Market Tech Share Discussion Threads

[dead cat bounce] 28/6/2003 08:28

energyi - good stuff, but for me the clincher is the downwards channel on the Dow. You just can't argue with it - it is still in place, although it is close to an upwards breakout.

dcb

[clem] 28/6/2003 01:56

The Hurst exponent is the inverse of the Fractal dimension and currently suggests that the medium term trend will continue.

The likelyhood of a trend continuing is directly proportional to the inverse of the fractal dimension. (Or put anotherway inversely proportion to the fractal dimension)

Another way to put that is: a drop in overall volatility suggest a high likelyhood of a continuation of the current trend.

[energyi] 26/6/2003 11:46

Following is my own ANALYSIS & writing.
COMMENTS PLEASE?

ARE U.S. ECONOMISTS "BLIND"?

US Economists appear "Blind" to the importance of Debt and Profit growth. Instead of focussing on these two critical areas, they focus on Money Supply and Aggregate Demand. The result: we see policies which do not stimulate the right parts of the economy. Al Greenspan's debt-bubble economy is out of control and headed for disaster.

A good example of dangerous policies: low rates have been the primary weapon to fight deflation. More than a dozen consecutive rate cuts by the Fed have had the impact of stimulating companies and individuals to borrow, including a great increase in refinancing of homes. Yes, this has helped to boost demand in the economy, but the stimulation has gone into the wrong places. Mortgage debt has increased, stimulating the mortgage industry (and growing companies like Fannie Mae and Freddie Mac into bloated monsters, geared at 50:1, far beyond the 20:1 "normal" gearing of commercial banks.) And yes, that new debt has stimulated spending, but where has that gone. Quite a lot has gone towards importing goods from China and other low cost Far Eastern economies. The impact there has been highly favorable. Chinese growth has been running at 6-8% per annum. New jobs are being created, factories built, and profits are growing; all while profit growth stagnates in the US.

Looking at the larger picture, we see debt growing in the US, while profits and productive enterprise grows in China. Alan Greenspan truly deserves to be a hero in the expanding Far Eastern economies, but perhaps a villain in his own country. The US is now greatly exposed to shocks. And any shock that brings higher rates, is likely to burst the housing bubble, stall the debt-fueled consumer spending machine, and put the US economy into severe Recession or worse.

What could cause this? There is an apparent and growing threat from the US dependence on foreign energy. Ironically, the catalyst for a rise in oil prices may come from the area where the US is least dependent on foreigners, natural gas. Over the past several decades, virtually every new electric power station has been fueled with "safe and clean" natural gas. But less and less new gas is being found. The easy gas has already been discovered, and only the deeper and more expensive gas is left to be exploited. So dependence is rising on Canada, and on importing gas in expensive LNG ships, a dangerous way to move this volatile fuel, which has traditionally moved in pipelines. But the newer and cheaper sources of gas are too far away, in places like the Caribbean, Columbia, and off the coast of Africa.

Now this growing dependence on foreign gas might be a manageable challenge, but for one important fact: Gas in storage is far below normal levels. In fact, gas as a percentage of demand is at the lowest level in US records. Normally gas is cheap in the summer, maybe $2.00 per MCF (rather thatn the current level of $4-5) and it is bought and injected into storage for the cold winter months, when demand for gas shoots up to meet heating requirements. Last time there was a less severe storage deficit, gas prices hit $10 plus in places like California and there were energy shortages. This winter, we could see prices like $15-20, albeit only on a temporary basis.

Many energy companies can see this crisis coming, and they are making adjustments so they can burn more oil as a replacement for gas. This is putting upward pressure on oil prices, and energy prices in general. And this pressure will become critical this fall, as inventories get built in anticipation of winter demand. The oil price drop that many were expecting after the Iraqi War has not materialised. Instead prices are hovering near $30 a barrel, and some OPEC countries are complaining that the higher dollar oil price disguises a lower price when measured in Euros and other more robust currencies. There is now growing talk of pricing oil in Euros or in Gold. And this talk is likely to escalate if the current pause in the dollar's drop is followed by a resumption of the Dollar bear market.

Some of these risks and issues have been around for a long time. Talk of the Debt Bubble goes back for years or decades, for example. But never have so many critical factors come together with such a tight trigger point (the Fall of 2003, with the need to stock oil and gas.) Often a crisis or "inflection point" is like an elbow. It takes longer to reach that point of inflection that most expect. So the fears associated with the inevitable crisis or ignored or forgotten. But once that point, the elbow, is reached, events move quickly into action, and a crisis unfolds very fast, and there is no stopping it.

In the view of this observer, the next few months will prove most interesting for those like to live in momentus times.

EnergyI, June 26, 2003

[energyi] 25/6/2003 20:52

Could be...
I am still calculating.
Sornette has done some work on the "Doubling" of time frames between
Highs and Lows in a CRASH FRACTAL.

I am checking & testing that here

[philmiboots] 25/6/2003 20:51

So the next low (L3) should be in April 2004 (roughly), ie +40 weeks from now. Have I got that right energyi?
:o?

[energyi] 20/6/2003 21:28

COMPARE. s'il vous plait:
Messr.Sornette ....................: & Messr.EnergyInformer

...avec M.Bradley:

[energyi] 19/6/2003 00:51

Sornette now FORECASTING A PROPERTY BUBBLE

Abstract:
In the aftermath of the burst of the "new economy" bubble in 2000, the Federal
Reserve aggressively reduced short-term rates yields in less than two years from
61/2 to 11/4 % in an attempt to coax forth a stronger recovery of the US economy.
But, there is growing apprehension that this is creating a new bubble in real es-
tate, as strong housing demand is fuelled by historically low mortgage rates. Are
we going from Charybdis to Scylla? This question is all the more excruciating at
a time when many other indicators suggest a significant deflationary risk. Using
economic data, Federal Reserve Chairman A. Greenspan and Governor D.L. Kohn
dismissed recently this possibility. Using the theory of critical phenomena result-
ing from positive feedbacks in markets, we confirm this view point for the US but
find that mayhem may be in store for the UK: we unearth the unmistakable sig-
natures (log-periodicity and power law super-exponential acceleration) of a strong
unsustainable bubble there, which could burst before the end of the year 2003.

Key words: Real estate; Bubble; Econophysics

...MORE:

[energyi] 18/6/2003 20:46

Might Help
Chart Family: Monthly.... /........ Weekly ........ / ........ Daily .........

[energyi] 20/5/2003 12:50

Keep up the good work, B

HERE's Mine:
The Time, Gentlemen Short-Call was on the mark
...
Tried to hit the top. I caem back last week and started
a new thread. Got short thru BEAR FUNDS, made about $7,000+ today
on those alone. (Did well on my remaining Gold shares, and also
on options- One of the best days of the year for me.)
...
Here's the FTSE chart: DOWN CHANNEL IS INTACT

[blackstone] 19/5/2003 23:42

energyi
Some similar charts to the ones I posted in April
Still can't make my mind up if they are bo!!ox or not
OEX

NDX

CAC


Blackstone

[energyi] 16/5/2003 20:03

New interview with Professor Sornette:
(on 21st Century Alert- thnx, AFewBob):


He talks about a Doubling of the Cycle, and doubling of price move
as the oscillations play out.

Some may want to have a glance at my new FBB thread/ with charts:
"Time, Gentlemen. > SELL!"

[clem] 07/4/2003 12:05

Harvester. Hum... not sure that would be the way it would work. :)

I've actually got a copy of his book and its an interesting if trifle hard read. What he appears to say is that you can tell when a market is going to crash when it starts to go up the steep part of a log curve.

Well that feels like an obvious point to me. ie When a price goes through the roof, then a crash will surely follow.

However his arguments are exceptionally dense, while spaced out with large preambles for the sake of the many readers who havent been down this math road before.

This is actually a great book. It might be total rot, but its an original work, full of synthesis. Whether it is rot, I haven't ascertained yet and a few guys I know, who might know, have also mumbled into their beers about it and aren't prepared to come out and say categorically its wrong. I'm not going to discount it until I can stab it in the equations and that might take some time.

Im particularly enjoying it as it condenses pretty much all of the stuff I've been noodling with for 3 or 4 years. Fractals, Non linear systems, Power laws, Chaos, Noise, Network dynamics etc. ... but this guy has taken the whole lot by the scruff of the neck and rolled them all up and presented a kind of stock market TOE (Theory of Everything.) It might be that like me he has just pillaged the pure math shelf of Barnes and Nobles and decided to throw everything into the soup for the hell of it. That’s certainly how I ended up doing Wavelet transforms on the Dow. But whatever the reason there's a lot of meat in the book.

You know when you're reading a good book, because you want to throw it across the room. Well I really want to throw this across the room, but on the other hand I think I will need to read it at least 3 times before I'm sure I can open a window and really sling it out…. But then again maybe I'll keep it….

My abiding feeling is that the book itself violates rule one of trading systems. Never curve fit. That is to say never look at the history and find an equation to fit it and then project it forwards. He seems to do this a lot and in the end of the book goes on to imply the Dow will be 17,000,000 points by 2050. Or is he suggesting that’s its all going to come horribly unhinged because that looks rather to much like log growth to avoid disaster. He doesn’t say, but he does put both cases forwards; global utopia and global disaster. This guy should do Elliott Wave tipster….. He is clear that its either going up, down or if neither, sideways. :)

Anyway the book is also a really good primer on various advanced math ideas which appear to have tantalizing applications for T/A. So all round its well worth the read, especially if you want to sit on the leading edge and scratch your head a lot. Tosh or work of Genius, either way this is a really great book.

[blackstone] 01/4/2003 10:15

energyi
A while back I noticed on charts of some secular bear markets, that when the market nears the bottom there is a loose repetitive chart pattern
I now think that I can see this pattern developing on the FTSE100

Here is chart of ftse 100 from aug 01 till last night closing
I have added dotted lines to give the basic pattern shape


Here is chart of ft30 1974 bottom


here is chart of sp500 1930's bottom


probably a load of bo!!ox but seeing as its april fools day

Blackstone

[energyi] 31/3/2003 09:59

From SandSpring: "CURVATURE"



In our recent subscriber-only article we spent a bit of time discussing UCLA professor Didier Sornette's assertion that the many of same laws of geo-physics that exist in the "real" world can be seen in the behavior of financial market prices as well.

Anyone who doubts this assertion may wish to cogitate over the chart above. Starting from our December 29, 1999 PEI cycle date, and a hypothetical "fair" central value, we've simply drawn concentric circles and concentric ovals using Fibonacci relationships. The result may look something like our solar system to some, but the degree to which the curvature "fits" the price action of the DJIA we believe is noteworthy and almost kind of eerie.

At the moment, the tighter circular bands are serving to still contain the price action. If they continue to do so, we risk a crash event in the very near future. Bob Prechter's ongoing call for a iii of 3 wave down will end up looking prescient (even though we still do not fully concur with his present I-II-i-ii count). If the tight circular bands get broken (perhaps probabilistically more likely), then the broader "triangle" that we have drawn represents the next most likely general price path suggested by the concentric ovals -- leading toward a late 2004 low.

Either way, the "big picture" does not look pretty. The maelstrom of an Iraqi war filled with complexities combined with an anemic and over-indebted consumer appears a nasty combination for the financial well being of this nation.
:LINK:

[energyi] 15/3/2003 17:03

MORE from the ZEAL article

In perfectly comparable indexed terms, the dismal failure of the latest bear-market rally in the S&P 500, the blue one above, is phenomenally bearish. Not only is the recent post-rally downtrend in the S&P 500 sloped steeply downward in a laser-sharp line, but the index has already witnessed two bearish technical failures below this important support.

85% of the ground gained from the latest V-bounce low of 777 has already been lost. The S&P 500 is once again trading within spitting distance of these important levels and it won't take much fear to push it through.

Once the S&P 500 closes below 777 for a few days, a blizzard of sell orders will hit as confidence crumbles. In addition, many speculators set stop-losses right under recent lows in order to protect themselves. As these stops are triggered the waterfall will accelerate dramatically, feeding on itself and breeding even more frantic selling. 777 truly is the Moment of Truth when popular bullish fairy tales boldly heralding the end of the Great Bear will face their ultimate acid test.
If I was long this market today like the bulls, the chart above would deeply disturb me. If everything is so wonderful in the US equity markets as the perma-bulls claim, why does the current decay curve in the flagship US equity index line up exactly with past S&P 500 behavior right before previous waterfall declines to new lows? Why is the trend down, with lower lows and lower highs, rather than the other way around? If the markets really believed that war was somehow positive wouldn't they anticipate this and rally ahead of the fighting?

This week, three long and painful years after the NASDAQ bubble topped, it defies belief that so many investors and speculators still don't understand the central issue behind bubbles and busts. Things like the coming Iraq war, economic releases, news, and single-day movements are totally irrelevant. They are merely useless distracting noise.

[energyi] 15/3/2003 16:15

FISHER's WATERFALL & My annotated Chart

Having read this intriguing article:

"Last Friday, March 7th, Mr. Fisher's imminent waterfall signal was triggered, and bullish and bearish speculators ought to take careful note of this provocative development."
...
And studied the diagram, I want to add some observations of my own.
Chart

A: Rectangle
You will see three rectangles. The upper Left hand corner of each is the Low in the 50d.Ma in the previous market drop. The lower Right hand corner is the bottom of the waterfall.
B: Circle
Along the top of each rectangle is a Circle. The center of each circle is where 50d.MA has fallen below the previous low.
C: Reload Rally
The new low in the 50d has each time been associated with an oversold condition that has "triggered" a sharp 1-3d short covering Rally. This rally in the market reloads bullish expectations and generates massive short-covering. This sets the market up for...
D: Collapse
A sharp fall, as Selling hits the market, with no existing stale shorts to cushion the selling and Bulls finally seeing that their false hopes (which generated the brief rally) are about the be dashed.
...
If I understand Fisher's pattern correctly, "C", the Reload, has just finished (or will finish within a day or two) and the stage D waterfall collapse is just ahead. A first sign that this is happening would be a reversal towards down early next week.

[energyi] 01/3/2003 13:35

Listen to the interview,
learn about "Herding"... and in his article, "Anti-Bubbles"

[energyi] 01/3/2003 13:25

Didier Sornette ...
The scientific study of complex systems has transformed a wide range of disciplines in recent years, enabling researchers in both the natural and social sciences to model and predict phenomena as diverse as earthquakes, global warming, demographic patterns, financial crises, and the failure of materials. In this book, Didier Sornette boldly applies his varied experience in these areas to propose a simple, powerful, and general theory of how, why, and when stock markets crash.

Most attempts to explain market failures seek to pinpoint triggering mechanisms that occur hours, days, or weeks before the collapse. Sornette proposes a radically different view: the underlying cause can be sought months and even years before the abrupt, catastrophic event in the build-up of cooperative speculation, which often translates into an accelerating rise of the market price, otherwise known as a "bubble." Anchoring his sophisticated, step-by-step analysis in leading-edge physical and statistical modeling techniques, he unearths remarkable insights and some predictions-among them, that the "end of the growth era" will occur around 2050.

Sornette probes major historical precedents, from the decades-long "tulip mania" in the Netherlands that wilted suddenly in 1637 to the South Sea Bubble that ended with the first huge market crash in England in 1720, to the Great Crash of October 1929 and Black Monday in 1987, to cite just a few. He concludes that most explanations other than cooperative self-organization fail to account for the subtle bubbles by which the markets lay the groundwork for catastrophe.

Any investor or investment professional who seeks a genuine understanding of looming financial disasters should read this book. Physicists, geologists, biologists, economists, and others will welcome Why Stock Markets Crash as a highly original "scientific tale," as Sornette aptly puts it, of the exciting and sometimes fearsome-but no longer quite so unfathomable-world of stock markets.

Didier Sornette is Professor of Geophysics at the University of California, Los Angeles, and a research director at Centre National de la Recherche Scientifique, France. A specialist in the scientific prediction of catastrophes in a wide range of complex systems, he is the author of the textbook Critical Phenomena in Natural Sciences (Springer-Verlag) and has authored or coauthored more than 250 papers in international journals.
...
Interviewed by Jim Puplava:

[energyi] 24/2/2003 11:15

Errol,
that fits "to a T" my expectation.
To me, we bounced off key support, have rebuilt Bullish sentiment
to enable the market to now plunge thru that support