this morning's close is significant in terms of testing double top neckline and failed convincingly. If it continues to fail to break through the resistance by the close of this week (both end of week and end of month) then I reckon position trading with short is on. Btw, it was confirmed in Bloomberg that USD is the new carry trade favourite
Dow Jones double top almost confirmed
- Thread starter feihong
- Start date
Why, when treasury yields are so low?
I guess what it means is that the developing trend of carry trade shows that the USD is becoming more and more popular vehicle as carry trade, as traders believe that Japanese yen is undervalued and USD is overvalued. Obviously in absolute quantity Japanese yen is the predominant vehicle of carry trade.
A double top means the top is likely in. Unless it's not. If it's not it maybe a triple top, or go down to a double bottom. A double bottom is like a second low, but not quite, depends if it was a double top.
Basically, it means the market may go up from here, or if not, if could go down.
Hey, just having a bit of fun. I'm not into this stuff either. Shares are either cheap or not as far as I'm concerned.
See ya's.
Basically, it means the market may go up from here, or if not, if could go down.
See ya's.
Ahhh, that's much clearer. Thank you !
OK,
The laymans translation: He reckons the Dow Jones might be about to fall because its struggling to break through a resistance level. That level has been "tested" twice now (a double top) and both times failed to break through. Its a tech trader approach to predicting which way the market is headed. They look for patterns in the charts, and a double-top is a signal that the market might be about to fall because it hasn't got the "sentiment" to break through the resistance level.
But I probably got that all wrong not being a tech trader and all. Another pattern they look for to signal a trend reversal is a head and shoulders pattern, but if you want to learn more about tech trading then google it. They also look at all sorts of different timeframes when doing the chart tracking. If you're into that sort of stuff then start by Googling "Elliot waves" as a bit of a founder of tech trading.
Cheers,
Michael.
The laymans translation: He reckons the Dow Jones might be about to fall because its struggling to break through a resistance level. That level has been "tested" twice now (a double top) and both times failed to break through. Its a tech trader approach to predicting which way the market is headed. They look for patterns in the charts, and a double-top is a signal that the market might be about to fall because it hasn't got the "sentiment" to break through the resistance level.
But I probably got that all wrong not being a tech trader and all. Another pattern they look for to signal a trend reversal is a head and shoulders pattern, but if you want to learn more about tech trading then google it. They also look at all sorts of different timeframes when doing the chart tracking. If you're into that sort of stuff then start by Googling "Elliot waves" as a bit of a founder of tech trading.
Cheers,
Michael.
Hi Michael,
I'm sure you would be a highly regarded trader if you choose to
Just curious, do you use tech analysis at all? I was introduced to investment world by chartist, so naturally I'm heavily biased towards tech stuff.Hi fei..
I have shared this bearish view with you for month or so now ..
The slow drop in dow from oct high to now (late nov) is not a signal of a correction but something larger ..
why?
well, in my short experience in sharer markets, a correction has always been a short, and sharp drop.. it is caused by uncertainty, which cause many to quickly liquidate in face of uncertainty .. hence a quick and sharp drop .. this isnt a quick and sharp drop.. everyone knows the problems, yet the dow continues to drop .. and its been dropping for nearly 2 months now (if we include the double top then its been dropping since late july - 4 months !!).. even though fed have injected bilions, dropped rates as expected etc ..
even worse it has kicked off inflation in a massive way (something which took the world a generation to remove.. from 70s to early 90s) ..
a deflation isnt a bad thing, and i think US should allow deflation to occur, it removes the excesses and makes the economy stronger.. but they dont want to go thru that pain.. US retailers discounting heavily to keep consumers borrowing, but i think that will only be short term..
Its an aweful cycle .. lets go thru the supply chain ..
China experiencing higher inflation and wage pressures.. companies have to increase prices of goods sooner or later to compensate, otherwise corporate earnings go down and p/e of 46 in chinese market blows out to 96.
US corporations are buying these products and selling to US consumers.. They have been discounting heavily to keep consumers borrowing and buying. Again this impacts corporate earnings.. so US corporations facing lower sales, higher product costs, and lower earnings.. hence their p/e goes up and eventually price also goes down .. they could pass on the costs to US consumers but that lowers sales and same problem occurs..
All the while borrowing costs for various things is going up; credit, mortgage etc .. US bond rates at 4% would usually signal low inflation ahead.. But i think the real reason is money needs a home.. bond rates 4%, and real US inflation prob 3-4% as well .. it means someone is willing to preserve their capital (by getting 4% from bonds) rather than LOSE money in sharemarkets or property ... also means bond traders are expecting fed to cut much more .. if they do this aweful cycle will only get worse..
Btw. dow and s&p 500 are now also officially in correction (drop of over 10% from previous high).. add to that japans .. my bet is ftse goes next , its looking very, very weak..
these are my humble views.. i may get some right and many wrong.. so please do your own research ..
Also, im open to some optimistic views and happy to change my mind if i believ in those views..
Hi Feihong,Hi Michael,
I'm sure you would be a highly regarded trader if you choose to
Yes, I do track the charts when understanding likely movement around the trend. But I'm fundamentally a value investor. I look at the macro economic environment and decide the likely direction for key sectors and invest long if I like the look of the sector or stock. I only use the charts when trying to time decisions like my recent one to diversify into commodities and Asia out of ASX blue chips. I thought the ASX was over-bought at 6800 so held in my conservative fund to limit the downside of the imminent pull-back. Now that its back at the bottom of the channel, I think the ASX is over-sold and am now executing my switch. The switch exposes me to more volatility which is good when there's upside but not soo good when its looking like more downside.
So, I guess, I'm arguing against the Dow double-top in that I think the ASX is over-sold and its a buy time not a short time. One day I might become a sophisticated investor like Thommo or TC, but for now I'm just a managed fund long buy-and-hold type.
Arguably, I should have sold out of my current fund at the 6800 ASX top when I knew it was over-bought. But I'm also a lazy investor and it seemed easier to send one instruction to my margin lender than two. So, I rode it down with my current fund and only gave away about $40K in unrealised capital gain. Dropped from $60K to $20K (a 5% fall on my invested capital). Still, that is a better result than had I been holding commodites through that pull-back. BHP dropped from $48 to $40, or a 15% fall. So now I'm hoping to re-balance and ride some of that 15% correction and forward strength for that sector, recognising there will be bumps along the way.
Cheers,
Michael.
I don't actually have an opinion on the performance of XJO/SPI, as I haven't been looking at them lately and it seems there is no clear established trend yet. BHP seems to hold up well near the resistance though, and that's got to be positive for our market at least. Your risk management sounds great, and there's a lot of things I'll have to learn from you when I'm finally in the position to have enough equity to do things like rebalancing and dividend redistribution.
Feihong,go back to 1987,average US bonds yeilds had gone up from7.3 per cent to 10.2 in that year,and you know why,the US
,ecom was worried about rising oil prices,serious inflation,and the falling US dollar,price- earning ratios going above 18 times,fast track to today no difference just a diffferent set of numbers,as i have always said they will only let the US dollar go so low against the EURO,I would be very carefull over the next few weeks, if you invest with the longterm mindset then it's no problem, but shorterm I just can't pick the trend just yet....willair ..IMHO..Hi Michael,
I am bearish on the asx as well .. we have so far been relatively unscathed in this latest market rout.. many stocks appear resonable value only when comparing their current price to the price a month ago when asx was 6800.. Mining stocks especially have had a spectacular run since mid aug …
However, if you look at price of metals and AUD/USD conversion it is far worse now than it was last year. Some miners including Zinifex and Iluka have warned about profit downgrades next year due to these two reasons. I expect many more to downgrade early next year for the reporting season.. Add to that IMF predicting global growth to slow next year and this will impact the supply/demand equation for various commodities..
The only silver lining I can think of atm is US fed will drop rates again and money will flow to physical assets like commodities, all the while warehouse levels continue climbing and supply finally balances or exceeds demand next yr .. In the longer term 3-5 years im very optimistic that many of the shares will be much higher.
From your posts you sound like a very well informed individual and I am sure you know what you are doing.
I am merely conveying my opinion… Good luck mate.
I am bearish on the asx as well .. we have so far been relatively unscathed in this latest market rout.. many stocks appear resonable value only when comparing their current price to the price a month ago when asx was 6800.. Mining stocks especially have had a spectacular run since mid aug …
However, if you look at price of metals and AUD/USD conversion it is far worse now than it was last year. Some miners including Zinifex and Iluka have warned about profit downgrades next year due to these two reasons. I expect many more to downgrade early next year for the reporting season.. Add to that IMF predicting global growth to slow next year and this will impact the supply/demand equation for various commodities..
The only silver lining I can think of atm is US fed will drop rates again and money will flow to physical assets like commodities, all the while warehouse levels continue climbing and supply finally balances or exceeds demand next yr .. In the longer term 3-5 years im very optimistic that many of the shares will be much higher.
From your posts you sound like a very well informed individual and I am sure you know what you are doing.
I am merely conveying my opinion… Good luck mate.
just looked at Dow Jones chart again, head and shoulder pattern, broken through 200 DMA. Looks like the momentum is going south. With all the crappy data that just came out, I think it's beyond doubt that DJIA is not going to be too flash. (A few forumites here are already convinced the US is in recession).
recession is still too strong a word - "stagnation" is probably better as of early 2008.
indexes will channell for a bit, which makes trading more predictable than normal.
when the dow breaks through 13000 on a downward flight, wait until it breaks through it on return then buy.
indexes will channell for a bit, which makes trading more predictable than normal.
when the dow breaks through 13000 on a downward flight, wait until it breaks through it on return then buy.
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