It's a thing!

[NYEXPAT]

Dow theory suggests that we are "Dancing with the Bear" although the Dow transports moved a bit further away today. As it is a shortened week, i do not see confirmation coming tomorrow and the long weekend may change the picture entirely.

Most retail investors believe that a "Bear market" must be preceded/closely followed by a recession and there is no recession in sight.

Just remember we are in uncharted waters and "It is a Thing"!

 

[38Chevy454]

Although I am far from a successful predictor of the market, I still feel there are strong underlying factors in the economy to keep from going into recession. Sure the market may become a bear. Several things lately that are putting bearish pressures on market results.

Overall I think just a time to ride it out.

 

[VanWinkle]

This time is different.....NOT

This too will pass.

 

[OldShooter]

... Just remember we are in uncharted waters ...

Why should today be any different?

The future is always uncharted, regardless of what the technicians and the other astrologer types think.

A few months ago I heard a talk by one of the two technicians employed by a major brokerage house. He was nearing retirement and had been there all his life. I resisted the temptation to ask why, if charting was such a powerful tool, he was still working for a living. The talk was quite funny, though he didn't intend it to be.

 

[COcheesehead]

If your retirement depends on one day, one week, one month... your asset allocation is jacked.

 

[Qs Laptop]

Dow theory suggests that we are "Dancing with the Bear" although the Dow transports moved a bit further away today. As it is a shortened week, i do not see confirmation coming tomorrow and the long weekend may change the picture entirely.

This reads like a horoscope to me. This "Dow Theory"--is it supposed to be something scientific? Because it sounds like BS to me.

 

[NYEXPAT]

Although I am far from a successful predictor of the market, I still feel there are strong underlying factors in the economy to keep from going into recession. Sure the market may become a bear. Several things lately that are putting bearish pressures on market results.

Overall I think just a time to ride it out.

This time is different.....NOT

This too will pass.

4 of the past 10 Bear markets were not associated with recessions! So, yes "it is a thing"

This reads like a horoscope to me. This "Dow Theory"--is it supposed to be something scientific? Because it sounds like BS to me.

It is the most "followed" theory on Wall Street and very simple to understand, I suggest you Google it.

Today for example: The Dow transports traded below 10137, but closed above that level. Based on that Dow Theory suggests that the current LT trend is still bullish. If at some point in the "immediate future" we close below that #it confirms what the DJIA has already suggested.

The point of my post is not about "Dow theory" which you may/may not follow, but about "Bear Markets" and the generally held belief that if there is no recession in sight a Bear market cannot develop.

 

[OldShooter]

... if there is no recession in sight ...

Which begs the question: How would anyone know if there is "a recession in sight?" Often, we have been in a recession for a quarter or two before anyone even knows it.

John Kenneth Galbraith: "The only function of economic forecasting is to make astrology look respectable."

Nate Silver's "the signal and the noise" has a very readable chapter explaining the futility of economic forecasting.

 

[VanWinkle]

4 of the past 10 Bear markets were not associated with recessions! So, yes "it is a thing"



It is the most "followed" theory on Wall Street and very simple to understand, I suggest you Google it.

Today for example: The Dow transports traded below 10137, but closed above that level. Based on that Dow Theory suggests that the current LT trend is still bullish. If at some point in the "immediate future" we close below that #it confirms what the DJIA has already suggested.

The point of my post is not about "Dow theory" which you may/may not follow, but about "Bear Markets" and the generally held belief that if there is no recession in sight a Bear market cannot develop.

My quote did not infer that "and the generally held belief that if there is no recession in sight a Bear market cannot develop"

It inferred that we have seen this before- "4 of the past 10 Bear markets were not associated with recessions!"

Do not panic based on conjecture.

 

[Gumby]

Do not panic based on conjecture.

Oh, don't be such a spoilsport. Let those who want to panic. It will make them feel better.

 

[Qs Laptop]

4 of the past 10 Bear markets were not associated with recessions! So, yes "it is a thing"



It is the most "followed" theory on Wall Street and very simple to understand, I suggest you Google it.

The DJIA does not contain several of the top 10 largest stocks by market cap so how can it reliably be used to predict overall market movements?

 

[joeea]

Dow theory suggests that we are "Dancing with the Bear" although the Dow transports moved a bit further away today. As it is a shortened week, i do not see confirmation coming tomorrow and the long weekend may change the picture entirely.

Did the picture change entirely? Are we still dancing with bears? What kind of dance? A Rumba? Maybe a West Coast Swing?

Inquiring minds want to know.

Most retail investors believe that a "Bear market" must be preceded/closely followed by a recession and there is no recession in sight.

I see. Or maybe I don't see. My sight is good. I need to wear reading glasses, though.

Just remember we are in uncharted waters and "It is a Thing"!

We are? It is? How can we be sure?

 

[marko]

IMHHO we are in a "headline" slump.

Earnings announcements are due over the next few weeks. Let's see what that brings.

Per Fidelity's Timmer: "If you overlay earnings & the SP500 over the last 100+ years there is basically a perfect correlation."

 

[foxfirev5]

IMHHO we are in a "headline" slump.

Earnings announcements are due over the next few weeks. Let's see what that brings.

Per Fidelity's Timmer: "If you overlay earnings & the SP500 over the last 100+ years there is basically a perfect correlation."

+1. However it's too simple . Certainly there must be a way to make it complicated. Otherwise there would be nothing to talk about. No CNBC, CNN or Bloomberg. That only leaves the weather channel.

 

[Totoro]

Which begs the question: How would anyone know if there is "a recession in sight?" Often, we have been in a recession for a quarter or two before anyone even knows it.

Ask these guys, they claim to know this stuff:
https://www.businesscycle.com/home

 

[OldShooter]

Ask these guys, they claim to know this stuff:
https://www.businesscycle.com/home

There are many who claim to know. None that I know of publish a score card comparing their forecasts to the eventual reality, though.

I'll refer you again to Nate Silver's book "the signal and the noise." He actually uses a couple of pages to discuss ECRI's forecasting:

" ... In September 2011, ECRI predicted a near certainty of a "double dip" recession. 'There's nothing policy makers can do to head it off.' it advised. 'If you think this is a bad economy you haven't seen anything yet.' ... The S&P 500 gained 21 percent in the five months after ECRI announced its recession call, while GDP growth registered at a fairly healthy clip of 3.0% in the last quarter of 2011."
​

GDP growth in 2012 was 2.2%. Not wonderful, but hardly the disaster that ECRI so confidently predicted for late 2011. IOW their prediction wasn't simply early, either. It was just flat wrong.

The key word in your post is "claim."

 

[jimbee]

The DJIA does not contain several of the top 10 largest stocks by market cap so how can it reliably be used to predict overall market movements?

Stop talking sense.

I can't understand why the DJIA is reported regularly as a news item. Other than inertia.

 

[Totoro]

IOW their prediction wasn't simply early, either. It was just flat wrong.

You don't understand, we've updated our models since and they take into account the factor that threw it off

Thanks for the reference!

 

[OldShooter]

You don't understand, we've updated our models since and they take into account the factor that threw it off ...

Interesting coincidence. I too have been working on an economic forecasting model that backtests perfectly.

It's a proprietary algorithm that takes as its inputs the price of salt in Madagascar, the amount of coal mined in Australia, and the 30-day moving average of the number of days of sunlight in Ushuaia, Patagonia.

I tried using this recipe:

Eye of newt, and toe of frog,
Wool of bat, and tongue of dog,
Adder's fork, and blind-worm's sting,
Lizard's leg, and howlet's wing

But it kept forecasting the English economy in 1606. Backtested pretty well, though.