brewer12345 said:
Are you kidding?! Wow, fasten your tinfoil hats, kids.
I really don't understand this sort of rationale. Have you actually ever seen any documented, preferable academic evidence suggesting that any of this technical mumbo-jumbo has any validity? I certainly have not. Instead, I note that a sizable percentage of amateur schmoes follow this nonsense. In contrast, none of the smart, well-educated investment professionals (who produce very strong returns) of my acquaintance have any truck with this stuff. If you are drinking that formaldehyde kool-aid, I'm not sure we can help you, my friend.
i don't believe in all of them since anyone can make up any formula from the price/volume info which is what they really are. I like MACD, Stochastics, on balance volume and a few chart patterns.
pull up a yearly chart of any index along with the MACD and stochastics and you will see the same thing over and over. Almost every year there is a nice rally where the technicals flash bullish for 3 months or so and then the next three month they flatten out while the market stays flat or goes a little higher
There is also a Fortune article from 2002 where they went back 100 years and saw a few things repeating themselves. The economy is very similar in the same year of every decade and most of the stock market's profits are made November through April. They found that if you were only invested 6 months out of the year you would outperform the indexes by around 1% on average with less risk.
In my free time I'm doing something similar and going back to look at the market performance every year and in the same years of every decade the market performs in similar fashion. 1987 looks very similar to this year's market. Even the news is almost the same. i pulled up some old articles from the NY Times and all you need to do is replace Bernanke with Volcker.
my prediction is that depending how this iran thing turns out we'll probably start a rally in a few weeks, hit some highs and in the spirit of 1987 and 1997 we'll get a nice crash in October due to bond or debt issues. for the last 20 years it seems bankers like to flush hundreds of billions of $$$ down the toilet on a regular schedule.
It's not exact where you can say every year is exactly the same but it's close enough where except for the late 1990's and late 1950's the stock market from the peak of year 7 of a decade usually goes sideways until the start of the next decade.
I also read a book that says we'll probably repeat 1929 in 2009 due to demographic trends. Baby Boomers are about to start retiring and he said back in the late 1920's another big generation was also starting to retire and went past their peak spending years but i think there are too many changes now since the last time.
in summary, people make the same stupid mistakes every decade no matter how fancy their degree is and us small fry can make a ton of money on the market inefficencies that it creates. Almost every decade there is a debt crisis where it turns out unimaginable amounts of bad loans were made. 1980's it was S&L and junk bonds. 1990's it was telecom and anything with the internet. I think something like $2 trillion was flushed down the toilet 10 years ago because the internet was doubling in size every week. we still haven't had the emerging markets debt crisis of the decade yet.
for 2007 - 2010 it's going to be mortgages. The subprime flu is already spreading to ALt-A and 3Q is when most of the rate resets start and we still don't know who holds all the credit default swaps. Based on past history we'll probably find out around October. If it's an insurance company or a few insurance companies like i've read and it's a strong hurricane season because last year there was sand in the atmospehere last year and supposedly none this year....
