Timing Market Turns - 2006:
A Brief History of the U.S. Stock Markets Through April 2006
A Brief History of the U.S. Stock Markets Through April 2006
By W. B. Busin
Monday, January 9, 2006
Most of 2006 will be a downward tilting year, as will much of 2007. Forward looking into any new year can be dicey for an investor or trader. We see several significant changes coming.
We hope this small effort at determining dates for Major Market Turns helps you to plan for these events by building expectations in your mind of potential changes. Below, we proffer our opinion of the coming Market Turns.
For those awaiting the next big crash, your patience and hopes will be tried and crushed. For those expecting a glorious race to new all time highs throughout all the broad indexes, your exhilaration will be tempered by a sharp reversal from new all time highs in the Dow Jones 30 Industrials and the New York Stock Exchange Index (already at new highs). The Standard & Poor’s 500 Index will not make it to a new all time high this year. The Nasdaq Composite Index and the Nasdaq 100 Index will soon end their modest upward move.
Since the lows in October 2002, the broad market indexes have rallied relentlessly for most of these 39 months. This upward move will soon end. These first months of 2006, we believe investors should be unwinding positions, taking profits and going to cash or to interest rate sensitive models. We assume most investors won’t be shorting stocks or indexes. Perhaps investors will use the various inverse mutual funds that allow for gains in this coming correction beginning soon.
Index and stock traders are sure to have an abundant year of opportunities for making huge profits from the volatile swings we foresee. Yes, volatility swings will be byword for 2006, as are most market corrections.
Let’s begin with a caveat or what some people will wonder about, “where we are coming from.” Long term, we are bullish on the U.S. markets, the indomitable U.S. economy, and the American people.
As many of our readers know, the dates and times (intraday) that our proprietary algorithms yield are independent of our bias for what these dates will manifest, a low or a high. Our view that October 21st and/or October 24th would mark the low to buy did come true even though it wasn’t the exact low, which occurred on October 12th. Those familiar with market structures ending like that, such as Elliott Wave Theory, will understand a bit better (though we aren’t wave theorists). We expect similar endings for indexes this spring. That is, some will make new highs and reverse from there while others will fail to make final highs. Those failures to surpass recent highs are ideal locus points for exiting bullish positions and establishing a bearish stance. Essentially, these are the safest places in time to sell short the indexes.
The dates to watch are as follows: January 23, March 13 and April 11. More swing dates are interspersed between those, but have not risen through the rigorous algorithms to show themselves as significant enough to mention yet.
Our bias, at this time, for what these dates should manifest shows the final high on April 11th as the high to sell. The January 23rd date should mark the end of a move. Our view is that it will be a high, IF a minor time locus date, Wednesday, January 11th, strikes a low of a fast correction beginning today, Monday, January 9th.
Monday, January 9, 2006
Most of 2006 will be a downward tilting year, as will much of 2007. Forward looking into any new year can be dicey for an investor or trader. We see several significant changes coming.
We hope this small effort at determining dates for Major Market Turns helps you to plan for these events by building expectations in your mind of potential changes. Below, we proffer our opinion of the coming Market Turns.
For those awaiting the next big crash, your patience and hopes will be tried and crushed. For those expecting a glorious race to new all time highs throughout all the broad indexes, your exhilaration will be tempered by a sharp reversal from new all time highs in the Dow Jones 30 Industrials and the New York Stock Exchange Index (already at new highs). The Standard & Poor’s 500 Index will not make it to a new all time high this year. The Nasdaq Composite Index and the Nasdaq 100 Index will soon end their modest upward move.
Since the lows in October 2002, the broad market indexes have rallied relentlessly for most of these 39 months. This upward move will soon end. These first months of 2006, we believe investors should be unwinding positions, taking profits and going to cash or to interest rate sensitive models. We assume most investors won’t be shorting stocks or indexes. Perhaps investors will use the various inverse mutual funds that allow for gains in this coming correction beginning soon.
Index and stock traders are sure to have an abundant year of opportunities for making huge profits from the volatile swings we foresee. Yes, volatility swings will be byword for 2006, as are most market corrections.
Let’s begin with a caveat or what some people will wonder about, “where we are coming from.” Long term, we are bullish on the U.S. markets, the indomitable U.S. economy, and the American people.
As many of our readers know, the dates and times (intraday) that our proprietary algorithms yield are independent of our bias for what these dates will manifest, a low or a high. Our view that October 21st and/or October 24th would mark the low to buy did come true even though it wasn’t the exact low, which occurred on October 12th. Those familiar with market structures ending like that, such as Elliott Wave Theory, will understand a bit better (though we aren’t wave theorists). We expect similar endings for indexes this spring. That is, some will make new highs and reverse from there while others will fail to make final highs. Those failures to surpass recent highs are ideal locus points for exiting bullish positions and establishing a bearish stance. Essentially, these are the safest places in time to sell short the indexes.
The dates to watch are as follows: January 23, March 13 and April 11. More swing dates are interspersed between those, but have not risen through the rigorous algorithms to show themselves as significant enough to mention yet.
Our bias, at this time, for what these dates should manifest shows the final high on April 11th as the high to sell. The January 23rd date should mark the end of a move. Our view is that it will be a high, IF a minor time locus date, Wednesday, January 11th, strikes a low of a fast correction beginning today, Monday, January 9th.
{Update- 01/18/2006 - January 23 will be a low since the turn on Wednesday, the 11th, was a high.}
On the other hand, if the indexes continue their upward move into Wednesday and Thursday, then we would change our bias to the January 23rd date to arrive as a low. This date’s result further colours our bias for the March 13th date, even though we tentatively expect it to be a high.
We will update as time passes on the sites listed below.
_______________________________________
W. B. Busin posts his views and market turn dates at two public sites. You can find his more general views of the market at http://blog.worldvillage.com/business/cat_financial_markets.html , and, as travels and time permits, his intraday timing loci for day traders posted to his journal at the Elite Trader web site, http://www.elitetrader.com/vb/showthread.php?s=7079fb0b20867133d90092aa21fa0119&threadid=56450&perpage=6&pagenumber=21 Both are titled “Timing Market Turns”.
On the other hand, if the indexes continue their upward move into Wednesday and Thursday, then we would change our bias to the January 23rd date to arrive as a low. This date’s result further colours our bias for the March 13th date, even though we tentatively expect it to be a high.
We will update as time passes on the sites listed below.
_______________________________________
W. B. Busin posts his views and market turn dates at two public sites. You can find his more general views of the market at http://blog.worldvillage.com/business/cat_financial_markets.html , and, as travels and time permits, his intraday timing loci for day traders posted to his journal at the Elite Trader web site, http://www.elitetrader.com/vb/showthread.php?s=7079fb0b20867133d90092aa21fa0119&threadid=56450&perpage=6&pagenumber=21 Both are titled “Timing Market Turns”.
No comments:
Post a Comment