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« A Market Epiphany | Main | Unemployment Disappoints, Dollar Drops »

Thursday, January 07, 2010

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Michael

Hope everyone is enjoying the ride in my "Stock of The Year" for 2010, which is now trading at $4.50, up from $2.50 just sixteen days ago!

vipul garg

Michael,
yes, good pick there

it hit my target today of 4.50

Michael

Given a mere marketcap of roughly $145 million, I would suggest that this stock has a lot higher to run.

It is not a "trade" for me. It is a core INVESTMENT position that will be added to on any correction.

Good Luck to All in 2010!
:)

Canadian Money

Interesting charts.

Lets see if I can make any sense of these numbers.

First, if a year being positive or negative was simply a random result then the probability of being negative or positive would be about 50 % for either outcome.

For the Years Ending In O Chart there were 12 years of data included in the set. Lets call these 12 trials. If it were just a random thing and the set were large enough...we would expect to see about 50 % or 6 years being positive and 6 years being negative.

Of the 12 years 4 were positive (33 %) and 8 were negative (66 %). That result is not that far from a 50 50 split. Might just be normal variation within a random process.

But then there is the data selection process that only included the years that ended in O. That might make it a dependent probability calculation. Here is where my knowledge gets weaker still. I think one multiplies the above percentages by 0.1. If so, the ratio between positive and negative years remains the same.

Any statistical experts reading this blog?

yelnick

Canadian, the market is up much more than down, so the starting point is not 50-50, more like 80-20 (I don't remember the exact stat), so having fewer than 7 or 8 up 0 years is a red flag; having as few as the pattern has is (probably) statistically significant, albeit on a small sample

jeff

2010 is 3 dozen years from 1974...you remember '74, the year Nixon resigned...well, 36 years is a nasty political cycle so I'll make my 2010 predictions by harking back to 1974:

Like Agnew, Biden is indicted for a criminal act.

Like Nixon, Obama resigns just before being impeached.

Can't believe its Pelosi, so I'll go with Hillary as the next Jerry Ford.

joe

Personally Jeff - I was too stoned to remember 1974 (or 75 for that matter).

Joe

Perigee

The decennial pattern on its own is a reasonable tool - however, to be used properly one must understand the longer term cycles as a means of context. As one example, in bear market cycles, the years ending in 8 (think 2008) tend to be down more than up. The more important aspect of timing rather than direction from the decennial pattern is the movement within the specified year. In other words, look at the patterns for all years ending in zero. Average all these together to calculate turn dates and as long as you know the opposite of up is down and vice versa you will probably beat the Elliotticians hands down this year!

Glenn Loser Neely

Where is the Neely Shill?

GLN

DG

Where is the Neely Shill?

GLN

You guys need to look up the definition of "shill", apparently. I've said on many occasions that I have zero affiliation with Neely other than as a paying customer.

http://www.thefreedictionary.com/shill

Also, Neely's methods have positive expectancy across all time frames on the ES. By definition, that's a trading method which works, so you don't even get the second aspect of shilling (that the product/service being shilled doesn't work) correct.

But your complete lack of facts and reliance on accusations and innuendo doesn't surprise me.

At least, Neely's track record is on public display unlike others who just post whatever they want with absolutely no paper trail.

Eventhorizon

Can't you use standard hypothesis testing test the null hypothesis:

"0" years return the same as "1" - "9" years?

"0" year return using 12 samples is: -4.94% +/- 15.8%

We need the average of the "1" - "9". The avg is 8.24%. The population has 6x12+5x11 = 127 samples which is enough to be considered large.

According to our null hypothesis the difference between the means should be zero but is 8.24+4.94 = 13.18.

How many "t"'s is that? 15.8/sqrt(12) = 4.56. 13.18/4.56 = 2.89.

There's 11 degrees of freedom. It's a one-tailed test. t-values greater than 2.2 equate to 97.5% confidence. 2.89>2.2 therefor we can reject the null hypothesis that "0" years are drawn from the same population as "1"-"9" years.

"0" years return less than "1"-"9" years with 97.5% confidence. (Note this does not mean they are losing years, just significantly less than all other yearas)

If I have done something wrong here, let me know, I am no expert.

Eventhorizon

Just thinking, it's actually a 2 tailed test, so the confidence would be 95%, not 97.5%. I probably should have used an unbiased estimate of std dev based on the sample which would be 16-some%.

Conclusion would be the same.

joe

DG -

Neely is still short, isn't it? If he is - he may be making a really brilliant call here.

Joe

Anon

Rhetorical question of the day - if the Fed couldn't control deflation, what hope is there that they can control hyper-inflation?

DG

joe,

It's more that he's looking to short on weakness, but he isn't already short.

The timing of his call has clearly been off. From a trading results perspective, he's down anywhere from 4-7% since the March bottom.

I have been working on a pretty extensive analysis of all his S&P trades during the last 3.5 years, which is all the data I have. He had a similar problem in 2007, when he tried to short all the way up and was also down for the year despite an up market. Then, in 2008, he made it all back and then some. If his wave analysis is right and we are leaving the period of maximum unpredictability (wave-B), using NeoWave, and entering a period of higher predictability (wave-C), his returns in 2010 should improve.

Mike McQuaid

DJ Transport Index closed above the golden mean retrace of the '08 high to '09 low. '09 low was the reversal, the trend is up.

Dave

In my opinion, Neely was incredibly defensive in his latest S&P update today.

Apparently, he is concerned about a public perception out there that NeoWave missed the whole rally off the March low, and so Neely goes on to rationalize his rebuttal of such a perception by citing that even though he has missed the last 35% of the rally, the "last" 35% has taken 400% more time than the initial 2-month surge, which he says he was bullish on.

I'm sorry, but that sounds rather convoluted to me.

DG

Well, even though I'm allegedly a Neely shill, I agree he shouldn't have bothered writing those lines in that update.

He did catch the bottom in March almost to the day on the first try and went long. Unfortunately, he got out of that trade after the initial pop and never went long again, although he did stay on the sidelines after that trade, despite looking for more upside.

He was bullish up until about 1000 on the cash S&P, but only traded long until about 800.

So, he's got something of a point, but exaggerated it.

joe

DG

I do think we will see some volatility next week - the VIX is that low and long over due a bounce and then there is the Jan expirations - among other reasons.

This wave count is very inconclusive - but it is not the only thing I'd be looking at here.

I think that 10260 DJIA level may indeed be challenged next week.

Joe

DG

This wave count is very inconclusive - but it is not the only thing I'd be looking at here.

Both the short and long term sentiment models over at Sentiment Trader have gone into the red.

http://www.sentimentrader.com/

I look at a lot of things, although all of my trading entries and exits are based on NeoWave.

One of the things I was looking at yesterday was the number of positive closes since the November 2nd low. Today makes 32 out of 46, which only happens about 3% of the time. I didn't check to see if the going forward returns following those periods was statistically worse than the typical market returns because I was looking more to see if I was right that there's just been something out of the ordinary about the market since the November low.

If you want to see a chart that has my interest, check out the SPX over the past two years with a "price by volume" overlay. We're right up against a huge wall of volume resistance from way back and we're about 300 to 400 points above any solid volume support. Since we haven't had any corrective reactions since the March lows, really, all the market has for support at this point is the upwardly sloping trendlines. Every move off a low since 900 has been a V-shaped rocket on low volume. Given the way that volume has expanded on down days and contracted on up days, it doesn't take a genius to figure out that when volume comes back in, it will be skewed toward the offer. Once those trendline supports give way, look out below.

What's been fascinating is to watch the bulls "story" evolve. First, it was "green shoots", which, of course, should have sprouted by now if the market began to discount them in March. Second, "weak dollar" was going to drive earnings overseas, but then the dollar started to strengthen. Third, "job market has bottomed" and now it's "economy is so bad, QE 2 is inevitable and we'll have zero interest rates until 2020".

I'm sure there's a market timing mechanism in tracking the evolution of this sort of thing in bear market rallies of the past. Like, when the bulls run through X number of different and ultimately false versions of why the market's going up, it's time to go short. Maybe that means the rally continues until QE 2 is shown to fail, although I'm sure by then the bulls' story will be "QE 3 will really, really, really work".

As I wrote on my blog, I feel bad for people who are just Joe 6 Pack types who are looking for work, see the market going up every single stinkin' day and wonder why they can't get a job if everything is so great. I actually think at a certain point, the market continuing up becomes a morale-killer in this country, since most people don't make their living in the market, they make it with income earned from a regular job. They'll see some 25-year old banker get a $50K bonus because the market was up 100 points and think about how their own 401k or IRA only went up a few hundred bucks for that 100 points and get even more ticked off at the situation.

bmccaw

Neely like all those forecasters before him, once they have made a once in a life time prediction and the event came true as a black swan event, its almost a certainty after such, all their future major predictions failed. Prechter, Gazaralli, Richard Russell... and plenty others.

What Neely wrote in the the latest newsletter was not only unnecessary but also demonstrate his confidence is gone.

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