Mid Week Update and Shine On

Looks like this morning that the futures are rolling over a little bit as expected. Still early, so we'll see what develops. Next turn date is monday, Jan 4th, 2010 and is a low. Very subdued markets over the holidays, enough to put you to sleep. On to other things this morning.

Below is a picture I took of the beginning of my solar project.

These are just some of the components that go into building a do-it-yourself solar panel. What you see here is a 2'x4' piece of 5/8" plywood, some pegboard, 3 of the total of 36 polychrystalline solar cells that will be joined in series to make the complete solar panel, tabbing wire, a solder flux pen, gloves for handling the very fragile solar cells, and 4 small diodes which act like check valves so that the power generated from the cells can only go in one direction.

The cells, diodes, tabbing wire and flux pen all came in the fed-ex box you see in the picture. This stuff came in a package kit I bought on ebay. The cells are 3" x 6" and are very fragile, sort of like a potatoe chip. The general idea here is to connect 36 of these cells in series to get an output from the panel of about 18 volts, since each cell should put out .5 volts under direct sunlight. Anyway, we'll delve deeper into the project in future blogs. Right now I have the panel box built and painted and am about to begin soldering the cells together. Steady as she goes, matey!

Mid Week Chart - Ho Ho Ho

I should know better. Doubting the tide trends most often does not pay. This trend, after a questionable start, seems to be shaping up nicely now. Of course it is Christmas, so what would you expect?

I am humbled by the donations and support that the followers of this blog have exhibited in recent days. It just shows once again the true character of the great people of this country in a small, yet visible, way. As strange as it might seem, it helps give me the confidence that folks out there are finding my work useful to them in their trading or analysis of the markets. It may seem insignificant, but it is not, at least not to me. So, to those of you who made any donation to this cause I want to thank you sincerely and wish you and yours the Merriest of Christmas and a healthy and Happy New Year. And let's not forget profitable !!

Yes, It Is

that time of the year. For giving and receiving. I have spent many hours in the past and not quite as many now, coming up with these tidal turn dates. I hope and trust these dates have been beneficial to you in your trading strategies. Are they always correct? Hell no, but they are a lot better than most anything else you'll find out there. So what am I trying to say? Its simple. We all want to know our efforts are not for nothing. An occasional atta-boy is good, but if you really like what I am trying to do here, a token measure of your appreciation through a donation speaks volumes. Its what makes me know that you REALLY do want me to continue with this effort. If you dont have any appreciation for it, let me know and I'll discontinue this adventure. Afterall, 90% of what I have done here for the past several months has been for the readers, not for myself.

Down at the bottom of this blog is a donate button. Please use it; no matter how small the donation, it is welcomed. You see, I have a project starting here at home and that is the building of DIY solar panels. Donate through paypal and that donation will go directly to this project and if successful, I'll post in the future the progress of this project. In reality, your donation actually does go to the greening of our planet and the reduction of my carbon footprint!

Weekend Update 12-20-09

It may be the time to be merry and all that, but it's also the time to be busy at all kinds of things. At least thats MO right now. Anyway, above chart posted just a week before Christmas with an expected high going into Christmas day. Not much exciting going on right now as the trend has been flat and sideways for the past month or so.

Above is the S&P crossover technique that is used to target future price levels. As you can see, I have simplified the signals a bit and two of the signals have been met with 3 others still to be reached. These remain in the 1,200 snp area and up around 1,400. Yes, they are still "live" targets that will be hit before any type of a major correction.

And last by surely not least is Tom Drakes 2cs. Not much happening here just as not much has been happening in the overal markets since early November. Interpretation? Sentiment still remains at overly bearish levels.

Weekend Update 12-12-09

There....that should pretty much do it. One whole month of sideways action should now be over and with it the consolidation prior to new highs. So, we could see a blip downward here into the tidal low date on tuesday and then its up, up, up. Not surprisingly I guess is that the high tidal date is none other than Christmas day. Who would have thought that? Why Santa would have, thats who. :)

Mid Week Update

Can you say inversion? A mild one though, but even still, an inversion. I think we usually get two or three cycle inversions in a row, so I'm anticipating a probable low on monday 12/15/09 to get the cycles lined back up again. And I think that would reset other indicators as well.

Mid Week Update

Sure looks like an inversion underway here. When the low came in on the 27th of November that should have been the clue that something was up. Best guess now is that we might peak at the end of this week then go down into the expected high on 12/10/09 or the day before that on wierd wollie wednesday. Just when you think everything is clear, someone shuffles the deck on you.

Weekend Update

An interesting thursday and friday huh? All in all, pretty much a sideways move into friday's high. Lets see how we proceed from here. Bears are calling this a topping pattern, bulls a consolidation pattern. I prefer the latter. You might note I've pulled the uptrend line down to a more shallow angle to better represent what we've seen in the last few weeks. Bottom trendline has not changed for quite some time. Which line gets broken first ?

Mid Week Chart and Thanksgiving

As of this morning, it appears we are climbing up into the day after Thanksgiving high as expected. Though it looks labored at this time, it is to be expected after such a long and steady advance since last March. For that, I am thankful as my portfolio is much improved from a year ago. As much as I feel the need to protect those profits, I also must be cognizant of the strong possibility that this advance is nowhere near complete as evidenced by the continued bearish sentiment which can be found most anywhere in the blogosphere. Let me ask you this, how many purely bull boards can you name versus just the opposite? Lets face the facts, this decade has pounded the bulls and the bears alike....the end result seems to be fear and loathing of the markets in general.

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Enough babble for now. Here's hoping everyone out there enjoys a safe and rewarding Thanksgiving surrounded by the people who really are important ....your family. Enjoy them, for life is indeed short.

Make Me Believe

Bulls have a little work to do next week to turn this trend around. The all too obvious answer is of course a rally into and through Thanksgiving topping out on the day after turkey day, which traditionally I believe is a strong bullish day. But, the boys may have other ideas here just to trip things up a bit. So dont be surprised to see a trend "inversion" where we bottom shortly after Thanksgiving. Sentiment is still in great shape, and we still have overhead targets yet to be reached.

Mid Week Chart

Pre-Turkey 2CS Sentiment

Good time to take a look at sentiment again. Tom Drakes 2cs senticator above on which I've drawn a couple of heavy black lines more or less bisecting the recent sentiment line and the price line. Notice how, as price has maintained a steady upslope since March, sentiment exuberance has actually backed off in the same time period. IOW, as price has remained more or less linearly up, sentiment has gone into a topping pattern and almost looks to be becoming more and more bearish as price marches on upward. We've got a long way to go before this market tops out.

Path of Least Resistance

Certainly feels to be up, doesnt it? Monday we complete a weak downtrend, unless of course for some reason we swoop down to begin the week.....that would be a surprise to me though.

So, what now? Well, I would like to see some weakness on monday to setup the upcoming uptrend into Thanksgiving. The actual turn date from my data falls on Thanksgiving day, but given the propensity for the day after turkey day to be up, I think its safe to pick friday as the turn....besides, we all take the day off and the boys have their way with the market and a full belly of stuffing, correct?

Needless to say, we completed a "seasonal inversion" in the markets whereby the seasonal changes (increase) in tides and gravity have largely been ignored or overtaken by other factors. My interpretation of what that means or can mean is that now with those forces weakening day by day and week by week, we reap their additional boost to the markets. I think we'll see a fairly strong end to November, a decent correction into the beginning of December and then an Xmas surge. All in due time.

Mid Week Update

No comments tonight.....too much else going on right now. Good trading !

Up, Up and Away.....Or...

There are times when this tide stuff just seems to be another smoke screen in the ever daunting task of trying to determine market direction. And then there times like now when it is spot on and like taking candy from the proverbial baby. Guess that's what makes it all interesting and intriguing.

So, we apparently head on up into the 11/11/09 date as a high. Interestingly, the same date coined as WWW by Don Wolanchuk and infamously known for a period of weakness prior to options expirations. So...........will WWW give us a low and the following trend an incorrect tide trend that morphs from a bearish one to a bullish one? Will we instead tag or penetrate the upper trendline as we approach turkey day here in the states? I'm leaning that way, but with some caution. From a personal standpoint, I am probably 75% long throughout all personal accounts and 401k, waiting for a signal to either go further long or take some off the table. I think the next week to two weeks will tell a lot about where we head for the next several months. If I were a betting man, I would say we trend up from here into mid February 2010.

Mid Week.......Yeah, Update

Sometimes words are not needed.

Path Forward

Before off hours futures starts trading this evening, I thought it'd be good to get some thoughts and possibilites down on paper so to speak. Regardless of where I think the markets are eventually heading, I think we're at a critical juncture right here where a couple of different scenarios could play out.

First, given that the market is down right here, the possibility exists that short term they will continue on down into the tide turn date and possibly into the bradley date with some accelerated selling. Call it what you want, a strong correction or a mini-crash, it's a possibility that should not be ignored. It's been a great run and opens up the chance to rape the bulls relatively easily at this point. So, if we get this, that opens the opportunity for a good buying spot into the second or third week in November.

If, on the other hand, we get mild selling or even sideways action into the wednesday tide turn date or the bradley date, followed by a correct tide uptrend, then one might expect at the end of that trend, the following down trend could be one to be very wary of if you are a bull.

To summarize, I think caution is called for in this period to see how the markets want to handle a likely and needed correction.

Trick or Treat, Huh ??

Aha, a little trick for the bulls, huh? Halloween goes to the bears, but ultimately, who cares? With my portfolio up well into mid-double digits, I have little trouble giving some back for the next bull onslaught dead ahead. Oh really, you might say? Well friggit, let's look at some evidence. But first, where we stand currently at the end of October, you know that scary, bad for the market, portfolio eating month of October ?



Where we are is pretty much exactly where we would expect to be....prior to a tide low mid week this week. And, we have a Bradley date shortly thereafter pointing to a turn. And we have bears and even weak handed bulls looking down, down, down. You suppose the markets going to accomodate all this bearish sentiment? Highly doubtful, for as we all the know, the markets will never make everyone rich nor even happy, so forget about that.

Take a look at Don Wolanchuk's clx chart below. Here is plotted the 3dma, 10dma and 30dma of the clx as well as the vaunted aydis all along side the relative movement of the dow.

All indications point to higher prices and in short order. Not shown here is the fact that in a couple days (tuesday or wednesday) there will be negative numbers falling off all these dma's such that the averages will surge upward and so will the market with it. You see, each of these averages mimic the dow in particular and the markets in general. For those not familiar with the clx and wanting a short and sweet primer, here it is. The clx measures the stock inventory that the market makers have on hand at any particular time. See, I told you it would be short and sweet.

On to sentiment. Tom Drake's 2cs in particular is plotted below. With end of week action, sentiment has gone over the top as bear froth abounds. Notice how the 2cs has plunged as the vix and p/c ratios gone out of sight. Great fuel for the upcoming blast.

And last, where are we heading? As it now stands, we've only taken out 2 of 7 targets to the upside! See chart below where the 1,100 has been hit but there remain 4 plum targets in the 1,200 zone and one way up there at 1,400 which will get taken out sooner or later. My guess? 1,200 falls easily by the end of the year....1,400 by February/March timeframe. Who knows what additional targets will develop on the glorious journey up? You know there will be blips and beeps and corrections...just keeping my eye on the most important ball in the game.

Sooooooo....short term look for some weakness early next week before everything gets back into alignment.

Mid Week Chart

Watching closely. Quick to the bottom trendline, lets see if it holds here. If previous "scheduled" turns during this bull run remain true to form, there should be a 1 to 2 day earlier than expected turn, so maybe Nov 3 or Nov 2 (tuesday or monday).

Clx with Some Tide Mixed In

Responding to Joe's question below, this chart is a plot of the actual Eastport tides (lowest tide) each day along with Don Wolanchuk's 3 dma of the clx. I wont get into the clx here and now; it is a subject that requires quite a bit of explanation. However, I will say that it marrys and mirrors the tide stuff pretty well.

Anyway, getting back to the subject....You see the black arrow pointing to todays extreme level of tidal swing....what this particular point represents is the highest elevation of the lowest tide in quite some time. In other words, todays tide level (lowest tide for the day) is higher than at anytime for quite awhile. Taking this a little further, we are at a point where the moons gravitational pull on a seasonal basis is low, low, low......we should coincidentally, if you believe low gravity equals higher market prices, then we should be at or nearing a seasonal top........food for thought and a reason for my caution. I know this was short and sweet, but it's a monday....lol.

Let me add that this hypothesis needs additional thought and work, so dont bet the farm on it!

Weekend Update

Lots of sideways up and down action. Will need a strong monday to make this trend good. Though not shown on this chart, Oct 22, 23 was a Bradley turn date and monday the 26th is one of the strongest tide dates seen in awhile. Turn imminent or another setup to pull more bears back into the market? I moved a little money from small caps into large caps and added a little into bond funds last thursday in my 401k. May make some more adjustments this week depending on monday's action most likely. Still have some unfilled promises in the 1,200 snp range, but may have to wait for those to be hit.

Mid Week Update

Last week's downtrend whimped out into a sideways move and we're now back into a tidal upswing. Projected top of this trend is next monday, 26th of October. This date, by the way, has some tidal significance in my work and will require special attention when it rolls around. I think right now it will form an intermediate high of some significance in this rally, and will likely result in some lightening up of long positions on my part, and potentially taking of some defensive positions. Just an indication from my charts, not a recommendation in any way.

Hoping to get back to the trading aspects of the tides before too long. A project looms in this respect to attempt to prove or disprove the reality of trading the tides with eminis as the trading vehicle. More on that later, probably in a couple weeks as family is beckoning this weekend. Trade well and stay on your toes, particularly in this timeframe.

Weekend Update, Another Look at 2CS

Where are we? Well, it appears the Oct 12 turn date was blown out of the water by this bull market as if it never existed. Or has it? Upcoming turn date is monday the 19th which is supposed to be a low.....very possible it could still happen. Since we had options expiration last week and friday was a down day, I suppose you could make the case that options expiration adjustment began friday and another down day or two would do the trick.

Technically, if the ES prints below about 1,075 on monday, this downtrend would be correct, though just barely. So, can we expect the uptrend to resume on monday or even tuesday? I think the answer is yes. Lets take a look at sentiment. Below is the Tom Drake's 2cs updated through last friday.

Although sentiment is approaching the trendline, a reasonable interpretation would be that if this is the start of a bull market, sentiment has room to grow as evidenced by the behavior of this indicator in 2004 through 2006 bull market. But, maybe it is different this time.

In The Grand Scheme of Things

From Carl Futia's (http://www.carlfutia.blogspot.com/) book, "The Art of Contrarian Trading" comes the plot above which is the SPX monthly with a 4 year or 48 month simple moving average overlay. Carl uses this very simple graph to get a grasp on whether the market is under or over fair value. Price below the moving average indicates below fair value and vice versa. Just another tool for the toolbox. :)

Tide Update

Just a quick look at where we are this sunday afternoon. Expected high tomorrow (monday), but keep in mind we have options expiration on friday.

Trading the Tides, Part 2

Last week I posted a few charts showing equity growth if one were to trade the tide turn dates over the last 3 plus years. If you scroll down to earlier posts, you'll see the two charts, one based on what I have termed a 50% entry/exit and the other labeled nirvana trading where the absolute best entrys and exits are assumed (not possible). The reason for these two charts is to frame what is felt to be the absolute best and possibly worst trading results (although it is entirely possible for a trader to do worse than an average 50% entry/exit).

With the extremes set, we should now take a look at the range in between these two. A little more explanation is in order to understand the following charts a little better. When I refer to a 75% entry, here is what I mean. Lets say that an impending tide turn is imminent (for instance this coming monday) such that the trade called for is to close out a long position and reverse to a short position. Also, lets assume that the snp ES range for monday is a low of 1,060 and a high of 1,073. A 75% exit long and entry short then would be 75% of the difference between the high and low, and since we are looking for a long exit/short entry, we want: (1,073-1,060)x.75 plus 1,060. If I have done the math correctly, this translates to a price of 1,069.75. So this price of 1,069.75 then represents a 75% entry/exit for this day.

Similarly, if monday were instead a tide low date (short going into that day) and the price range were the same, a 75% exit/entry to exit short and enter long would then be: 1,073-((1,073-1,060)x.75) or 1,063.25. Pretty simple concept.

Now, lets look at some equity charts with varying degrees of success with average exits and entrys. Below are 3 charts illustrating the results.

At the top of each chart in the title block the entry/exit assumption is shown. Below is a chart with all the charts combined.

The heavy white line has been drawn to show a 100% return on investment, on in this case, starting with a $25,000 account and have it grow by $25,000 annually. Apparently, to realize this type of account growth, the average entry and exit would need to be in the 65% to 70% range based on backtesting data for nearly a four year span. At some point, I would like to go further in the past with backtesting. Again, this return is based on trading one ES contract and has no consideration for drawdowns, which if you are a trader, you would know how those can affect a trader's ability to stay in a losing trade. More on this later.

Mid Week Update and Nirvana Trading

Above is a chart of where we are on the snp ES as of about 5:35 pm, tuesday 10-6-09, the day after my birthday. :) Clearly the tidal low expected for today actually came in late last week. There seems to be a tendency for a turn date to occur one or two days early in the direction of the predominant trend. In other words, in this bull market, the low and turn upward seems to come in earlier than expected, as if the market can hardly wait to resume it's upward march in a bull market. I will have to check to see if this the opposite occurs in a bear market......In any event, monday the 12th is the next high point of this rally according to the tides.

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Now, back to trading. Last weekend I posted a chart based on trading the tides with a 50% entry and exit. Just for giggles, below is a chart of nirvana trading where the basis is that a trader would get the absolute best prices available on the turn dates. Obviously this is not possible, but I post the chart just to frame the boundaries between what should be bad trading (the previous 50% chart) and what is impossible to do (the 100% chart). Now the limits are set and this weekend I'll put up some charts of equity growth based on what we might theoretically expect a trader, only slightly smarter and more experienced than that caveman mentioned earlier, ought to be able to do. Keep in mind this is based on trading a single ES contract and getting the impossible best prices for entry and exits. Also no consideration for drawdowns is included here.

Trading the Tides ?

Since beginning this blog a little over a month ago, I've touched upon the tides and trends but have said nothing about trading. Let's delve into that area a little bit here. It seems obvious that if the tides are anywhere near consistent pointing to top and bottoms, we ought to be able to trade with this information. So here's what I 've done.
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My tide data goes back a little over 3-1/2 years to the beginning of 2006. I've downloaded the S&P emini daily price data (open, high, low, close) from Tradestation over that time period and laid it up against the tide turn dates I've developed. Since the eminis trade 24 hours a day, understand that the official beginning of a new day is at 4:15 pm est and runs to 4:15 pm the following day.
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An assumption must be made in order to backtest the data. That assumption being at what price on each turn day one would theoretically be able to either buy or sell the emini contract. For this assumption, I've varied the efficiency of the entry and exit points to examine various equity curves based on these entry/exit points. I start first with what I call a 50% entry/exit. What that means is that on any given tide turn date, a trader would only be able to enter or exit a trade halfway (50%) between the high and low of that particular day. In other words, if the tides indicated a turn next tuesday (which they do), and the trading range for eminis on that day was from 1010 to 1030 and the trade required was to go long, then the trader's best low entry price for that long entry on that day would be 1020, or halfway (50%) between the high and the low of that day. As that long trend and trade played out to the next turn date, his exit long and go short price would again be 50% between the high and the low of the turn date range. So, if the trading range on the reversal turn date is between 1040 and 1052, then the exit long and go short price would be 1046.
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Using an excel spreadsheet to tabulate all the entrys and exits for each turn date, I then calculated an equity curve using a theoretical $5 per trade commission cost. Below is a chart of those results dating back to the beginning of 2006 with an assumed starting account of $25,000.


As you can see, nothing special here. Over almost a four year period, a gain of only about $10,000 on an initial investment of $25,000, or roughly 10% annual return. And some fairly wild swings in equity with undoubtedly large drawdowns along the way. Surely, we can do better than this. Well, we can do much better than this...actually much better by improving the entrys and exits on the turn dates. Keep in mind the equity curve above is based on only being able to get average entrys and exits at prices halfway between the highs and lows of each day. Surely, even a caveman could do better. Mid week, I'll put up some more equity curves based on what a trader should be able to do.

Weekend Whirl and Wierd Wollie Wednesday

Sometimes I'm just amazed at it's predictive power. Maybe I shouldn't be, but show me something more accurate for targeting highs and lows. Not always exact, as nothing is, it just keeps plugging along.

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So, its targeting down into next tuesday. I see a couple of things that could trip us up a little bit here. First, it tagged the lower up trend line on friday and secondly, we face the vaunted "WWW" on wednesday. For those not familiar, WWW is an acronym for Wierd Wollie Wednesday. Its significance, as espoused by none other than 16 time winner of the Timer of the Year Award, Don Wolanchuk, is that there is a tendency for the market to be taken down into the wednesday before the week of options expiration or OE. OE occurs the third friday of every month, being on the 16th of October this month. Therefore this coming wednesday is WWW so we might expect a low at that point. So, low maybe tuesday or wednesday.

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Those who dont know Don Wolanchuk are missing out on a real market guru gem. He's controversial, outspoken, sometimes arrogant......but he's also good at what he does. So for me, that trumps any fault, and we all have them. Besides, once you get to know the old geezer you'll see he's of a large heart for people. His picture is, by the way, next to the word mega-bull in your dictionary. Don worked with Joe Granville for many years and took his on balance volume work to new heights with his clx. Someday in the future I'll delve into that system for you....but by necessity due to the clx's many intricate features, it is beyond the scope of this blog. However, I can direct you to a full course on the subject as Don has done for many others over the years. I was fortunate enough to get in on the ground floor of his technique in the early 2000's......it has become an integral tool for me and it was the key he says to winning so many timer of the year awards.

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On the oppisite side of the bull, if the bear case is taken, this tide turn date and/or WWW will be rejected and the market will continue the short term trend right on down through the trend line and we "crash" at that point. With bearish sentiment as it is right now, not a likely scenario.

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I have been running some backtesting on a simple strategy of using the tide turn dates to buy and sell the eminis (ES). I'll get those up on the blog, hopefully this weekend.

Mid Week Update - 2 Charts

Starting with the standard tide chart. Just barely had a successful trend last week with yesterdays high. This weeks trend into next tuesday is forecast as a downtrend, which seems entirely feasible given where the market has been in recent weeks, and why wouldn't it come down a bit and tag the lower trend line ? Nothing says its got to be that way though.

Okay, second chart. Revisiting Tom Drake's 2cs below. You can see that sentiment has backed away a bit from the log trendline. Does not seem to be a lot of bullish exuberance showing up here yet. My take anyway.

RUH ROH ???

I'm not saying watch out, but I dont like seeing what I think I'm seeing. Last weeks trend was a bad trend...this weeks also looks bad...at least at this point in time. What concerns me a little is the combination of two things....first, its looking like this weeks is shaping up to be an "inversion" to the downside in the midst of a bull trend. Secondly, if you look down below to the Price Projection post, you see that we have filled price projection #2 right now at 1,065 to 1,070. So, this could be something more than just a blip on the price chart......we would have some work to do to correct this trend which ends on monday.

In any event, my antennae are all the way up. ;)

Update

Just a midweek update. I've seen targets from 1,085 to 1,200 for this run. I'll pick a point about 1,115 ES before some sort of a correction which begins this coming monday.

Price Projections

One of the things I've picked up over the years is that there are folks out there in cyberspace who have been studying these markets much longer than I. People who have scientific inclinations that have or are pushing the discovery envelope so to speak. One such person is Joanne Mcable who often is posting at Wollie World http://www.crystalball-forum.com/context/main/wollieworld/msgindex.htm.

She has a terrific talent for research and discovery not often found in this business, often searching for the hidden clues or indicators of market direction. Unless I have misrepresented her work in this area, the chart above describes one of her little discoveries.....though I think she would probably describe it as a work in progress or esoteric piece of work. It is one my little favorites though because it is a price projector and not based on fibonacci work, though there is nothing wrong with that either.

Here's what it will look like. Plot the closing prices of the snp and run a 10 day simple moving average (yellow line) against it. On top of that, plot a 12 day exponential moving average (red line). I use excel extensively so it is easy for me to do it in this manner; most plotting software out there will easily overlay these moving averages over the snp.

Here's how it works. The 12 ema is the faster moving of the two moving averages. It will turn up quicker and turn down quicker than the 10 dma. As price rises or falls, the 12 ema will lead the way until at some point, about halfway along the total price movement, the 10 dma will catch up and cross over the 12 ema. So, what the crossover of the 10 dma over the 12 ema indicates is the halfway point of a price movement.....as the 12 ema turns up and gains momentum, likewise it gets to a point where the momentum of the price movement slows and the ema is eventually overtaken by the slower moving 10 dma. In other words, the moving averages are measuring the momentum off a price low or high. For instance, below is a listing of the measurements taken off the 6 indicated lines:

#1 Price low = 670, crossover = 775, projected top = 880

#2 Price low = 670, crossover = 875, projected top = 1080

#3 Price low = 670, crossover = 920, projected top = 1170

#4 Price low = 670, crossover = 940, projected top = 1210

#5 Price low = 880, crossover = 1020, projected top = 1160

#6 Price low = 670, crossover = 1035, projected top = 1400

As you can see, #1 price projection was met on April 17th, and #2 price projection is in the process of being met right now. Number 3, 4, and 5 have projected to the 1150 to 1200 area within the rectangular box. And lastly, but not leastly, #6 is pointing to a high of 1400 presently based upon an apparent crossover occuring right as we speak. This one may be a bit premature, but it looks to be another crossover in the making, and I am more than happy to give it a thumbs up at this point. :) So, quick summary.....projections 1 and 2 have been met. Projections 3 through 6 not yet satisfied.

One thing to keep in mind of which Joanne herself has cautioned several times. Often the crossover will point to a top or bottom and not the halfway point of a move. This is obvious because as price makes a turn, its 12 ema will crossover down, or up, through the 10 sma making it look as if it is the other way around....i.e. making it look as if the 10 sma is catching and overtaking the 12 ema where in fact it is not, and what is happening is the faster moving ema is responding to rapid price movement instead. Something to watch out for.

In any event, I like this tool. Certainly can be open to interpretation and can sometimes be misleading but arent they all? I keep it next to my hammer..:). Another point is that this tool does not seem to work well with individual stocks, although with some I seem to recall it does. You would have to work with it on various stocks and even play with the lengths of the moving averages to find one that fits best.

What does this all have to do with tides? Absolutely nothing, but I like to stray from the waters edge once in a while.

Looking at That Spando Thing Again.......

A while back I posted a tidal chart wondering if the possibility of a spando thrust was underway in the snp. Taking another look at the chart today, we see that price has broken above and outside of the narrower trend range and is currently parked up above the upper trend line. In addition to that, yesterday (friday the 18th) was in fact a tidal low date. Does that mean that we are heading back up again next week to satisfy that criteria? We are several days past a new moon and consequently the forces of gravity from the moon are weakening each day. Keep in mind, the hypothesis from Taylor is that decreasing gravity results in higher market prices and increasing gravity in lower prices. Time will tell.

Our last tide trend we have to qualify as a bad trend. In other words the white line on the chart (indicating incorrect trend) "should have" terminated in a price lower than the beginning of the trend because it was supposed to be a down trend. But, bullish forces being as they are right now, did not allow that to happen. Generally, the trends are 75% to 80% correct as indicated by the tides.

Tom Drake's 2CS Senticator

One of the most underutilized methods of looking at the markets is probably sentiment....how fearful or greedy investors are feeling at any particular time. Here's a snapshot of Tom Drake's 2cents senticator. Tom's a regular poster on WollieWorld Forum at Crystal Ball http://www.crystalball-forum.com/context/main/wollieworld/ posting as "deuxsous", and at Don Wolanchuk's Valence thread on Silicon Investors http://siliconinvestor.advfn.com/subject.aspx?subjectid=52296 posting in cognito as "dospesos". He has permitted me to post his work here. For those who dont know him, Tom is THE sentiment meister having spent many years studying sentiment....one who is recently retired and most interested in capital preservation......so he necessarily needs to get a market pulse at all times to sidestep deep downdrafts.

Here's what he does. He uses the daily vix and cboe put call ratios and takes the summation of the product of these two numbers for the last five days. I believe he feels this compensates for any games that might be played by the boys.

The chart above plots the senticator against the Dow since early 2003, which is as far back as my data goes. Blue line is the Dow (scale on the right hand side) and the yellow line (scale on the left) is Tom's senticator. You'll see the senticator moves somewhat in tandem with the Dow, but that is not the important piece of this work. For ease of discussion, I've added a logarithmic trend line (least squares fit) of the senticator (light blue line) which from 2003 to present shows a gently down sloping line from about 60 to 80. Now, please note that since the senticator is the 5 day sum of vix times p/c ratio, as stocks rise and the vix and p/c fall, the senticator falls. Since I have a little dyslexia, I've actually turned his 2cs upside down.

Okay, what do we see? Note the 2cs coming out of the 2003 hole....similar in many respects to what we have happening right now. As the Dow climbed, likewise the 2cs climbed with it. Until it hit the log trend line (light blue line) more or less and then hovered above and below this trend line through all of 2004, 2005, 2006 and early 2007 (bull market territory). Once things started to go in the crapper in late 2007 and into 2008, the 2cs likewise dropped well below the log trend line and stayed below it.....even today we are below the trend line with a 2cs value of a little north of 100.

My interpretation: The 2cs, in a bull market, seems to have an affinity for hovering 0 to 20 points above the log trend line. What that means to me, in this environment, is that the rally will continue until the 2cs spends several months or even years bouncing back and forth from 60 to 80 (just above the log trend line), or......between 40 and 60 if past history in 2004 to 2007 is to be believed. A long, long way yet to go.

Notice how the 2cs "peaked" on July 21, 2009 (my wife's birthday) as has actually backed away from the peak all the way through the August and September run up. Meaning that as this rally has gained legs, sentiment has actually gotten more and more bearish! Under a similar situation in late 2003, the Dow simply ran up right through these "seasonally bad months" ahead of us and didn't peak prior to a significant correction until February 2004. So, hold on folks. Are there differences between then and now? Surely there are and there will be corrections along the way, but this senticator is saying, at least to me, higher prices are ahead of us, possibly much higher prices. Next weekend we'll take a look at a means of projecting these higher price levels.

Where We Are...What Lies Ahead

Just a quick one tonight....present picture snapped at 9:47 pm est 9-9-09. Lots of folks seem to be getting a little antsy in here.....No interpretation, just some markers on the chart....have fun!

Credit Where Due

I would be remiss should I not give credit for the tidal / gravity work where due. A few years back, I was directed by a friend to this website: http://www.xyber9.com/Xyber9/Home.aspx. Admittedly, I was a little intrigued by the concept, though I seldom buy books on line simply to learn something new (bad me).

Anyway, to make a long story longer, I purchased Robert Taylor's book Paradigm, as advertised on his site, and gave it a read. In general I thought it to be a pretty good novel, though a little dry towards the end....but the concept that gravity, as measured by our tides, has a direct cause and effect on our markets really, really caught my interest. Maybe there was something to this. I am no astrologer (I did enjoy the study of planets in school though:)), but perhaps there was a connection between those who studied the movement of planets and our moon, with the tides on earth.

At the time, the purchase of the book got you a free, short term subscription to his service....I cant recall, maybe a 3 month subscription. Regardless, the subscription opened his website for one to view his forecasts....ones that seemed to be accurate most of the time. Could it be he had discovered something really meaningful for predicting turning points and direction of the markets? As obscure as the concept sounds, do fluctuations in gravity actually affect the way we feel emotionally and therefore help determine how we invest?

At one point Mr. Taylor had opened a discussion forum on his website for subscribers to discuss any number of topics relative to his discovery and his book. I remember some interesting and lively chats. Some folks actually resrearched various techniques to improve entrys and exits on his turn dates using the moon and its influence on a daily or hour to hour timeframe as the basis for their study. Unfortuneately, he shut the forums for reasons that elude me right now. Thinking back, it would seem maybe not a wise decision, but he had to do what he had to do.

Regardless, for those with an interest in the possibility that forces of gravity actually do more than just suck us down to earth, I highly recommend purchasing the book. Read it and make up your own mind. In it you will discover the basis for his predictions....notwithstanding the alterations he makes to his data with his so-called xyber9 program.

Full Moon Spando Thrust ???

Here is a screenshot of the s&p eminis (ES 60 minute) annotated with a spattering of lunar points of interest, projected tidal turns and even some quick and dirty trend lines. I guess the more technical folks might call the smaller trend envelope a running correction or a consolidation pattern.....but what of the larger envelope? Is it possible that we are inside of a larger degree spando (courtesy of Don Wolanchuk) of some sort? Now, let it be known that although I do own a technical background, I am by no means a master of technical analysis, not even close. I know there are rules and regulations and proper techniques in the world of market technical analysis....far beyond the scope of this blog...but, I'm just thinking out loud here and considering.

I've also "projected" a couple of weeks ahead here.....with options expiration coming up shortly, it should be interesting to see how this resolves. Others are of the opinion that we should see a high coming into September 18th, which coincidentally corresponds to both a new moon and options expirations. My tide data suggests otherwise, but I could be fairly easily convinced that a run up right past the 9-11 date does occur and we end closing even higher on the 18th, especially the way this market feels right now....we shall sea...:)

Just a note about future interpretation of data. My goal will generally be to project turning points and trends based upon my raw data. In my opinion, there is something meaningful and a direct correlation between the tides and the markets. However, there are times when that correlation seems to go down the tubes so to speak. Nothing's perfect....certainly the injection of other's opinions and other methodologies makes perfect sense.

Back to the Basics

A very simple primer on the moon but with some important concepts and facts. While we wait to see what the markets want to do on this full moon day. Good one to just stash away......
http://www.enchantedlearning.com/subjects/astronomy/moon/

Past Performance Is No Guarantee.....

So they say. But history does tend to repeat itself. Anyway, here's some history from December of 2008 through July 2009.