Transitioning - October 25, 2011

[Billy]

Billy says in his morning comments that this rally has the feel of one where players are in for the long term, not just a short squeeze. The article I mentioned http://blog.alphascanner.com/
however shows that this is not the case and it also uses your money flow indicator to substantiate its claims.

This is off course a very important question for all of us to ultimately understand.

Thank you
(I have just subscribed to your daily comments too, Pascal, so I might get more understanding through that as well)

Hello Daniel and welcome on board!


Here was my conclusion from last weekend ‘s blog update:

“The daily stages score has turned positive last Friday for the first time since 7/26/2011 and it is a most optimistic development, with a positive divergence from price. But once again the transition is now overextended and looks unsustainable without a more constructive and orderly shake-out first.

This is in line with the 20-day money flow indicator at www.effectivevolume.com which is on a buy signal since October 4 but now much overbought. The IWM robot, the mechanical and statistical system from the same website, is in cash as of today due to neutral risk-reward outlooks.”

I see nothing contradictory with my Tuesday’s robot comments based on Monday’s impressive and exceptional action.
Billy

[Timothy Clontz]

I'd also like to add a caveat to be careful about time frames in different venues.

Personally I see this as a bear market rally within a secular bear market, so...

Sideways to 2017-2020
Down to first quarter 2012
Currently up, but overbought in last quarter 2011.

Depending on the time frame I could theoretically be long or short the same position depending on how long I was planning to hold.

Different comments you'll see here will reflect different time frames as well.

Take XLF, quarter to year time frame might profit being short, while a two to three year time frame might profit being long.

Week to month timeframe... I honestly have no idea (hence my eager subscription here).

Just keep in mind the holding windows reflected in the comments you read...

Tim

[dakuki]

Hello Daniel and welcome on board!


Here was my conclusion from last weekend ‘s blog update:

“The daily stages score has turned positive last Friday for the first time since 7/26/2011 and it is a most optimistic development, with a positive divergence from price. But once again the transition is now overextended and looks unsustainable without a more constructive and orderly shake-out first.

This is in line with the 20-day money flow indicator at www.effectivevolume.com which is on a buy signal since October 4 but now much overbought. The IWM robot, the mechanical and statistical system from the same website, is in cash as of today due to neutral risk-reward outlooks.”

I see nothing contradictory with my Tuesday’s robot comments based on Monday’s impressive and exceptional action.
Billy

Guten Morgen Billy,

But in the article it is also written that ''a very negative long-term breadth development that doesn’t bode well for a sustainable rally.''

It still isnt clear to me. Did Mondays developments than override the concerns mentioned in the article?

Thank you
Daniel

[Billy]

Guten Morgen Billy,

But in the article it is also written that ''a very negative long-term breadth development that doesn’t bode well for a sustainable rally.''

It still isnt clear to me. Did Mondays developments than override the concerns mentioned in the article?

Thank you
Daniel

Daniel,
You are correct with your quote, but the key notion here is “long term”. I wrote that sentence in the context of the weekly stages analysis which is changing very slowly with only one new set of data each Friday after the close. So, ''a very negative long-term breadth development that doesn’t bode well for a sustainable rally'' is not negating the possibility of a rally on the daily timeframe and simply emphasizes that such a rally has a high probability of being short term in nature. It is still too early to know if Tuesday was a turnaround or just another minor pullback in the emerging rally. Tonight’s reaction to the EU summit news will of course be the final referee.

The robot is neutral and objectively telling us that he cannot have confidence in the current market environment (non-stationary, see my other post in the VIT Forum) for initiating any high probability trade in any direction.

Billy

[dakuki]

Daniel,
You are correct with your quote, but the key notion here is “long term”. I wrote that sentence in the context of the weekly stages analysis which is changing very slowly with only one new set of data each Friday after the close. So, ''a very negative long-term breadth development that doesn’t bode well for a sustainable rally'' is not negating the possibility of a rally on the daily timeframe and simply emphasizes that such a rally has a high probability of being short term in nature. It is still too early to know if Tuesday was a turnaround or just another minor pullback in the emerging rally. Tonight’s reaction to the EU summit news will of course be the final referee.

The robot is neutral and objectively telling us that he cannot have confidence in the current market environment (non-stationary, see my other post in the VIT Forum) for initiating any high probability trade in any direction.

Billy

Thank you Billy for this clarification. It is very much appreciated. I am very happy to have discovered such an outstanding forum and service like yours.