Thank you for the invite to post this week.
First let me assure you that I have only one identity on SI and even use the same identity on other boards that I rarely post on anymore. I sign all my posts Lee at the end but my identity is always L3akaL3 or L3_aka_L3. Lee is someone different from myself and a quick e-mail or PM to SI Bob can verify this.
As to using the futures for trading instead of the DOW, I am in total agreement however since one of the main and best in my opinion posters on the other thread developed his system based on the DOW, we all try to adapt to a standard and he prefers the DOW since it is the index that most people equate to the market. I agree that it is a fairly useless index since it is so skewed as I eluded to in an earlier post. While the market was down around 10% the DOW was not due to the UK buy out/merger. UK will be replaced on the index by another stock, probably one out of favor right now so that the DOW will have "locked in" the higher level and will get an extra boost as this stock recovers. That is why I actually do not call the market bullish or bearish based on indexes but instead use what the majority of stocks I track, the Advance decline ratio and various other indicators are doing to decide which way to lean. When I get the rare chance to day trade, I use the futures and also camp out lurking the futures thread. I keep the SPU running on q-charts but since I don't often get to trade during the day prefer to actively trade the OEX, SPX, sector indexes and on some occasions stock options. ( I also don't have the huge capital to risk that is required to trade the SPOO since the Air Force doesnt paythat well <ggg>) It is not a large leap to convert targets in futures to the "standard" indexes since day to day, they tend to follow each other and the "average" investor/trader trades stocks. Options traders are a minority and the futures traders are an even more rare breed. Heck most of those that contact me don't even short stocks or have option accounts so they can only trade long on regular stocks. I/we therefor try to speak in terms that the average J6P can understand.
Again, let me assure you that I am only one person and "Lee" is someone else so I can not answer for any posts from him. As to our being rude to Wei, maybe we were a bit harsh and I honestly don't recall the conversation back then. I do remember that he showed up out of no where, near the top of the market and was extremely bullish as we were seeing the topping signs which proved to be correct. I believe this thread was very bullish at that time and it proved to the the exact top that week when he hit us for being too bearish. We didn't know his track record or even who he was and we often get hypsters lacking thought or analysis crashing the board poking fun at us not understanding our posts. I did follow him for a couple weeks through PMs and came to the conclusion he did not fall in that category.
We are often taken as always bearish since we all mostly trade the extreme short term swings. This means that half of the time, we are short since short term cycles tend to swing every 3 days or so. We often take the contrarian view to keep people's eyes open to alternate possibilities also when speaking longer term. This is the case with my target on the Bond rate. You pointed out I said it could go to 6.5% but if you read a bit deeper, I also said the first swing was to 6.15% ( it reached 6.2) then this most recent swing's target was 6.25% (which was hit) and the longer term possibility was 6.5% before a re-evaluation would be required due to the long term strong resistance at that level. I believe we will pull back to 5.9% here in the next few weeks. At my site, I often keep both a bullish and bearish set of forks on my charts so that both possibilities are always represented. You may note that we were getting more bullish as the recent pullback was ending and that we tend to get more bearish as the bullish trends top out. It is too easy to drop one's guard the higher the market goes or to get more shorts going as the corrections run their course. This was most evident by the extreme put call ratio at the July top and low VIX since almost everyone was buying calls and no one was going short at the top. That is why we tend to post the alternate views more fiercely at those times. The bounces/drops are often the most violent at the turning points and we all want to be prepared and want others to be the same.
I have not finished my homework yet and am already a day and a half late updating my site since I am busy with other things so I have no real targets yet. I see a good possibility of SPX 1370, OEX 725 and 2725 NASDAQ but these are farther out targets so I will have to reel them in to get an end of week forecast. I also am not convinced that we are necessarily out of the woods yet to go whole hog bullish. Many stocks and sector indexes stalled or reversed at important resistance levels and or 200 DMAs. Until these are broken, there is always the possibility that this is a bounce due to temporaily bullish news and the extreme over sold levels we had up until Aug 6th. As Foreign markets gain strength, we will lose some liquidity as foreign money leaves our market to return to their shores and J6P is not putting in as much fund money as usual. Liquidity drives this market and outflows can impede our progress even if everything is A-OK. I do beleive we will have a higher DOW before the end of the year but September is a historically bad month for the US market so keeping ones guard up the next few weeks is still a wise choice IMO. I am guardely bullish but PPI reports are trailing reports and AG does not use these in his decisions. A rate hike is almost certain though the Bond market has already priced this in so we can climb now. As to inflation, of course there is inflation, oil is up 50%, the CRBis climbing as is corn prices. Beef will climb due to the Drought and labor wages are starting to creep up so there is no question about it in my mind. The real question is will it be enough to hold us back. I doubt it for now. There is over a month of stored up buying pressure and we NEED a bounce. Some of my best charts are still showing that we should have dropped to OEX 645 before reversing back up for real so I am still on guard that this may be a temporary bounce lasting a couple weeks only. I keep many charts and some of these have excellent track records and point downward still at this time. I also however did post the bounce August 6th and am totally open to that possibility. I will as always watch teh market's reaction to critical levels and then base my longer term view based on those reactions.
I will watch the breadth of this rally and gauge the markets strength from it. I am curious as to how much cash is really available to the buyers and how many shorts are still out there ready to get squeezed out adding fuel to the upturn. Time will tell and I will react accordingly.
Best of Luck,
Lee (but not he other Lee <g>) |
