Thursday, April 8, 2010

The Stochastic Indicator...

I noticed an entry on Tim Knight's SlopeofHope blog that the market is broke. I happen to agree. The post analyzes the weekly chart for the RUT and points out how the stochastic signal failed for the first time. I though this would be a good time to check out the stochs on the SPX.

5 comments:

Paulus said...

Dave.
(Pick up the phone hehe.)

Thanks for the tutorial. Hugely appreciated.
And as i wrote this morning, while you were still asleep: Confirmed: bounce & buy the dips all over the world.
And so it/they did. Again. And again
For ever and ever till hell freezes over.
Broken? Yes and beyond repair.

David O said...

Paulus, my friend!

It is amazing how this thing keeps going and going. But the rate of ascent has really diminished. I also notice waves of distribution in the action. I think the real problem is that there are no more shorts left to create the big squeezes. Next week we see how earnings look going forward. I added to my short position today with some leveraged junk that I usually never touch. Let's see what happens.

Busy building a wine rack for the cellar. Important to keep the mind clear of the noise!

payline said...

David , thanks for the TA lesson ,I enjoyed very much ,
Broken , bring Jesse Livermores , I dont argue with the tape quote to mind doesn't it
I agree when this gos it will GO, no shorts out there left to cover .

I am half short and half cash right now , with no banking short ,( for now )
Watching gold and silver and bonds and oil ,nat , not liking any entry right now long or short .

Here is a bloggers comment on the markert and the coverage.

t's BULLISH No Matter What! ...

The price of oil is rising – BULLISH! More profits for the energy companies, and more investments in "clean energy."

Most of the new jobs created in March were part-time or temporary – BULLISH! Since the economy has turned the corner full-time job offers are practically a sure thing.

But didn't wages go down too? – BULLISH! Revenues - Costs = Profits!

41 states have revenue shortfalls – BULLISH! Various states have always complained about shortfalls. It's another sign that things are getting back to normal.

8 million people are still unemployed – BULLISH! That's 8 million spenders, not savers.

Interest rates are rising – BULLISH! Yet another sign that the economy is getting stronger.

Stocks may be going up but on very low volume – BULLISH! That means the "dumb money" hasn't even bought into this rally yet.

People have a lot of concerns and uncertainty about the future – BULLISH! Not until the "wall of worry" ends will this party be over.

So much new liquidity will cause inflation – BULLISH! Stocks are one of the best hedges against inflation.

The wars in Iraq and Afghanistan are bankrupting us – BULLISH! Don't get mad, get even. Debit the Treasury and Credit the defense companies.

Inflation in China is picking up – BULLISH! That should dampen any bubbles that some people worry about.

Gold is going up in price – BULLISH! This is a broad-based rally.

Wait, maybe gold is going down – BULLISH! That means economic fears are dissipating.

Actually the gold price seems to be consolidating and moving sideways – BULLISH! A sell off or rally would mean things are overheating.

Iran seems determined to develop it's nuclear program – BULLISH! More nuclear power plants means less demand on oil which means lower energy costs which means more profits.

Israel may be forced to handle Iran themselves militarily – BULLISH! That will kick-start the construction industry when we rebuild both sides.

The Health Insurance Reform bill is an abomination – BULLISH! If insurance premiums rise there will be subsidies; if doctors check out they'll be replaced with cheap foreign ones; if care is rationed then costs will be controlled and profits ensured.

And now the student loan programs are nationalized – BULLISH! Good riddance for the banks. Now the government can garnish wages and lower the deficit.

The markets are being purposely manipulated with government money – BULLISH! What's not to like? That means the market ain't going down no matter what.

Big Media is spewing propaganda about the economy – BULLISH! Perception is reality. People only know what they're taught. Advertising works.

Greece may default – BULLISH! Greek bond holders will make up their loses in the stock market.

Japan is a bug in search of a windshield – BULLISH! Just imagine how much more deficit spending we need to do to beat them.

The Euro is getting weaker – BULLISH! King dollar is back.

A $400+ trillion financial mine field of derivatives are set to go off – BULLISH! Let's start the rumor that if the stock market tanks we'll all be dead.

One that Note , Good Luck Everyone

Paulus said...

Payline you forgot:
Dave making a wine rack; Bullish! For retail and financials (he will trade more while under the influence)

PS:Dave I'm a wine geek too so enjoy.

David O said...

Love this string of comments!

Thanks guys!