As a follow-up, here is an observation by Mark Hulbert, "Breaking the market's neck."
-cal-
----- Original Message -----
From: Dave Rubin
To: 'CANSLIM Stock Investment Group'
Sent: Tuesday, July 07, 2009 10:41 AM
Subject: Re: [CANSLIM] Rally & SPY
I look at a 10-year monthly chart of S&P as a sanity check.
The 10-month EMA is a simple but accurate long-term trend indicator, providing both resistance and support.
The June close around 920 is eerily similar to the November 2002 top. The market had begun a steep ascent in September 2002 only to undergo another correction a few months later. The market never re-tested those September lows but, like most bear market bottoms, the "W" was formed.
Just like then, the S&P failed to touch its 10-month EMA. The 23.6% retracement (based on closing monthly price) is almost too good to be true for Fibonacci followers.
If this symmetry plays out we should see the S&P correct to at least 800 this summer. I am leaning short here and watching 880 on the S&P. A loss of that line would be a textbook head-and-shoulders breakdown.
Only thing that makes me pause is that this is all too obvious. But the charts don't lie.
From: canslim-bounces+daverubin=yahoo.com@??? [mailto:canslim-bounces+daverubin=yahoo.com@???] On Behalf Of Charles & Lois
Sent: Tuesday, July 07, 2009 10:27 AM
To: CANSLIM Stock Investment Group
Subject: Re: [CANSLIM] Rally & SPY
What lessons are the NASDAQ (& other averages) giving us now?
-cal-
----- Original Message -----
From: Anjan .
To: CANSLIM Stock Investment Group
Sent: Sunday, May 24, 2009 3:54 PM
Subject: Re: [CANSLIM] Rally & SPY
cal, I think current market focus is on the nasdaq - leading index - and the 200 dma from where past market recoveries were begun. You are right with observing that the current market bias is "mixed", any new entries on the long side may be risky. For market confirmation I like to see nasdaq build higher lows and higher highs above the 200 dma. I did not buy spy at the bottom, but got some stocks when they broke out of bottoming base (base without prior up trend) and averaged 20%+ gains.
--Anjan--
On Sun, May 24, 2009 at 10:00 AM, Charles & Lois <cllyn@???> wrote:
Anjan,
Thanks for the comments.
I can see how some of my own comments can be taken as attempts to "predict" the market. They are not so much that; rather, like other traders, merely applying insights and lessons learned to gain a feel for a market bias when one exists. It is evident that throughout the last quarter 08 through the first quarter 09, the bias has been down. What indicator failed to flash & confirm that? So now, is the bias still down? Or are indicators beginning to show differently? They appear mixed to me, indicating a bit of sideways movement. As you aptly pointed out before, there is a lot of "noise" out there. So what is the market really doing? What do we learn if the averages pierce and fall below their 50 & 20 dmas again? Conversely, what if they successfully test them as support?
You mentioned that you suggested SPY after 3/9. Did you actually buy yourself? If so, when? What led you to decide when to enter a position? How about exit?
-cal-
----- Original Message -----
From: Anjan .
To: CANSLIM Stock Investment Group
Sent: Sunday, May 24, 2009 2:39 AM
Subject: Re: [CANSLIM] Rally & SPY
Good cal. Looks like you are following a "trend following" system like you are supposed to. You can apply the technique to different "time frames" simply by picking monthly, weekly, or daily charts to draw your channels and trade/invest from there. Picking bigger time frames should allow you stay in a trade longer, conversely picking a smaller time frame will cause you to trade more often.
One caveat about using overbought/oversold oscillators is that they work well in a market moving sideways. A trending market may stay in overbought or oversold condition for a very long time; therefore it should not be used when the market is in a "trend".
Lastly, all your notes seems to indicate that you want to "predict" the market. Well, that is "impossible". This is why one must develop a trading disciplin - that is to exit a trade very quickly if it does not move in a anticipated direction within a anticipated time. Also be ready to jump back in if the "trend" is resumed.
Have a good Memorial Day.
--Anjan--
On Sat, May 23, 2009 at 3:03 PM, Charles & Lois <cllyn@???> wrote:
True, true. Hindsight is the only certain way to confirm a trend. Still, traders have to decide whether or not to participate at some point.
For those who participated in the rally off of the average's lows of 3/9, when and how did you decide to commit? What indicators made you begin to decide that a reversal had occurred and that an uptrend was in place? What indicators are pointing toward a continuation of this trend? And what indicators are pointing toward a reversal?
For me, I was extremely skeptical and maintained what is for me an above average amount of cash on the table. When I did commit, I traded stocks that I identified to have established a high-low channel since Oct through March and bought when price was near or at its lower support and indicated an oversold status. I usually allowed them enough room to pass my target and, if they did, trailed them from that point with a stop. If they didn't hit my target, I had lower sell points selected. NDAQ was one of my trades that worked out in this way this time.
Like I indicated, I remained quite suspicious of this rally pretty much the entire time. Had this reversal not been from what are new lows - in practical terms - I probably would not have been as suspicious. This market left correction status and entered crash status a long time ago. I'm not going to argue with market reality, but I think that some solid base action needs to take place before a new uptrend is sustainable for a longer term.
-cal-
----- Original Message -----
From: Duane Runnels
To: CANSLIM Stock Investment Group
Sent: Friday, May 22, 2009 9:34 AM
Subject: Re: [CANSLIM] Rally & SPY
When was the rally viable? You never know until after the fact. I suspect one of the pure canslimmers here would say -- when leading stocks are participating.
Some years ago I would round out my portfolio with QQQQ, selling some of it to pick up a stock breaking out.
Now I have both a long term and a shorter term view of ETFs. I don't use any IBD criteria, like Market Outlook, to tell me when to buy/sell, however it IS a good rough approximation. I round out the downtime in IBD type activities, you know when IBD says nothing to do but maintain your watchlist, by investing in ETFs using one set of criteria and daytrading ETFs using another system. As a pal of mine says, "I want a system I can use when I'm not using canslim."
It sounds to me like you need a backup plan. Nobody's suggesting there's anything wrong with canslim, but guys it's just a set of tools. It relies on a set of circumstances to work and it works very well, but it doesn't work all the time. There is no shame in using more than one system to trade the market, it's not like cheating on your girlfriend.
I can't offer you many insights on when to buy SPY. There has been discussion on this list that it may be profitable to buy/sell ETFs based on Market Outlook. My opinion is that MO is late.You'll have to dig, research, and test to figure out what you're comfortable with.
--- On Fri, 5/22/09, Charles & Lois <cllyn@???> wrote:
From: Charles & Lois <cllyn@???>
Subject: [CANSLIM] Rally & SPY
To: "CANSLIM Stock Investment Group" <canslim@???>
Date: Friday, May 22, 2009, 7:29 AM
In response to one of the other topics, Anjan recently wrote:
******
If you bought SPY near market lows, today you would be up 30%+.
Thus, my response was for you to ignore the "noise" of the media selling their shows with doom and gloom 24X7 while the market completed a very decent rally. I hope you participated in it... I had mentioned etf/MutualFund SPY as an alternative, in case you were having trouble filtering for canslim stocks.
******
When and how was it determined that the post 3/9 pivot was a sustainable rally? At what point in the rally was the decision to buy SPY made? Were other index funds (QQQQ, DIA, etc.) also viable alternatives?
Thanks for any insights!
-cal-
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