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« Green IPOs Have Been Mixed | Main | That 1937 Analogy Fits the Bigger Picture »

Friday, August 20, 2010


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Hocked the farm.

All in short with my fun money.

When the gdp revisions come out, folks are going to stop playing pocket pool. It should push us through 10,200 on the Dow and 2150 on the NAS. Nice air pocket on the NIK just below the close last night.

Should know in the next week or two. Shirt for sale? Who knows.


Bull trade

Early July 2010 was the 2 year cycle low.

Late July 2010 was the 78 week cycle low.

4 year cycle is due October if the market remains flat here....


Lou Duva

17 week Bernanke cycle is due in early October. Undercutting 17 week low in July indicates left translation of the cycle which means that low will be taken out.

Bull trade

In terms of trading days, October isnt very far away.

Time for the bears defintitely running out.

Bull trade

:::indicates left translation of the cycle:::

It the Dow can rally 700 points into September 7 New Moon, the cycle will be "right-translated" and bullish.

Bull trade

Any sharp rally next week, its lights out for the bears.



You continue to make the rookie mistake of believing that there is a high correlation between stock prices and the economy. More often than not, they are NEGATIVELY corrlelated.

By the way, this smells an awful lot like 2003 all over again. Check the charts.



The "Flash Crash" was the result of market-makers and traders "backing-off" and pulling their bids... not of robots selling massive shares of stock. This is a fact.

As for program trading and HFT trading, I would suggest that these terms are some of the most misunderstood on the Blogosphere.

Using them without being SPECIFIC, simply adds to those kinds of misinterpretations, I am afraid.

Behold: The Grace Box !

Pause today, followed by a CRASH next week, if pattern holds:

Mamma Boom Boom

Bird, did you notice how volume on the naz went positive about 2:30?

Lou Duva

Robots are the market makers. They get in between the end-users, the buyer and the seller.


Michael, I discussed this at length back in May. The NYSE specialists backed off, and that drove the 'bots over to other exchanges where they mindlessly drove certain stocks down before the specialists got back in control. The backing off may have precipitated the event, but the 'bots made it plunge.

And yes, there are 'good' 'bots and bad ones, but the volume of bad ones was very high during the event.


Mamma, no and even if I did, I wouldn't know what to make of it. A bullish sign to you?

By my methods, it should still break lower before going higher.



Not trying to be a dick here but:

If there is a 30% chance of finding at least 15 bad apples in the basket, how could the probability of finding more than 5 bad apples be less?



Hock, I could have added more precision but I presumed my readers could figure out that when I had 30% > 15% drop and 25% > 8% they understood it meant by implication 8-15%. Perhaps I should have stair-stepped it: 
30%>15%55% >8%77% >5%92% >2%

The interesting implication is this: said to resolve within 4 months, so consider Dec ES at 1065 vs Sep ES at 1070.  If 77% chance of greater than 5% drop, the expected return is at least 78.5%, say 80% for convenience, or a 4% expected drop (minimum).  And 4%*1070=42 pts. The spread at 5 pts is less than that, indeed much less. So seems like a good bet. 


crash next week, DJIA -5000

take a look behind the new highs and you will find that a part comes from canadian exchanges.
and (more importantly) within the NYSE highs you will find many BOND related ETFs.
in short we´re well below the required threshold that makes for the idea of an out of balance STOCK market.

that doesn´t mean that stocks can´t drop.
but if they do they won´t because of "HO".

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