retired is right.
On the one hand you state that major bottoms take years to form. On the other hand, you state that stocks like JDSU (and the fibre sector) had put or are in the process of putting in major bottoms.
I admit that I was careless in my use of tenses. I'm usually pretty good at my grammar.
Given that JDSU broke down out of a major double bottom at $5, in what I like to call a reverse cup and handle,
My friend Bill O'Neil invented this term for a bullish formation which can't be applied to the evolution of state on the downside.
JDSU didn't break out of a double bottom. You need bigger swings in the "W" to claim a price pattern is double bottom.
how can you even mention the term "major bottom" even in an observational context?
Because what you can't see is that every trade money flow has diverged substantially upward from price. Money flow is the first measure to change direction. This initiates the first phase of the major bottom. I've been computing money flow since the late '60s, and I've never seen such a huge divergence developing between flow and price which is occurring not only in JDSU, but in many other techs and non techs. The only similar absurdity was the incredible negative divergence that occurred in '99 and early '00 between price and flow.
The fact of the matter is that you were right in defining that major bottoms take years to form.
No, I didn't say that that was necessarily the case. Sometimes a major bottom turns on a dime. JDSU could be such a case. It may be that JDSU will reverse very soon in incredible fashion running up to six in two days. I only mention these parameters because that's what is commensurate with the flow dynamic. That's how vulnerable the short side is.
The problem is that this analysis doesn't fit with the fibre stocks - or really almost any tech stock.
Trying to find causal connections between economic quantities is only justified to some small extent on the macroeconomic level. Finding correlated action won't necessitate that the correlation will continue. Making vague generalities like this wouldn't get you a BA in my econ department.
One sector where the analysis does fit, however, would be gold mining stocks - which have been in a 3 year consolidation after the Asian Contagion spike.
They have been in no such thing. A consolidation refers to a tight range in price during a price translation. It's caused by early speculators closing position to take profit. Such a term can hardly be used to describe the last several years in gold. The 20 year bear in gold ended 9/1/98 which you'll find me declaring in various places on SI like in the NEM thread years ago.
The analysis doesn't fit gold at all. It has looked like gold was starting a major bull market early this year, but now I'm not so sure. If it goes higher, you've got just another bear market rally which has the potential of even negating my great 9/1/98 end of disinflation call. I am still guessing that gold will very soon correct and substantially, thereby restoring the integrity of the bull.
Bull markets are built on failure and disappointment, not on speculative madness. Maybe you haven't learned how destructive the inflation of anything is, but I'd expect that most would have learned something from the bear market rally which lasted from late '98 to early '00.
JDSU is at best a 50 cent stock,
And you castigate me for merely stating what the hard data is doing?
this figure represents where it stood at the beginning of the 1995 Nasdaq liquidity boom.
You mean illiquidity boom. From '95 until the Oct '97 break money flow was net in. Then it double topped to Feb '98. Since then until recently it has been straight down. Even during the earlier period money flow wasn't commensurate with price.
The current period is reminiscent of '81 - '82. Stocks bottomed in Sept '81 with money flow. Flow then started up and continued upward even while price sunk from Jan to Aug '82. I went short because the stock charts showed it against the data and I made $tons. The stock charts represent sentiment and are reinforcing as fear of price decline overcomes sane judgement.
I was dead wrong and I knew it. What I was doing was taking advantage of my understanding of human sentiment, not theory which was saying I was dead wrong, and cashing in on other people's sentiment. It was the biggest mistake I ever made. You can't do anything worse than make money for the wrong reason even if you know what the truth is. It's your psychology that suffers and that's worth more than any $tons.
The fact that you continue to defend your point in such an assholish way shows that you know a lot of theory but really have no idea how to use it to your advantage.
I don't see how the above sentence is coherent. Defense shows I know theory? I know how to use theory to defend a position but I don't know how to use theory to make money? Let's assume you mean the latter. You said JDSU is a $.50 stock. What theory led you to that conclusion? I assume the same theory would have you short JDSU because you can use theory to make money. It might work, but that has nothing to do with any theory.
My guess is that you have more in common with the unibomber than Warren Buffet.
The fact that you continue to defend your point in such an assholish way shows that you know a lot of theory... |
