Ian Woodward's Investing Blog

Stock Market: Bears are Dancing Again

I see the Tom-Toms are beating loudest again in Thailand and my good friends in Qatar looking for more information after the Major Five Bucket Down Day we had on Friday which took a Bite out of GOOG for a disappointing Earnings Report among others such as IBM and McDonalds.  Net-net we are back in the doldrums and the Bears are in Control for the moment.  Next week is critical to see whether we have a Bounce Play or trot on down further to test the mighty important line in the sand of the -8% Mark on all Indexes from their recent Highs.

Here is the usual picture I give you of the Market Indexes which are all droopy:

…And here is the Roadmap for the High, Middle and Low Road Scenarios while doing a Highland Fling for my good friend Mike MacDonald:

In a matter of one month, we have moved from Irrational Exuberance being overbought from the euphoria of Draghi and Q-E 3 to being down in the dumps through the phase of Stalemate as you will see from these various charts:

…And here’s the See-Saw, Marjorie Daw Picture:

Here is that Five Bucket Down Warning I gave you.  It may snap back or it can drag you down next week:

You folks who are into this stuff with a vengeance are already on top of the 2x & 3x Bears Picture which looks ominous:

…And here is the twin picture.  There is some hope for the Bulls as the BANDWIDTH is still quiet, and if things break to the downside, this will be the first clue as it will jump up fast.

Well, we are down to the last week before the Seminar and we will be well into it this time a week from now.  As a sneak preview for the people who will be attending Bob Meagher helped me develop this next slide which we will cover at the seminar.  It shows the history of 3, 4, and 5 Bucket skips either up or down and gives ample warning of Fear, Hope and Greed.  The bottom line is that next week is nail biting time and it may turn out to be a fizzle, and then again your job is to preserve your nest egg…which is what I have taught you for these past twenty years!

Best Regards and thanks for all your support,

Ian.

3 Responses to “Stock Market: Bears are Dancing Again”

  1. Paul R Says:

    Excellent market analysis Ian, sounds like you are getting warmed up for the workshop! Sounds like a great weekend in the making!

  2. RichardB Says:

    Hi Ian

    I’m not sure if you’ve looked at this (I bet you have!) but the weekly %B*BW on the Russell 2000 shows some fairly distinct peeks and troughs going back to at least 2004. %B*BW falls below 0.01 once (or occasionally twice) per year virtually every year, almost like clockwork. The peaks and troughs reach very similar levels, albeit higher peaks since 2009 after the huge volatility of 2008/9. Turndowns from peaks sometimes “lead” prices, but there is an obvious correlation (as I suppose is to be expected). This becomes even more obvious if you add a short moving average.

    Since mid September I’ve been watching the most recent turndown and it’s going to be interesting to see if %B*BW falls to or below 0.01 sometime before January. In my own trading I sometimes get too focused on daily price action so I’ve found your work on %B*BW invaluable to making me look at the weekly picture in order to put the daily picture in context. I’ve found the %B and %B*BW extremes on the dailies also seem to fit fairly snugly within these larger cycles, and along with some other indictors, it’s also helped put pullbacks within a downtrend in a better context. I plan to do some more work on this.

    Anyway, I just wanted to say thanks again for sharing your thoughts and experiences so generously. I started reading your blog and using HGSI from the first few weeks of my trading and they been a tremendous aid to learning to “become my own expert”.

    Thank you very much!
    from Thailand 🙂

  3. ian Says:

    Many thanks Richard for the great feedback. As the saying goes “There are no flies on You!” We do watch the RUT closely, but your beady eyes spied something that had not fully registered with me: “%B*BW falls below 0.01 once (or occasionally twice) per year virtually every year, almost like clockwork.” We reached 0.000 yesterday and are back to 0.006 tonight, so not out of the woods yet.

    All the best to you and yours,

    Ian.

Copyright © 2007-2010 Ian Woodward
Disclaimer: Commentaries on this Blog are not to be construed as recommendations to buy or sell the market and/or specific securites. The consumer of the information is responsible for their own investment decisions.