Down goes the Dow

fisky wrote:

Both the Dow and the SP500 made bullish candlestick patterns today. This would forecast rising prices for the next few trading sessions, which could test or set new highs in both indexes. It will be interesting to see if this happens.

That forecast worked.

The DOW has been in a narrow trading range for 16 days and could be setting up for a Bollinger Band squeeze. This is worth watching. See this chart.

Note the Bollinger Band above and below the Dow. Every time the Bollinger Band gets narrow, the breakout has been followed by a big move... see the squeezes at Sep 2012 ~400 pts, Feb 2013 ~1500pts, Aug 2013 ~-800 pts, Jan 2014 1,000 points. These are equally distributed as reversal and continuation moves.

The Bollinger Band is still pretty wide, because it's based on the last 20 days of trading, but the DOW has been in this narrow range for 16 days.

If the DOW trades below or only a little above today's close, then the BB will dramatically squeeze Thursday or Friday next week. Then, a move above the trading range would be bullish. A move to the top of the band followed by a move below the midpoint would be bearish.

If the DOW moves up dramatically before Thursday, then the squeeze won't happen so there would be no forecast.

another all time high for global stocks and the dow today.

small cap US and emerging markets still well below highs.

fisky - it would be interesting if you went back in the thread and posted how your predictions played out.

although you seem to put a lot of 'ifs' in your posts so maybe they aren't actually predicitons.

Anyway

hey how about we start a trading contest? Sign up as our handles and see how we do against each other?

Anyone interested?

agip wrote:

hey how about we start a trading contest? Sign up as our handles and see how we do against each other?

Anyone interested?

Sounds like fun.

"could test or set new highs"

You know fisky, bare conditionals have almost no content.

Why don't you put a qualifier on it, like is done with precipitation? Say, a percentage likelihood? Just to make it more interesting. I personally won't dig into your model.

Sure, I'm in, what are the parameters?

Plus, the day is not yet over.

Previously I said that I think that Q2 and Q3 will be OK, but the question I'm now faced with, in view of my request for qualifiers from fisky, is "how OK?"

I could actually see 3% per quarter. Almost makes me want to get back in, in a limited way, for a limited time.

I'm still hearing talk of big-time overheating, and over-pricing, but there's a lot of money around, looking for some place to go. A bunch of it will go to the US markets, raising prices, because those buying can afford it, as just another place to park wealth, rather than a place to look to generate gains or income.

Take a look at what is happening in Canada, for instance, IIRC the vast majority of their investment dollars are put into US markets, something like 80%.

Hit the Dow high. Glad I stayed in (which I always do since I'm not retired yet and have no need to take money out).

Glad to be in.

Maserati wrote:

I'm still hearing talk of big-time overheating, and over-pricing, ...

You can hear whatever you want. You just have to listen to the right people.

ciao flagpole - long time no see. I hope all is well.

I'll poke around for the best site to use for a contest, unless someone has a favorite one.

How about we put some skin in the game? $20 to play, winner gets to choose a charity everyone has to send their $20 to. Objections?

6 months sound good for length?

Maserati wrote:

I'm still hearing talk of big-time overheating, and over-pricing, but there's a lot of money around, looking for some place to go.

You need to stop listening to the voices in your head.

hi flagpole

Jan 1 16,577

Today (so far) 16,684

YTD gain 107 points, or 0.65%

still no particular reason to get back in

believe it or not, i am prepared to forego a potential 5-6% market gain this year (if it is more than that I will consider mine to have been an unfavorable decision from a growth perspective but still a favorable decision from a stability, and obviously a liquidity, perspective), in favor of other investment opportunities combined with insulation from the potential downturn i still think will come this year.

if i get in this year in any serious way, it will only be after that downturn, or after a stable summer/fall combined with a stable response to the fall elections

losing greater gains from the market--gains I would have to do essentially nothing to realize--would sting though. it would have been so darned easy.

only time will tell, though.

The real question, in my mind, about overheating or overpricing, is what the alternatives are.

For the average hands-off "investor", there really aren't any alternatives to the bond and equities markets, other than a bank account or something like short-term deposits, and physical metals.

I talk about real estate, art, businesses, etc., but realistically, for the average person these are not options.

Sure there is wiggle room within the markets, but that money remains within the markets.

Ultimately, the markets are still "worth it" to everybody, even though some perceive them as overpriced or overheated, until they find a better, PALATABLE AND MANAGEABLE alternative.

Let's face it, there isn't one. "Investing" in the markets is insanely easy, and purposefully so--for instance, compare owning REIT's to owning actual real estate...REIT's are comparatively very easy, and incur very low transactional costs.

So I take the "overheating" and "overpricing" talk with a grain of salt, in general. For me personally, they are overpriced, and I put my money to work elsewhere--however, in general, I don't think they are necessarily overpriced, in the sense that there will be a big correction based on that overpricing. I still believe there will be a downturn or even a crash, but I don't think it will be precipitated by "overpricing" concerns.

Maserati wrote:

hi flagpole

Jan 1 16,577

Today (so far) 16,684

YTD gain 107 points, or 0.65%

still no particular reason to get back in

believe it or not, i am prepared to forego a potential 5-6% market gain this year (if it is more than that I will consider mine to have been an unfavorable decision from a growth perspective but still a favorable decision from a stability, and obviously a liquidity, perspective), in favor of other investment opportunities combined with insulation from the potential downturn i still think will come this year.

if i get in this year in any serious way, it will only be after that downturn, or after a stable summer/fall combined with a stable response to the fall elections

losing greater gains from the market--gains I would have to do essentially nothing to realize--would sting though. it would have been so darned easy.

only time will tell, though.

including dividends:

year to date:

Dow: +1.3%

SP 500: +3.0%

World Stocks: +2.6%

(those are based on funds tracking those indices,not the actual indices. This way we know how dividends affected returns but the numbers may be off a tenth in either way)

I will leave conclusions unsaid, gente style.

Hey guys, newer investor.

How do you all think the Alibaba IPO will affect Yahoo stock?

Maserati wrote:

hi flagpole

Jan 1 16,577

Today (so far) 16,684

YTD gain 107 points, or 0.65%

still no particular reason to get back in

believe it or not, i am prepared to forego a potential 5-6% market gain this year (if it is more than that I will consider mine to have been an unfavorable decision from a growth perspective but still a favorable decision from a stability, and obviously a liquidity, perspective), in favor of other investment opportunities combined with insulation from the potential downturn i still think will come this year.

if i get in this year in any serious way, it will only be after that downturn, or after a stable summer/fall combined with a stable response to the fall elections

losing greater gains from the market--gains I would have to do essentially nothing to realize--would sting though. it would have been so darned easy.

only time will tell, though.

As of today, I am actually LOSING to the Dow. I am DOWN 0.6% while the Dow is UP right at this moment at 0.67%. My number is BEFORE the climb today, but even with it, I'm likely just under what the Dow has done so far this year.

Here's the thing though about waiting to get back in...

You should NEVER wait to get back in, because you should ALWAYS be in...UNLESS you have tons of money from some other venture (business, inheritance, something) where you just can't even reasonably spend it all before you die. If you make low to even way above average money but you aren't yet rich enough to kick back and do nothing if you wanted to, then you need to be in the market AT ALL TIMES.

We're almost a half a year into 2014, and the market has remained flat. Well, let's say you are someone who invests 15% of your income and your household makes $150,000...that's $11,250 that you wouldn't have put in so far this year with still no end in sight to when you MIGHT put money in again. When people who have invested and are out of the market and are waiting to go in again, they don't typically invest in other areas when they are not in the market, so that is lost opportunity.

Being in the market at all times is OPPORTUNITY. Even if this year is down, eventually the market will go back up, and that's when that added money will swell like the cankles on a fat chick.

agip wrote:

ciao flagpole - long time no see. I hope all is well.

I'll poke around for the best site to use for a contest, unless someone has a favorite one.

How about we put some skin in the game? $20 to play, winner gets to choose a charity everyone has to send their $20 to. Objections?

6 months sound good for length?

I won't be in on the contest. I don't pretend to pick short-term winners. I'll watch you people do it though.

Flagpole wrote:

agip wrote:

ciao flagpole - long time no see. I hope all is well.

I'll poke around for the best site to use for a contest, unless someone has a favorite one.

How about we put some skin in the game? $20 to play, winner gets to choose a charity everyone has to send their $20 to. Objections?

6 months sound good for length?

I won't be in on the contest. I don't pretend to pick short-term winners. I'll watch you people do it though.

oh come on - we're all pretending here.

Just buy one of your favorite mutual funds or an index fund and see how it goes against us stock jockeys

Re "How do you all think the Alibaba IPO will affect Yahoo stock"?

http://aswathdamodaran.blogspot.com/2014/05/yahoo-puzzle-mystery-and-enigma.html

Also, a must read is

http://aswathdamodaran.blogspot.com/2014/05/alibaba-china-story-with-profitable.html

Has a valuation of $61.46 a share for Alibaba.

http://4.bp.blogspot.com/-Immtzx3SRXc/U2zqC_L7e8I/AAAAAAAAA_4/HEtUpzRYV3A/s1600/AlibabaValuationPicture.jpg

Aswath Damodaran teaches finance at NYU's Stern School of Business.

http://pages.stern.nyu.edu/~adamodar/

agip wrote:

Flagpole wrote:

I won't be in on the contest. I don't pretend to pick short-term winners. I'll watch you people do it though.

oh come on - we're all pretending here.

Just buy one of your favorite mutual funds or an index fund and see how it goes against us stock jockeys

Nah...just one more thing for a yahoo here to say that I know nothing (which is bogus), and they would never get it through their head (or pretend not to) that I don't normally invest in that way, so you guys have fun with that, but I'll be just a spectator.

No, I'm doing other things with money, although some of it is sitting in a bank earning essentially nothing.

One of the things I was looking at doing when I got out was residential lending to people close to me I know to be credit-worthy in the extreme. I thought, hey, I can lend to them at less than what they pay the bank, and still make a decent return while they save money.

Then I did some asking around. People are getting 2.6% on first residential mortgages, with no prepayment penalties up to 56k extra principal per year.

quickly discounted that as an alternative. More than 1 person I know had gotten this sort of deal.