, brokers ... all need to be regulated.

Two years ago the damage was done. The Fed cut rates in 2001.

 

Excessive borrowing by state and municiple governments

 

 

HOW THIS BEAR COMPARES - Duration, Size of Drop:

http://www.nytimes.com/interactive/2008/10...AR_MARKETS.html

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Just listened to and enjoyed the Buffet interview, liked his altruistic attitude and love his analogies.

 

Rubini - FFS, the TPTB are still not listening to him!

 

Not surprising I suppose when you consider the treasury, Fed, JP (captain)Morgan, Goldman sucks et al relationship.

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The 9 MONTH Cycle is bottoming next week, says Carl Swenlin

 

I am compelled to show you a chart of the 9-Month Cycles. My current projection for the next cycle low is October 22. As you can see, it is highly likely that the cycle low is already in as of last week, although we can never be sure except in hindsight. Nevertheless, the cycle chart is one more piece of evidence that we could be getting a sustainable rally at any time.

 

081017_os-4.gif

 

Bottom Line: The market is extremely oversold, and we have plenty of evidence that a rally is due. I do not for one minute believe the bear market is over, but it does not seem reasonable that the vertical descent will continue unabated. Reasonable? Perhaps that is not the best word to use in these circumstances. Let's just say that the technicals are screaming for a good sized bounce. Having said that, I will leave you with a reminder that we are playing by bear market rules. Oversold conditions are extremely dangerous and do not always present opportunities on the long side. Be careful!

 

/MORE: http://www.financialsense.com/editorials/s.../2008/1017.html

 

My own chart

aa0ox3.gif

 

I dont think I have every seen a case where a stock market has a huge drop like that

and recovers straight up. It needs time (Months) to form a bottom, and the is likely

to mean to lows are retested or beat

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I was expecting a decent rally today as part of the "C" leg up but I think it was stifled by the excess of bad news over good news, in particular the dire housing data. I imagine there's a lot of deleveraging going on combined with the fear of another shoe to drop at any time not helping - VIX closed at 70.33

 

Perhaps we'll see a period of consolidation until LIBOR is significantly reduced when hopefully capital will start to flow. Can't see it happening if Mish is right about his "pretend lending" theory (REF: latest CWR podcast http://commoditywatch.podbean.com/2008/10/...-mike-are-back/ )

 

 

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Looks like we could be setting up for a lower low on lower VIX

(if the low came on lower volume, that would be bullish also.)

and that may check-in on Friday or Monday, coinciding with Larry P's call of the final "negative

aspect day" for October on 25th.Oct., which is a Saturday.

 

bighe9.gif

Note: prior SPY low was 83.58 on Oct.10th

VIX has been hovering over 50 for many days

bigui4.gif

Intraday VIX is a bit more clear

bigkk2.gif

 

(Note: VIX is the index of implied volatility on nearby SPX options, and many take it as a measure

of "fear". A lower stock index on less fear should be a sign that sentiment is set to turn more positive.)

 

See: thread on Larry Pesavento's forecast of a black October, and then a rebound.

http://www.greenenergyinvestors.com/index.php?showtopic=4537

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THE GREAT ROLLOVER - Dr. Janice Dorn

http://www.netcastdaily.com/broadcast/fsn2008-1018-3a.mp3

 

This will scare you- 17 trends rolling over.

"We are falling into a 'black hole' ... and it is unavoidable."

 

Based on the work of Strauss Howe, and generational issues.

 

Another "upage" in the stock market that may finish in early 2009, then "it's over".

(Presumeably, she means the rollover problems are upon us.)

 

Dorn's website : http://www.thetradingdoctor.com/

Strauss Howe : http://en.wikipedia.org/wiki/Bill_Strauss

 

(From the Stauss & Howe link):

 

In 1997, they published The Fourth Turning, which expanded on the ideas presented in Generations. Examining 500 years of Anglo-American history, The Fourth Turning reveals a distinct historical pattern: modern history moves in cycles, each one lasting approximately the length of a long human life (about 80-years), and each composed of four eras, or "turnings." Analyzing particularly the period from the end of World War II until today, they describe the general persona of each living generation, from the powerful proactive G.I.s, the thoughtful Silent, the values-obsessed Boomers, and the pragmatic 13ers, to the new coming-of-age generation of powerful, proactive Millennials. By situating each living generation in the context of a historical generational cycle and archetype, the authors claim to clarify the personality and role of each--and the inevitability of a coming crisis in America.[citation needed]

 

In 2000 the two authors published Millennials Rising. This work investigated the personality of the generation currently coming of age, whose first cohorts were the much celebrated high school graduating class of 2000. Strauss and Howe show how today's teens are recasting the image of youth from downbeat and alienated to upbeat and engaged. They also say Millennials are held to higher standards than adults apply to themselves; they are a lot less violent, vulgar, and sexually charged than the teen culture older people are producing for them, and, over the next decade, they will entirely recast what it means to be young. According to the authors, Millennials could emerge as the next great generation

 

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BH's playbook:

 

"Our August 20 edition continued the discussion of the disaster of falling commodity

prices and reviewed our "roadmap" for the stock market. This expected that the senior

indexes would end their May rally with a sharp break that would result in a 25% decline

from the October high.

 

This worked out on the July low, leading to a rebound and churning around through

August when a classic phase of heavy liquidation could run into late October. Also noted

in that edition was that our target of a 48% decline for the bear was realistic. We weren't

certain if this could be accomplished by our target for an important low in late October or

sometime next year. We have also pointed out that around -48% may not be the limit for

this cyclical bear market.

 

Recent lows have been around 45% below the highs of last October, so one objective has

been achieved. The other is timing and conditions going into late October seem to be bad

enough that this target has essentially been achieved as well.

 

To be clinical, the "Black Friday" of October 10 set the low needed to register the

Downside Capitulation. This is rare for the Dow and unseen since 1966 or the three

times it registered during the 1929 to 1932 bear.

 

Once Capitulation has registered the bottoming process could take up to three weeks.

Also, the ChartWorks noted that the market could decline by some 5% to 8% below the

level that generated the Capitulation.

 

Using a couple of counts this phase of forced selling could complete by next week. The

initial rebound could be quick and signaled by the first day with a higher high.

Then comes the test whereby most of the great crashes have completed in the latter part

of October and tested in November, before moving to a few months rally in the first

quarter."

 

From Pivotal Events

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BH's playbook:

 

"Our August 20 edition continued the discussion of the disaster of falling commodity

prices and reviewed our "roadmap" for the stock market. This expected that the senior

indexes would end their May rally with a sharp break that would result in a 25% decline

from the October high.

 

This worked out on the July low, leading to a rebound and churning around through

August when a classic phase of heavy liquidation could run into late October. Also noted

in that edition was that our target of a 48% decline for the bear was realistic. We weren't

certain if this could be accomplished by our target for an important low in late October or

sometime next year. We have also pointed out that around -48% may not be the limit for

this cyclical bear market.

 

Recent lows have been around 45% below the highs of last October, so one objective has

been achieved. The other is timing and conditions going into late October seem to be bad

enough that this target has essentially been achieved as well.

 

To be clinical, the "Black Friday" of October 10 set the low needed to register the

Downside Capitulation. This is rare for the Dow and unseen since 1966 or the three

times it registered during the 1929 to 1932 bear.

 

Once Capitulation has registered the bottoming process could take up to three weeks.

Also, the ChartWorks noted that the market could decline by some 5% to 8% below the

level that generated the Capitulation.

 

Using a couple of counts this phase of forced selling could complete by next week. The

initial rebound could be quick and signaled by the first day with a higher high.

Then comes the test whereby most of the great crashes have completed in the latter part

of October and tested in November, before moving to a few months rally in the first

quarter."

 

From Pivotal Events

 

Where may I ask Bubb are you positioned as of now?

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