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Catflap's Cycle Views - A Rally into Q3. 2010

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I think DrBubb was keen to get a thread going after I (directly and without mincing my words) told him that the 'diary' had been wrong on equities since July 2009 - in fact Prechter and all the EW guys referenced on that thread have been continually wrong. Reading what is being said more recently then I can see that it's going to be wrong again and I was suggesting that GEI has too much of a bear bias that is way too early.

 

With my comments in mind DrBubb has decided to start the thread, probably because I said I was taking a break from posting to see how things go on here..... I wanted to see some site improvements before posting again and know the trolling issue was sorted. What's happening right now has implications for anyone that blindly follows so-called experts like Prechter and Neeley and has a short position - I'm quite happy to be long here because I know they will be wrong yet again!

 

So at least there is now a thread to counter DrBubb's equity bearish diary, although I think a general thread where bulls and bears argue the direction is better. Certainly we shouldn't follow others in a herd like manner but should learn to read the market ourselves and make our own decisions.

 

With regards to my own K-wave theory, you should be able to serch for it - I use fractals and say the entire cycle is now around 72 years long with the deflationary K-winter being the longest at 20 years. The 18-month cyclical bull market is something that happens in both the K-summer and K-winter when the stockmarket is in a long secular bear market and commodities are in a long secular bull market.

 

It's a rebound that follows a 'panic crash' sell-off where there has been a major financial crisis, eg. secondary banking/oil crisis 1973 and 2007 sub-prime/banking crisis. The same with Japan in 1997 with the Asian financial crisis which led to a panic sell-off and an 18-month cyclical bull market afterwards. The only exception was the 1938/39 period due to exceptional events back then which I think changed the markets behaviour and what Louise Yamada says about the period re-inforces this, so I don't use that period.

 

Yes, I have come up with my own confidence cycles within the seasons and have a very good idea what likely lays ahead, eg after a projected low in April/May 2013 we should get a 4-year bull market into summer 2017. But it's largely to do with the baby boomer generation who are born between 1946 and 1964 - when they retire en masse then a long deflationary period in assets is the only outcome like we've seen in Japan.

 

I should also say that whilst I like reading Martin Armstrong's articles (when I have the time!) and respect his work, I don't see any logic in his theory for such a fixed cycle - there will nearly always be something that can be made to fit with one of the dates, but sometimes there is nothing.

 

I’ve pretty much stopped following all the experts and I’m going with my instincts. I don’t even read DrBubbs diary anymore. I watch the occasional Mark Faber video when some one posts one and I read the occasional Martin Armstrong release.

 

I sold some of my Kaz shares at below 1,000 expecting a pull back and it’s not happened. I’m not kicking myself. I made the best decision with the information I had available at the time and it’s not worked out as well as it could have. If anything, I’m glad I didn’t sell my gold shares and energy shares funds. I’m not expecting any serious pull backs from here and I’m happy to hold on if the price dips a little.

 

I’ve kept my foot in with all the other shares I bought in December 2008 and I’ve got all the ones I picked up in March 2009.

 

I’ve still got a lot of Sterling in my long term portfolio (around 25%) and I am feeling nervous at the moment. I tried to buy Exxon at £40 a few times in the last couple of weeks but the price had gone up by the time I picked up the phone. I might dump a load of cash in to BP just to lighten up on Sterling a little.

 

Like you, I’m expecting shares to climb from here and the last few weeks have presented a good buying opportunity. I picked up National Grid for my long term buy and hold dividend payers. There’s sill loads of big companies offering a 4-5% yield at a time when savings accounts are offering jack S.

 

I wish I had some charts to post or something but I haven’t. I’m just *feeling* a good opportunity to buy more shares and reduce some Sterling.

 

Mid term, I’m hanging on to gold and silver. I’ve got together the cash I need to purchase a house and I haven’t had to sell a gram. After completion I will look at holding a little Sterling and maybe reducing my debt a little - especially my RPI linked student loan.

 

I’ve really really cut back on my short term trading. I seem to lose money with every trade and don’t seem to improve with experience. Every time I gain, I get greedy and lose it all. I just can’t seem to gear my brain to think ‘take the money’. Perhaps it’s because this portfolio has no aim other than get rich. Every time I make something I think I’m going to become a millionaire and I’ve lost it all before I know it. I still enjoy trading but I’m not really in a position to lose money for fun now. I’m long Oil and FTSE100 at the moment. Both positions under water.

 

I’ve roped the misuses in to contributing towards a fourth portfolio (to go with 1. Long, 2. Mid, and 3. Short). The fourth portfolio will be a ‘Buy a bigger house and pay off the mortgage’ fund. I’m targeting 15 years to pay off the mortgage on a future bigger house. I might start a trading diary for this portfolio when it starts (Probably April or May).

 

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I watch the occasional Mark Faber video when some one posts one and I read the occasional Martin Armstrong release.

 

I think Faber has had a great run recently. I find his outlook the most compelling one out there. Four videos released yesterday pretty much sum up his outlook over the last six months. He thinks a 20% correction on the S&P would just trigger more money printing.

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Hiya Cat

 

Good to see you back.

 

Agree H Dent would be a good guest on FBB. Had a quick look at youtube - most recent vid a quick look brings up = Oct 2009 -

 

I see his website has some freebie vids as well but these seem older

http://www.hsdent.com/hs-dent-free-video-downloads/

 

- do you have any more recent links?

 

+ I remember a while back when you were looking at TA skills training you suggested you tube is a good place to look - do you have (or remember) any links ?

 

+ What is that pic in your profile - a TV programme ?

 

Thanks - one of the last ones I listened to was

in November where he talks about gold going down which I completely agree with but havn't had time to fully analyse yet. All I can suggest is to just search all the videos you can and read his articles, but bear in mind his timing isn't spot on but what he says is.

 

The only person I tended to follow on YouTube for TA is Ira Epstein - great guy and I learned a lot about the markets and TA from his videos, although it's aimed at futures trading. He also has Jake Bernstein (often wrong!) and Mark Leibovit (very good) on usually every other week and posts these along with his 'Mid day metal report' and 'Mid day financial report' which are each day. Also videos explaining bollinger bands, slow stochastics etc.... Very good starting place for anyone and he explains so well.

 

http://www.youtube.com/watch?v=13IcPWwDXeU

 

http://www.youtube.com/watch?v=864pprnqXdE

 

http://www.youtube.com/watch?v=ckFCqlbWXTQ

 

 

Oh the pic in the programme - it's Filthy Rich & Catflap!

 

From:

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I think Faber has had a great run recently. I find his outlook the most compelling one out there. Four videos released yesterday pretty much sum up his outlook over the last six months. He thinks a 20% correction on the S&P would just trigger more money printing.

Excellent as always. And it's nice to know I am on track according to Dr Mark.

 

I haven't got many food stocks though... fertiliser... who makes fertiliser?

 

Have you noticed Dr Mark only owns one shirt and one tie?

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Have you noticed Dr Mark only owns one shirt and one tie?

I dunno about that, but I've noticed he seems to spend his life travelling, I wouldn't mind his airmiles!

But I just find his bigger picture views make a lot of sense. And I suspect he's a decent sort of bloke - would be good to have a few beers with him.

Somewhere to find his latest media appearances: Click

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Fair enough, are you able to post a chart or two explaining these fractal patterns that allow you to foresee future market direction vis a vis the dollar?

 

I'm just using the dollar fractal to confirm my projections - if anyone is good at doing computer stuff and can circle the points in question then feel free to post here. It looks like an 'M' but with the right peak being lower.

 

Below is what I posted on HPC financial section last month, along with some other analysis using very long EMA's on the dollar.

 

Can't remember if I've posted before or not, but here is the weekly dollar index - I see resistance around the 81 area which is also about a 50% retracement of the prior move down.

 

 

 

Chart above has been updated 24/2/10 to show the developing fractal

 

 

I did a post on GEI last month about a fractal pattern I had discovered on the dollar index that also occurred in from the middle of 1973 to the beginning of 1975 (around 18 months) plus the beginning of 1991 to just past the middle of 1992 (around 18 months). The current fractal started in the middle of 2008 and looks as if it will last maybe 6 months longer, no doubt because the recession this time has been longer than what occurred in mid-70's and early 90's.

 

So these fractal patterns are almost exactly 18 years apart and start after a peak in property speculation and where the economy goes into recession.

 

http://beforeitsnews.com/ckfinder/userfile...lar%20Index.jpg

 

 

If we go back and look at the last dollar 'recession fractal' then the point we are in now is early 1992. After hitting a low of 83.91 the dollar made a 60% retracement of the prior move down to 92.36 and this happened in the space of about 2.5 months.

 

 

 

 

The current retracement move we have now started at the beginning of December 2009, so 3 months would take us to the end of February where we could expect to see the dollar at a peak and gold at a low. I'm expecting the dollar to run out of steam in the 81 area before turning down to make new lows into the 60's.

 

- a 50% retracement of the prior move down takes the dollar up to a peak of 81.71 (green line)

 

- a 60% move takes it to 83.19 (pink line)

 

 

 

 

After we hit this peak the dollar should again be in freefall until the second part of the financial crisis starts - that's the end of the fractal pattern which lasted some 5 or 6 months to the beginning of 1975 (I'll try and get the exact data at some point) and 5.5 months to the beginning of September 1992.

 

If we were to make a low at the end of February then adding 5.5 to 6 months onto this would take us to mid-to-late August for a projected peak in equities. I already have late August or early September as a likely peak anyway so this is kind of tying in quite well with that and seasonally that's a time when volatility really picks up going into October. Seasonally I don't expect gold to be peaking here - some point in May looks more likely to me.

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Welcome back Cat!

Good thread this one..even if it means more homework :rolleyes:

 

Ta - know what you mean. I was planning on doing something else this evening!

 

Oh and the dollar made a bearish red hammer today, to go with the long black candle made on Friday.

 

Black candlestick

 

Signals downtrend movement (those occur in different lengths; the longer the body, the more significant the price decrease).

 

Hammer

 

A bullish pattern during a downtrend (long lower wick and small or no body); Shaven head – a bullish pattern during a downtrend & a bearish pattern during an uptrend (no upper wick); Hanging man – bearish pattern during an uptrend (long lower wick, small or no body; wick has the multiple length of the body.

 

http://stockcharts.com/h-sc/ui?s=$USD...id=p63220815732

 

If stocks are going lower then the dollar needs a bullish chart pattern, not a bearish one.

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I think Faber has had a great run recently. I find his outlook the most compelling one out there. Four videos released yesterday pretty much sum up his outlook over the last six months. He thinks a 20% correction on the S&P would just trigger more money printing.

 

It sounds like he is saying the same thing as I said in my "Manic Swings" articles

 

For a food play, I have : CORN.L, and calls on DBA

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I’ve pretty much stopped following all the experts and I’m going with my instincts. I don’t even read DrBubbs diary anymore. I watch the occasional Mark Faber video when some one posts one and I read the occasional Martin Armstrong release.

 

I sold some of my Kaz shares at below 1,000 expecting a pull back and it’s not happened. I’m not kicking myself. I made the best decision with the information I had available at the time and it’s not worked out as well as it could have. If anything, I’m glad I didn’t sell my gold shares and energy shares funds. I’m not expecting any serious pull backs from here and I’m happy to hold on if the price dips a little.

 

I think doing your own work and making your own mistakes is the only way of getting better - I just check two other people but by and large I now trust my own work and am able to 'read' the market better. Kaz, well at least you didn't sell at 4.00 - I thought I was doing well after I had bought at 3.00 and had locked-in a 33% gain. Like you, I gave it my best short with the experience I had back then - got burnt on bank shares, but kept a few gold/silver miners. All in all, I think it's been the best time to learn about and study the markets - very challenging!

 

 

I’ve still got a lot of Sterling in my long term portfolio (around 25%) and I am feeling nervous at the moment. I tried to buy Exxon at £40 a few times in the last couple of weeks but the price had gone up by the time I picked up the phone. I might dump a load of cash in to BP just to lighten up on Sterling a little.

 

Like you, I’m expecting shares to climb from here and the last few weeks have presented a good buying opportunity. I picked up National Grid for my long term buy and hold dividend payers. There’s sill loads of big companies offering a 4-5% yield at a time when savings accounts are offering jack S.

 

BP still looks good - p/e of 10.17 and a 6.3% yield. Something like 73% of the FTSE 100 earnings now come from oversees, so a falling pound should increase profits as these get repatriated back to the UK. I have looked at National Grid but I don't like the huge debt it has (£20 Billion plus by the looks of it) so prefer to invest in companies that have little or no debt and big cash reserves. Same with companies with huge pension liabilities like BT.

 

 

I’ve really really cut back on my short term trading. I seem to lose money with every trade and don’t seem to improve with experience. Every time I gain, I get greedy and lose it all. I just can’t seem to gear my brain to think ‘take the money’. Perhaps it’s because this portfolio has no aim other than get rich. Every time I make something I think I’m going to become a millionaire and I’ve lost it all before I know it. I still enjoy trading but I’m not really in a position to lose money for fun now. I’m long Oil and FTSE100 at the moment. Both positions under water.

 

You might find swing trading better by looking for 3 or 4 set-ups each year off a decent correction - I'm now aiming to be right and as accurate as possible with these swings, whilst keeping a core holding invested at all times with shares like BP, Astazeneca, Glaxo, BAE Systems and gold mining funds/shares plus a few others. I try not to focus on the potential gains but instead focus on getting the timing right - if I am right then the rewards will follow. I tend to see it all as a strategic game where I'm aiming to outsmart and beat thousands of other people.... it's like constantly playing chess and monopoly without end, except you can take breaks when you want and for as long as you want. I really do enjoy the challenge of it all!

 

I think you'll be above water soon enough - if the FTSE gets to 6,000 on this next move into early May you will be laughing. Just don't get too greedy and take some profits! :D

 

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I think you'll be above water soon enough - if the FTSE gets to 6,000 on this next move into early May you will be laughing. Just don't get too greedy and take some profits! :D

I lost my bottle last night and closed my oil long when it popped above $80. V.Small profit.

 

I piled All-In on the FTSE100 at 5280. I've got my head above water now.

 

I'm going to be a millionaire this time next week ;)

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Have you noticed Dr Mark only owns one shirt and one tie?

 

They could be all different, being an ecomomist he's probably bought them as a job lot in an asian sweat shop, can't be one too far away from where he lives?

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They could be all different

I thought the same thing when I was watching 'The Sixth Sense' and I turned out to be right

 

being an ecomomist he's probably bought them as a job lot in an asian sweat shop, can't be one too far away from where he lives?

:lol:

 

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I thought the same thing when I was watching 'The Sixth Sense' and I turned out to be right

 

 

:lol:

 

It was either that or he got them down Wembley market, I saw the spitting image of him down there the other weekend. I was tempted to say hello but you get a lot of pot smoking pony tailed old hippys down there so thought it was best not to for fear of embarrassment. (If your reading Mark I'm great fan of yours, please don't take it personally).

 

I haven't got many food stocks though... fertiliser... who makes fertiliser?

 

Take a butchers at this list on google finance it encompasses all that he was taking about with reference to exposure to the grains:

 

Individual Stocks on NYSE: CF, MOS, IPI, AGU, MON, TRA, SYT, DE, AGCO, CNH, ADM

 

ETFs: MOO, PAGG

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It was either that or he got them down Wembley market, I saw the spitting image of him down there the other weekend. I was tempted to say hello but you get a lot of pot smoking pony tailed old hippys down there so thought it was best not to for fear of embarrassment. (If your reading Mark I'm great fan of yours, please don't take it personally).

 

Take a butchers at this list on google finance it encompasses all that he was taking about with reference to exposure to the grains:

 

Individual Stocks on NYSE: CF, MOS, IPI, AGU, MON, TRA, SYT, DE, AGCO, CNH, ADM

 

ETFs: MOO, PAGG

 

Don't forget this UK stock traded which I have been buying:

 

CORN.L / Etfs Com Securities (LSE) ... chart

 

And DBA, etc.:

Check out the Food threads

here:

on Advfn: http://www.advfn.com/cmn/fbb/thread.php3?id=21259080

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A strong move up for most of next week?

 

- MACD has now gone postive on the daily charts (just)

 

- Slow stochastics now locked-in above 80

 

- Inverse head & shoulders pattern looks complete

 

- Price now above the 20, 50 and 100-day EMA's

 

 

Catflap's 'fourth full moon' cycle observation - is it going to come true again?. After a significant correction, previous big moves up leading to new highs since the cyclical bull market began have started around this time, eg:

 

March 11 full moon

July 7 full moon

November 2 full moon

 

Also Monday is one of two 'most important' Bradley turn dates for 2010.

 

From:

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In a cyclical or secular bull market price should not go below the 400-day EMA. Using a weekly chart and an 83-week EMA (400/251 trading days x52) then price recently hit this and bounced off:

 

 

 

 

Also, see how 1063 was major support at the same point

 

 

 

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I'm going to take some profit at S&P = 1180 and 1210

 

S&P futures looking strong this morning

 

Non farm (if positive) this week should send send the markets up. Hopefully Halifax HPI will be fairly flat at worst.

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Didn't spot it last week, but gold has now broken out of it's falling wedge pattern which is bullish. So a top must definitely be in on the dollar - we've already had some bearish candlesticks and my target of 81 has been met. Like equities, gold also has a bullish inverse head & shoulders chart formation.

 

http://stockcharts.com/school/doku.php?id=...s:falling_wedge

 

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Didn't spot it last week, but gold has now broken out of it's falling wedge pattern which is bullish. So a top must definitely be in on the dollar - we've already had some bearish candlesticks and my target of 81 has been met. Like equities, gold also has a bullish inverse head & shoulders chart formation.

 

http://stockcharts.com/school/doku.php?id=...s:falling_wedge

 

I respect your view, however, I look at it a bit differently. I would personally wait for GLD to break the horizontal resistance of 111 and only if the volume goes above average.

 

Advfn link

 

You seem to be bearish on USD at present. Do you rule out a possibility of equities, USD & gold drifting sideways until the "dust is blown" in April or May?

 

 

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I respect your view, however, I look at it a bit differently. I would personally wait for GLD to break the horizontal resistance of 111 and only if the volume goes above average.

 

Advfn link

 

You seem to be bearish on USD at present. Do you rule out a possibility of equities, USD & gold drifting sideways until the "dust is blown" in April or May?

 

Thanks for that chart S60R - shows it beautifully. Your approach is the right one for most people, but I personally really hate waiting for all these signals like MACD and everything else which are lagging. I'll admit that I don't pay any attention to volume in any of my trades and I'm a little unconventional in my approach - I like developing my own rules/figuring things out for myself and seeing things that others maybe don't.

 

As I said to someone else this evening, I use cycles, symmetry, fractals and patterns to give me a good understanding of what the market is doing - I still use moving averages, MACD and slow stochastics etc as well as market breadth stuff for equities. Candlesticks can also tell you what the market is doing or wants to do and I'm increasing my knowledge in that area as well.

 

I don't see a scenario of equities, the dollar and gold drifting sideways - it could happen, but the inverse head & shoulders pattern along with all the other work I've done says to me it's less likely. If the dollar heads back to the 71/72 area which I believe it will then stocks are going to make new highs. My other work says equities will make a peak in early May.

 

The focus could already be starting to shift back to the huge debts that the US has with what Niall Ferguson has been saying on American television. Forget the PIIGS - the US is still the biggest PIG of them all!

 

http://www.youtube.com/watch?v=0KD4Dr1efZs

 

http://www.youtube.com/watch?v=d7Rvha2_KT8

 

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... and I'm a little unconventional in my approach - I like developing my own rules/figuring things out for myself and seeing things that others maybe don't.

 

 

I am glad that you figured out how to evaluate your own edge that helped you to make a number of good calls and boosted your trading confidence. Surely, this gives you a great advantage. I remember a number of your posts related to K-wave theory and I will revisit and try to reanalyse them for myself.

 

... I use cycles, symmetry, fractals and patterns to give me a good understanding of what the market is doing - I still use moving averages, MACD and slow stochastics etc as well as market breadth stuff for equities.

 

I understand and am trying to follow a similar path. I am not too keen on fractals as they do fail very often, so do patterns and the lagging indicators of course. I have to admit that I don't have much experience yet. However, I do have scientific and engineering background and, at present, I am trying to evaluate individual probabilities of various patterns and indicators in the markets that I am trading. The aim is to do a simple statistical analysis to evaluate an overall probability. Once a good pool of data has been sampled I will code it in to give a semi-automatic signal for placing the trade. This can be easily done for indicators and even candlestics. The problem with the fractals especially the 18-year cycle ones is in the accuracy of the data and the insufficient sampling.

 

As I mentioned before, I need to review your work posted on GEI before, in order to see how you've overcome the above limitation with the K-waves. I will probably ask a few more questions very soon, if you don't mind.

 

Candlesticks can also tell you what the market is doing or wants to do and I'm increasing my knowledge in that area as well.

 

Me too, currently reading Steve Neson book on Japanese candlesticks. Interesting stuff, but requires a lot of comparison and analysis with the current charts. What was that black candle that you mentioned in another post. I understand the red and the white (or black and white), hanging man, hammers, dojis, but where the heck on earth the black one (in the context of red and whites) came from?

 

Many thanks.

 

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I understand and am trying to follow a similar path. I am not too keen on fractals as they do fail very often, so do patterns and the lagging indicators of course. I have to admit that I don't have much experience yet. However, I do have scientific and engineering background and, at present, I am trying to evaluate individual probabilities of various patterns and indicators in the markets that I am trading. The aim is to do a simple statistical analysis to evaluate an overall probability. Once a good pool of data has been sampled I will code it in to give a semi-automatic signal for placing the trade. This can be easily done for indicators and even candlestics. The problem with the fractals especially the 18-year cycle ones is in the accuracy of the data and the insufficient sampling.

 

Bulkowski might save you a bit of time

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Bulkowski might save you a bit of time

 

Thank you, GTG! I have bookmarked his website and will have a thorough look once I have finished with Nison and Achelis books.

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