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2 Cents on the Market
The Next Global Financial Meltdown
Last Activity 6/13/2010 12:25 AM
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PaddyVA

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Subject : The Next Global Financial Meltdown
Posted : 5/18/2010 5:16 PM
Post #5094

In Post 5092, I asked: "BTW, anyone here read Aftershock by Wiedemer, et al., or follow the Currency Capitalist? I'm beginning to wonder about this stock market and the whole global recovery. I guess we should discuss this someplace else, not sure it fits any place in the Nirvana Forums. Maybe after the new Options program comes out. Anyone know if that will include Forex?" Barry responded that this section, 2 Cents, would be an appropriate place to discuss the question.

The number of articles and people commenting on the US debt and deficit, and the Greece and EU current financial crisis, have been on the increase, it seems, and I think all this talk has had the effect of the DJI pulling back 747 points (6.6.%) since 4/26. Some people (traders close to the Chicago exchange, on 5/7/2010) I respect were expecting 8, 12, even 15% "correction" and moves were going to be "a lot faster than recently."

In general, I believe the World will tend to go on, and so I tend to discount the "sky is falling" forecasters. Bob Prechter has been singing that song for a long time, and a lot of suddenly converted deficit hawks in Congress have chimed in, not to mention Ron Paul, who has been saying it forever.

But I've begun to have my doubts. As I write this, Jim Cramer just opened today's program with, "What the heck is the value of following stocks?" "Skepticism and pessimism are building up to a point . . ." where it doesn't seem to make any difference to do your homework. Right now, he says, it doesn't matter, the market has become too cynical. (Don't get the idea that I'm a big follower of Cramer, but I think he does move stocks, so he's worth listening to for his take on the market and stocks.)

Visual Trader is a good tool for seeing turns in the market, in groups, and in stocks. Does anyone have a routine way of keeping an eye on the longer timelines, like weekly or monthly, to watch for broad turns?

On the second part of the question, will there be an options version for VT and will it include Forex? Anyone know? Or will it be an add in to OT? Or new program?

p.s. In partial answer to my question, I've just added a floating chart of weekly SPX, and it's interesting to note that that the week of 4/26, it topped out at the 200 week SMA, and on 5/6, it bottomed [although an anomaly] at the 50 week SMA. Right now, it's bumping up against the 20 week SMA. From a technical viewpoint, it can either go sideways and try again to get through the 20, or go back down to test the 50 again, which would mean about 1075, from today's close at 1120, or another 4% down . . . and then . . .

Pat

[Edited by PaddyVA on 5/18/2010 6:08 PM]

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Barry Cohen

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/18/2010 5:29 PM
Post #5095 - In reply to #5094

After we release the options plugin (OptionTrader) to OT2010, then the VT update will be next & it will have the options plugin capability. As for Forex, OT & VT already can use Forex symbols, just not from OmniData.
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julesrulesny

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/18/2010 6:56 PM
Post #5096 - In reply to #5094

Pat,

I pretty much only use VT and OT to trade FX.. or am testing it paper trading FX for months now.. I find it to be very suitable. However, the data feeds are very expensive if you plan on using IB or MBT to trade with so you can use your OT/VT. You will most likely need eSignal as they are one of the few services out there that provide 'Contributor Prices'. That's so your feed can match the FX prices from your broker.. WHat this means is if your prices don't match and you trade thru OT/VT - you can place trades that have different prices in OT/VT to what your broker shows..

But I like VT/OT so much I'm willing to do it this way. I have also found most of the plugin strategies work ok in FX as well. However, OT/VT is not equipped to paper trade FOREX properly as commissions are not calculated correctly. You can paper trade thru your broker though. (IB or MBT).

Altho I don't think the sky is falling, this current crisis was only a patchwork, like all crisises of the past. I think its very possible further collapses are ahead in the near future and slow economic progress.. Not just b/c of economic reasons - I mean every type of socio-political issue. How much gain is actually possible? As we all study Technical Analysis, we know Financial Markets must move up and down to equal pressure for both supply and demand. the same forces apply to the overall economy. yet this patchwork didn't fix our underlying greed to borrow more money and continually use up nearly every natural resource this planet has to provide. To me, I look at the past 125 years of growth -- We've had our ups and downs, but we surely have had more ups than downs.. History tells us this consistent swing to the upside (sort to speak..) can not be sustained.

Ok, i'm getting way to philosophical and political.. But this is actually a reason why I love VT so much - is b/c you could see all this information in the market..
So, for example: Let's take the DOW - we see price moving up and down everyday and its reported in the news. That in itself is a form of Analysis to base your investment decisions.. This DOW30 being reported in the news is like the Battle of the Bulge in WWII.. Now, looking at these stocks in a chart, or in a "Focus List" such as we have is like like studying different battles simultaneous, but separate in study.. Add VT and see the entire market on a map is like having an overview of our planet during WWII and we could zoom in and out of the different conflicts/battles of the war for further study, while zooming out to see the whole picture?

I think that made sense... LOL!

Thanks for your market insight and your take on the Weekly Chart of SPX. I enjoyed reading that and am currently checking into that myself.
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PaddyVA

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/19/2010 12:15 AM
Post #5097 - In reply to #5096

An interesting simile of OT and VT to the battles of WWII, Jules! :) If only Ike had a bigger, better overview, he might have let Patton go for it!

I watched a webinar on options tonight, and the presenter confidently predicted that the market tomorrow will open up for a half hour or so, and then "plunge" to 1095 on the SP500 and will be at 1099 Thursday morning. He predicted BIDU down to about 69 tomorrow.

My favorite after market commentator / technical analyst tonight thinks the DJI tomorrow will go down to the 200 day SMA about 10250, and the SP 500 will come down to the 200 about 1102. Breaking those supports would be "disastrous." Then the target is the 500 day SMA -- the low on 5/6. And that's just a "normal" market outlook, not a meltdown!

Does not look like a good time to go long. Even gold is pulling back. Asian markets, as I write, are down 1-1.5% right now. Need to see a turn around soon! Visa and Mastercard are down already to their 500 day SMA.

I show 20 new buy signals on the T3 strategy, but I wouldn't buy any of them at this point. The next few days will be a real test of the strategy.

[I was about to post this, but thought I'd first add what tonight's SignalWatch Live had to say, but as I started it, I got another BSOD! Amazingly, when I restarted Chrome, it was able to restore this unposted message! So, I'm quiting while I can to post this. I now strongly suspect that the BSOD I've been having with VT and OT have to do with the RT OmniData server, not the programs themselves!] You can check SWL yourselves. :)

Pat



[Edited by PaddyVA on 5/19/2010 8:50 AM]

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julesrulesny

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/25/2010 6:06 PM
Post #5127 - In reply to #5097

Hey Pat,

Sorry didn't respond sooner..

So, did that present regarding the webinar you watched about Options - was he correct the next day about the DJI going down to 200SMA and all the other measurements/predictions?? Not that it means if he was wrong, he's a fraud, same goes if he's right.. I'm just curious..

It is interesting to note though that since you started this thread the markets have been tumbling. I just don't see the economy being that strong. Albeit, it's improving but jobs are NOT! But they are always lagging anyhow..

How do you like your T3 strategies? Making any money? And have you adjusted them in anyway? (maybe I should post those questions in the T3 thread..

Finally, what does "BSOD" mean??

Did you get the flier for "OptionTrader"? Loooks extensive and great!
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julesrulesny

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/25/2010 6:07 PM
Post #5128 - In reply to #5094

I forgot to add...

Although these forums are really for discussing OT/VT alone. I would like to see more market discussions in this thread "2 cents on the market".. I think with all the sheer volume of OT and VT users we could get very insightful comments and enjoyable discussions!
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Jim Dean

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/25/2010 6:23 PM
Post #5129 - In reply to #5128

BSOD means "Blue Screen Of Death" ... much worse than the Dread Pirate Roberts, awaiting you at the tops of the Cliffs Of Insanity. It's what happens when Windows refuses to come to the party at all.

And the continued meltdown is of course DUE TO this very thread.
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PaddyVA

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Subject : RE: The Next Global Financial Meltdown
Posted : 5/31/2010 12:14 AM
Post #5136 - In reply to #5127

Mark, sorry I didn't see your post before tonight -- and just now, when I started VT 7 RT to check on the SPX, VT 7 locked up my computer -- it didn't do a BSOD (which Jim defined for you), because I tried to stop the RT Server from repeatedly trying to connect, so it punished me anyway! It is definitely the RT Server, for either OT or VT, that is causing the BSOD -- see my posts at http://www.visualtrader.com/forum/thread-view.asp?threadid=947&posts=7 and elsewhere. I've sent all kinds of files to Support, and am working with Thad to try to resolve this. It seems to be more frequent since I installed VT 7, but it would occur before also; it's a long standing problem on two of my machines.

Anyway, back to your main question about how the market acted the day after -- the date in question was May 19 -- quote from my post: "I watched a webinar on options tonight, and the presenter confidently predicted that the market tomorrow will open up for a half hour or so, and then "plunge" to 1095 on the SP500 and will be at 1099 Thursday morning. He predicted BIDU down to about 69 tomorrow.

My favorite after market commentator / technical analyst tonight thinks the DJI tomorrow will go down to the 200 day SMA about 10250, and the SP 500 will come down to the 200 about 1102. Breaking those supports would be "disastrous." Then the target is the 500 day SMA -- the low on 5/6. And that's just a "normal" market outlook, not a meltdown."

The webinar forecaster was correct that the SP500 would open up for half an hour; it bottomed at 1100.66 just before noon, then closed at 1114.63; the next morning, 5/20, it gapped down to open at 1107.37, with a close at the low for the day at 1071.62. So he missed the low on the high side by 5.66, and the 5/20 open on the high side by 8.37; but by 9:45, it was down to 1088.40. BIDU hit a low of 69.3 on 5/19, but closed up some from that. So, he was correct in the direction, and really close on BIDU. Give him a B+ or A-.

My favorite analyst was correct on direction, and close on low -- DJI gapped down on 5/19, hit a low of 10324.66 before pulling back, and then the next day, went right through the 200 DMA for a close at 10068.01; the SPX on 5/19 went just through the 200 DMA at about 1100, then pulled back to close at 1115.05; the next day, it plunged through the 200 DMA to it's low of 1071.58 and close of 1071.59. Since breaking the 200 DMA, the DJI has hit a low of 9774.48 and the SPX a low of 1040.78 before bouncing some.
Give him a B+ on the DJI and an A+ on the SPX.

Last Thursday and Friday, 5/27 and 28, the DJI and SPX both hit up against the 200 DMA, but didn't break through, so what was support has now become resistance. Unless they can break up through that level on Tuesday or Wednesday, they will probably go back down (my opinion) with the next support at DJI 9679 and SPX 1029. I sure hope it doesn't go there! I don't know where the 500 DMA is at the moment (don't have enough data on OT or VT loaded and I don't feel like firing up my TOS).

On the Option Trader, yes I just got the brochure, Thursday I think, and I'm very interested. But, I'm disappointed too, because it doesn't work with MB Trading, and there's no forecast as to when it might. Also, two $1000 plug-ins in a row, plus also the $594 iTLB3.0 (I missed the deadline and I don't think I will get it now) is getting pretty expensive, plus the GT3/ETF trader, whatever that was, and I know I'm spending more than I'm making from these. The Jury is still out as far as I'm concerned; I'm considering returning the T3 -- see my new thread at http://www.omnitrader.com/currentclients/OTForum/thread-view.asp?threadid=4980&posts=1 .

Yes, I'd like to see more of the market discussion in this section too -- it was opened up by Nirvana, so it's fair to post on the subject here, not just on OT or VT subjects.

Although the job growth is slow, it is growing again, and there are a lot of positive signs in terms of corporations having a lot of cash. I think a bunch of the CNBC talking heads (particularly Kudlow!) and a bunch of certain politicians are doing everything they can to bad mouth conditions, and now on top of that comes Greece and the other PIGS (hate to say that because it includes my ancestral homeland, Ireland), and the @#@% high frequency traders and hedge funds, who IMHO, are just sucking money out of the rest of us a fraction of a penny at a time! They are whipsawing the markets and picking up big money every time. The SEC needs to get in gear and change the rules! How many times do we have to go through this deregulation or no regulation learning experience before we say that rules and transparency are necessary to a fair market and a stable economy? I'll take the good ole 1950s, thank you! LOL

Pat

[Edited by PaddyVA on 5/31/2010 10:30 AM]

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THELGET

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/5/2010 10:54 AM
Post #5142 - In reply to #5136

Pat:

Some information for cogitation. This comes from a trading friend:


This is the latest from my Forex guy at FXCM comparing the drops in 1929 and 1987 to the current market.

“Now, in 2010, the first leg of the decline consumed 21 days (as opposed to 23 and 19) and the following correction lasted 6 days (compared with 5 and 8 days). IF the Dow continues to follow the ‘crash path’, then the May low would be broken late next week (the 6th day is Friday the 11th). The decline would accelerate the following next week. 12 days for the crash leg of the decline and 40% (compared with 45% and 37%) would result in the Dow at 6755 on June 22nd. Interestingly, June 21st is a Monday.

Again, this is simply a forecast based on historical patterns in price and time. If the current situation begins to diverge from the path laid out here, then we’ll know that something else is probably in the works.”

So here is how it looks using AmiBroker (since I had data back to 1987) as best as I can interpret it:






Tom Helget



[Edited by THELGET on 6/5/2010 11:15 AM]

Attached file : COMPARISON.png (145KB - 599 downloads)

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/5/2010 10:59 AM
Post #5143 - In reply to #5142

We can only Hope for a Crash. VT set up correctly told you to get out some time ago. So profits will be a plentiful when the hand basket come!
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Tony Birchfield

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/5/2010 12:27 PM
Post #5144 - In reply to #5143

Folks,

after the flash crash recoverd to challenge 49 on the Q's which was under the hrly base and could not penetrate, the story was written. I see only one direction and it is about darn time for the real truth of our economy to be shown in the price action. The head fake has finally gotten its black eye. For now, should be interesting to see if the great manipulators can hide this. Yes, my view is not mainstream. But just my opinion. Whatch out for the mainstream buying opportunity hype.

I love seeing the truth be told. We shall see.

Enjoy the weekend.

Tony
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Tony Birchfield

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/6/2010 2:59 AM
Post #5145 - In reply to #5144

Ah,

here is the answer:

http://www.youtube.com/watch?v=NOzR3UAyXao

Tony
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TP

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/6/2010 7:35 AM
Post #5146 - In reply to #5094


That's awesome Tony.

Thanks.

TP
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TP

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/6/2010 10:05 AM
Post #5148 - In reply to #5094


Those following this thread may also have an intetest in these....

http://www.websterscommentaries.com/

http://pragcap.com/





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PaddyVA

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/6/2010 2:38 PM
Post #5150 - In reply to #5142

Tom, thanks for those scary charts! There's the old quote that if we do not learn from history, we are doomed to repeat it. So, are there inherent patterns or responses to events that are somehow ingrained in the human psyche? Do Fibonacci numbers really have meaning in nature and human events and the stock market? Are cycles of certain lengths inherent in the markets?

A lot of evidence has been put forth to support that they do. But how much of repeating events, or "rules" are simply self-fulfilling prophecies? I think that a lot of the reason that supports, resistances, key moving averages, Fibonacci numbers, etc. work in financial markets is that a lot of people believe that they do, and act accordingly. So, they do, until there is a new epiphany, a paradigm shift. Then the rules start to not work.

I am inclined to believe that there are many factors that affect personal and group behavior, and that seldom would the same conditions recur. But, belief is a very strong motivator, and if enough people come to believe that something will happen, then they will act similarly, often to their own detriment. Case in point -- the Jim Jones mass suicides, to say nothing of wars.

I hope that people like Bernanke and the other central bankers are smart enough to avoid a repetition of the great depression. But they do not directly control group psychology, so there is the chance that mass fear can overwhelm whatever economic maneuvers they may attempt.

Economies are feedback systems, where there is a lag in corrective action; as things get worse, the feedback makes things even worse, until somehow, they start to get better, and people act as though they are getting better.

For several years, I have read the occasional postings of Steven Williams at his CyclePro website -- http://www.cycleprooutlook.com/Charts/SP500/Outlook.htm . He writes, "The current U.S. stock market appears to be following a similar path as was previously witnessed by U.S. investors in 1929 and 1987, and more recently by investors in the Japan Nikkei in 1990, Hong Kong in 1997, and many others. These were the most famous world stock market "crashes" of the century. We have already witnessed crashes in internet and high-tech industries during 2000, will this year also be added to this prestigious list for a "Crash" in the United States? Will the global economy crash too?"

I haven't been able to determine his qualifications, but he has some very interesting charts on the Dow Jones Index and gold -- see particularly the semi-log plot of the inflation adjusted DJIA back to 1800, in the September 4, 2009 posting at http://www.cycleprooutlook.com/Charts/SP500/Outlook_091116.htm and http://www.cycleprooutlook.com/Charts/SP500/InfDji200_0810.jpg .

Williams earlier posted a reference to writings by Martin Armstrong, former chairman of Princeton Economics International, (and now in Federal prison) at http://www.contrahour.com/ItsJustTimeMartinArmstrong.pdf and 1929 Revisited - The Greatest Bull Market in History, about parallels with 1929; Williams posted links to each of the chapters, but these no longer work, and I can't find other working sources; the closest I could find are these: http://www.contrahour.com/contrahour/2007/03/free_martin_arm.html?no_prefetch=1 and http://seekingalpha.com/article/103613-on-martin-armstrong-s-it-s-just-time .

I remain inherently optimistic about the world outlook, but it is more difficult to do so given the decline in markets of the past several weeks. I am concerned that the negativity of a lot of commentators are contributing to a self-fulfilling prophecy effect. Even more so, I am concerned that the high frequency traders, the hedge funds and the short sellers are having a negative effect on the markets, as George Soros did in breaking the British pound -- see http://en.wikipedia.org/wiki/Black_Wednesday .

Pat

[Edited by PaddyVA on 6/6/2010 3:26 PM]

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THELGET

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/6/2010 4:13 PM
Post #5152 - In reply to #5150

Pat:

I am not a student of history (but I do love the series, "The Tudors") and so cannot say whether or not we are doomed to repeat the financial past. However, I find the analogy, as Spock would say, "Fascinating!".

Tom
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PaddyVA

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Subject : RE: The Next Global Financial Meltdown
Posted : 6/13/2010 12:25 AM
Post #5178 - In reply to #5152

Check out the June 12 issue of Barron's article on repeating history:
http://online.barrons.com/home-page

This Picture Looks Familiar
By MICHAEL SANTOLI |

Stocks this year have hewed to some familiar patterns, but the question is whether the patterns will hold. There's cause for hope.

AFTER WEEKS OF SCRUTINIZING every twitch and feint of the indexes, the big picture beckons.

There's been queasy tedium in staring at "key" index levels that "should hold," while stocks move tick-for-tick with the euro, and traders wonder whether fundamentals-driven funds have cash to express their view that "stocks are cheap." The longer view is one of much energy expended to go nowhere.

Admonitions to keep the big picture in mind usually take the form of a resigned lament. Large-cap stocks delivered a negative annualized return over the past 10 years, without even considering inflation or opportunity cost. A generation of investors who did the "right thing" have nothing to show for it. Secular bear markets tend to last a dozen years or more after a burst bubble. Etc.

Agreed, all around. But what do these sorrowful yesterdays tell us about all our tomorrows?

Ten years ago–an exceedingly poor time to buy the major indexes–the New Economy was supposed to have banished the business cycle. Now we are said to face a new normal of suppressed growth for years. Back then, we had a putative federal surplus; today, deficits look intractable. In 2000, government was deregulating and CEOs were celebrities. Not so much anymore.

[more . . . see the chart go to web]
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