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Old 07-28-2007, 09:54 AM   #21
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I used to be driven by statistical analysis. The engineer in me wanted to have it work. After several years I realized that statistical analysis is only useful to explain what happened after it has already happened. You can sound very knowledgeable. Unfortunately, it doesn't predict anything.

My portfolio tanked last week. I suspect this next week will also be "difficult." As it now stands I'm up 7.05% for the year. That's not bad for a typical YTD return in July. Unfortunately, a week ago I was up around 12%.
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Old 07-28-2007, 11:05 AM   #22
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If enough people follow it, itíll become a self fulfilling prophecy.
I think you're right.


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IMHO, that the way all technical analysis works.
Not sure about this, though.
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Old 07-28-2007, 11:31 AM   #23
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CFB has already said he's not going to try to really sell this strategy so I'll assume it was mentioned somewhat tongue-in-cheek.
Sort of. I look at a shitload of "indicators", "systems" and whatnot. I take these more or less as tools in the tool box.

And i'm not much of a market timer anyhow. But I do subscribe to the theory that the markets get drunk once in a while and that one or two times in your investing career you may want to take matters into your own hands.

I'm a little better off having said "holy crap, this is stupid!" in 2000 and selling all of my equities, then having bought back in in late 2002. Fortunately I was not "blessed" with that funny brain thing plugged in backwards that makes people want to buy stocks when they're expensive and sell them when they're cheap.

If everyone feels just great about owning stocks, and a bunch of indicators are all redlined in the opposite direction, and I feel things are over priced...I've been known to lighten the load a bit. I did that a couple of months ago.

If we break the 200 day MA (which simply says that we're in the midst of a strong trending downturn...people are selling)...I'll look for an opportunity to buy back in.

These sorts of threads are just little dialogs designed to get a little interesting discourse going on...otherwise i'll run out of pictures of cats with bacon on their heads.
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Old 07-28-2007, 11:37 AM   #24
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I used to be driven by statistical analysis. The engineer in me wanted to have it work. After several years I realized that statistical analysis is only useful to explain what happened after it has already happened. You can sound very knowledgeable. Unfortunately, it doesn't predict anything.
I completely agree with that. If it's called analysis, it's because it was developed to analyse (and not to predict), and to analyse, you need existing data. So by definition, statistical analysis is a tool used to look backward, not forward.
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Old 07-28-2007, 01:01 PM   #25
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If we break the 200 day MA (which simply says that we're in the midst of a strong trending downturn...people are selling)...I'll look for an opportunity to buy back in.
If you think about it, breaking a 200 day MA does not necessarily mean we're in the midst of a strong trending downturn. Suppose the market is treading water for quite awhile -- then it takes very little to pierce a moving average.

OK, so maybe now we have a reasonable percentage change causing the event. Ha, now we can do the historical analysis and come up with some trading rules. You could check the data trying various rules like only sell if market is down more the X% and pierces the Y day MA. Then you need another rule to get back in. All you need to do is check the market back a few decades and see which will work. Unfortuneately, it may not work the next time. Also, if you invest in a slice/dice or perhaps tilt to value or have lots of international stock exposure can you really use such rules based on one index? Maybe you need a few more indexes, and on and on and on ....
BTW, I use to do some of this so feel I'm qualified to say it isn't too smart . All this looks really appealing until you get whipsawed or miss a market turn.

CFB, my hat's off to you on the 2000-2002 trading but personally I don't think this market has the wild look of the large growth 2000 bubble -- on the other hand it has other factors that make it worriesome. I rebalanced 3 weeks ago and will stick with my stock allocation but will not rebalance into stocks unless we get a really nasty decline.

Les
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Old 07-28-2007, 01:15 PM   #26
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I don't think this market has the wild look of the large growth 2000 bubble
Nah, but it looks a little chubby and people are too complacent.

And I smell a little alcohol on the breath of a few sectors...
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Old 07-28-2007, 02:03 PM   #27
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I fouled up.

I told my wife 2 weeks ago I was going to move the majority of our equities into our MM account until the market jitters calmed down. Well, my son and daughter took some leave and flew home. Our family went on a week long backpacking trip into the Eagle Cap wilderness in NE Oregon. This is a heck of a thing to be greeted with on my return. Value of portfolio dropped by $150K. I believe I will ride it out now.
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Old 07-28-2007, 05:01 PM   #28
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If you think about it, breaking a 200 day MA does not necessarily mean we're in the midst of a strong trending downturn. Suppose the market is treading water for quite awhile -- then it takes very little to pierce a moving average.

OK, so maybe now we have a reasonable percentage change causing the event. Ha, now we can do the historical analysis and come up with some trading rules. You could check the data trying various rules like only sell if market is down more the X% and pierces the Y day MA. Then you need another rule to get back in. All you need to do is check the market back a few decades and see which will work. Unfortuneately, it may not work the next time. Also, if you invest in a slice/dice or perhaps tilt to value or have lots of international stock exposure can you really use such rules based on one index? Maybe you need a few more indexes, and on and on and on ....
BTW, I use to do some of this so feel I'm qualified to say it isn't too smart . All this looks really appealing until you get whipsawed or miss a market turn.

CFB, my hat's off to you on the 2000-2002 trading but personally I don't think this market has the wild look of the large growth 2000 bubble -- on the other hand it has other factors that make it worriesome. I rebalanced 3 weeks ago and will stick with my stock allocation but will not rebalance into stocks unless we get a really nasty decline.

Les
my guess is that it's pretty similar to what Cramer described what he went through in 1987 and 1998 and what was described in the book about LTCM. We might not be heading into recession but so many institutional investors own a lot of this junk housing debt and they are leveraged on their holdings that if things get really bad they will have to sell stock to cover their mortgage investments. there are also rumors that a lot of big pension funds and some big insurance companies are exposed to the mortgage debt market and they may have to sell other investments to cover their cash needs.

we don't have junk companies with no earnings like in 2000, but in the last few years we had a huge credit boom. people bought homes, they went to home depot to renovate their homes, etc. Dupont reported bad earnings because their chemicals are used in a bunch of products related to housing and this thing will probably touch almost every part of the economy
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Old 07-28-2007, 05:08 PM   #29
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My CNN Money site shows a downdraft of 250 on the S&P Friday post-closing.

The business channel talking heads weren't optomistic last night either. I think more blood will flow before this settles out.
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Old 07-28-2007, 05:22 PM   #30
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Oops, that should have been -250 on the DOW. -29.9 for the S&P.
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Old 07-28-2007, 08:30 PM   #31
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Yeah, that lump in my throat is my heart, stomach, and possibly a spleen.

Dont DO that to me...
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Old 07-28-2007, 09:42 PM   #32
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The business channel talking heads weren't optomistic last night either. I think more blood will flow before this settles out.
Maybe since all the talking heads are so gloomy, the opposite will take place in the market next week. I'm not counting on it, but I would like to see it just to shut the friggers up.
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Old 08-03-2007, 03:34 PM   #33
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And splat, we broke the 200 day MA hard.

Hope all y'all have your protective headgear on.
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Old 08-03-2007, 04:57 PM   #34
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glad i noticed the diversion of the MACD and the indexes last month. works pretty much every time in predicting a downtrend. next step is learn enough tech analysis to sell at the top. i'm up only 6.5% for the year instead of the 10% i could have been

usually it lasts 3-4 months before a downtrend starts. this time it was around 2 months. i'll have to check past corrections to see if there is a trend since this is looking like to be a secular bear market that happens every 10 years or so
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Old 08-04-2007, 05:38 AM   #35
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And splat, we broke the 200 day MA hard.

Hope all y'all have your protective headgear on.
I've tightened my seatbelt... ready for the rollercoaster ride ...
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Old 08-04-2007, 06:52 AM   #36
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I've tightened my seatbelt... ready for the rollercoaster ride ...
Ready?? I thought we were already on a roller coaster.
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Old 08-04-2007, 09:46 AM   #37
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Good news!

The market probably wont go down today.

Maybe not tomorrow either.
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Old 08-04-2007, 09:49 AM   #38
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Old 08-04-2007, 10:10 AM   #39
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One thing about using charts - you should change the period you are looking at with your time herizon. If you are day trading you look at 5 minute or less charts. If you are investing for ER then you look at weekly.

BigCharts - Interactive Chart
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Old 08-04-2007, 10:31 AM   #40
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Hang on, collecting my tea leaves.

A better view of the 200-day MA over a longer time frame, to see how reliable it is (or isn't)

http://bigcharts.marketwatch.com/cha...517&mocktick=1


And for Dow:

http://bigcharts.marketwatch.com/cha...341&mocktick=1
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