Chrib:

jackg1606:

Yep, since the SP500 broke out of that rising wedge I've been waiting for this market to turn south fast.  Maybe it will happen this week.  I think part of the delay is the low volume due to August vacations.  If it doesn't turn south this week then next week will be very likely.

So you're leaning bearish? That's interesting. I'm actually leaning bullish but like you trying to remain unbiased because it really is 50/50. My blog post tonight is on the subject of where we are in the cycle.
No doubt the long term trend is down but downtrends are the most complicated, home to the biggest rallies, ironically.

On the SP500 the 50 day is below the 200 day moving average.  In this condition you have to lean toward the bearish side.  I think the saying is the market is guilty until proven innocent.

Here is a link you may find interesting.  It shows the ratio of bulls to bears. 

Link

In theory, when there are too many bulls in the market a downturn is imminent.  The fact of a large number of bulls being in the market signifies that most people who are going to buy most likely have already bought their position.  This makes it easier for sellers to take control of the market because of there being fewer people willing to buy. 

When there are too many bears in the market the opposite is true.  Most people who are going to sale have already sold making it easier for buyers to take control.  This all relates to the ease of movement of the market. 

If you notice the percentage of bears graph in the link, you can draw a trend line up from the prior lows and see the percentage of bears left in the market is approaching this trend line.  If it finds support here it signifies a trend reversal is likely.  In other words, the rally is over.

Have you ever wondered why the market will rally when everything in the news is terrible?  This theory helps explain why bad news is bought and good news is sold near turning points in the market.

Okay gentlemen, thanks for the advice. 

jackg1606:

Here is a link you may find interesting.  It shows the ratio of bulls to bears. 

Link

In theory, when there are too many bulls in the market a downturn is imminent.  The fact of a large number of bulls being in the market signifies that most people who are going to buy most likely have already bought their position.  This makes it easier for sellers to take control of the market because of there being fewer people willing to buy. 

When there are too many bears in the market the opposite is true.  Most people who are going to sale have already sold making it easier for buyers to take control.  This all relates to the ease of movement of the market. 

If you notice the percentage of bears graph in the link, you can draw a trend line up from the prior lows and see the percentage of bears left in the market is approaching this trend line.  If it finds support here it signifies a trend reversal is likely.  In other words, the rally is over.

Have you ever wondered why the market will rally when everything in the news is terrible?  This theory helps explain why bad news is bought and good news is sold near turning points in the market.

This reads like Elder's writing style... gag ...
Great man, love his work on the proper psychology of the disciplined trader but can't stand his writing style in the indicators section of TfaL
Also I disagree with his implicit premise that there is a causal relationship between a trade setup and what happens afterward, as reflected in his tendency to look back at the setups of failed trades (in Entries & Exits). Yeah, sometimes you might have missed something, but holding as a premise that this is necessarily so and then searching searching for what that could be, makes the trading concept unnecessarily complicated. Best trading concepts are KISS - you take a calculated risk each trade.

Interesting link, but it is not tradable information. For example, what's the timing of it? A backdrop like that at most would make me dial down my risk percentage.

I agree that this market is guilty until proven innocent; there's no proof yet but a case is building.

Actually, this knowledge I gained from Pring.  LOL

Here is another reason I am bearish.


Article

jackg1606:

Actually, this knowledge I gained from Pring.  LOL

I bet one copied the other :-)

The link you provided had some bad financial-related news, but I'm tempted to quote what you said about bad news and rallies.

Anecdotes:  I check CNBC.com sometimes at night to check on the Asian markets - if they're down, I'm not worried about the US markets. If they're up, I get worried.

I check the futures, too: http://www.cme.com/
If they're +/- 500, I sleep easy. Down more than that, I'm a little worried. But if they're up a lot, I get REALLY worried.

LOL. Point is, the most important factor is sentiment, not the news itself. This is something my mentor taught me. The exact same piece of news will cause different reactions depending on market sentiment. And sentiment is the hardest thing to measure. It changes all the time. And no, you cannot use $VIX to measure it. The best way to measure it is to work a trading desk. LOL. If you can get a good read on sentiment, you have the greatest edge in trading. I think TK does a good job with this, and he posts updates throughout the day: www.tradingwithtk.com

Hello Chib

Could this leg be the second wave in a bigger wave up?

Chrib:

jackg1606:

Actually, this knowledge I gained from Pring.  LOL

LOL. Point is, the most important factor is sentiment, not the news itself. This is something my mentor taught me.

Here's a great quote from him that I just dug up:

"If you are going to do technical stuff find out what works and what doesn't (most.)"

If the thing has 50/50 predictive power, or doesn't tell you when, or tells you after the fact, or throws false signals frequently, then it ain't tradeable. I put most oscillators like STO in this category as they signal after the move's half over.

Be there or be square:

http://alphatrends.blogspot.com/

Hello guy's

The  bull/bear + bear  ratio at it's max range highest or lowest 70-35 where the highest is bearish and the lowest is bullish. It was at 73-76-71 the 3 weeks of October 2007 and it has been as low as 36.7 last month 07/25/2008 gives some indication of a trend change. Then when it is moving up or down relative to it itself for shorter term sentiment readings.

blaster:

Hello guy's

The  bull/bear + bear  ratio at it's max range highest or lowest 70-35 where the highest is bearish and the lowest is bullish. It was at 73-76-71 the 3 weeks of October 2007 and it has been as low as 36.7 last month 07/25/2008 gives some indication of a trend change. Then when it is moving up or down relative to it itself for shorter term sentiment readings.

Chrib wrote the following post at 08-25-2008 5:31 AM:

jackg1606:

Here is a link you may find interesting.  It shows the ratio of bulls to bears. 

Link

In theory, when there are too many bulls in the market a downturn is imminent.  The fact of a large number of bulls being in the market signifies that most people who are going to buy most likely have already bought their position.  This makes it easier for sellers to take control of the market because of there being fewer people willing to buy. 

When there are too many bears in the market the