The markets were closed for Martin Luther King Day, and thus I took advantage of the extra holiday for further review and to post more of my most recent analysis. See the charts below.
Some of you were wondering about my fewer postings recently. The first quarter of 2011 is a very busy time for me, and therefore, I advise that my postings may be less than regular or frequent time intervals. Naturally, if something big, or a trend changing event takes place - that I have not already advised about - then, I will do my best to get a quick blog posting out.
As I begin my post today I want to point out that recently, I have received some sarcastic and ridiculing comments posted on this blog (the offensive ones were simply deleted and now I have been forced to moderate comments) and further in recent weeks, even personal emails ridiculing cycle analysis and suggesting that I should throw in the towel, or capitulate, and become bullish as evidently some other blog or analysts have.
The emails and some blog comments thus suggest the blog postings are outright wrong, and in essence worth no more than trash. Given that this is a public and open blog, I have elected to make this topic open for debate and further comment, as opposed to keeping anything hidden. In essence, this is a request for comments to our blog readers, especially if your have read this blog for several weeks or months.
Yet, let me suggest to you now - that sending in such emails or posting such comments on this blog will not change my market mood anytime soon. I also believe changing my market mood (cautious if not outright bearish on certain financial instruments recently) is not even in your best interest as readership.
Assuming most blogs were outright bullish, as some have emailed and suggested to me, then this blog would provide a very good balance.
However the core or my cautionary argument, and our discussion herein this evening may be more about money management and market logic, than simple trend following . Read on.
But on the other hand, having now started this blog which can be seen by global masses and a variety of individuals, I too have learned a valuable lesson about human nature.
Therefore, as a warning and before I begin tonight's blog, let me officially go on record to say and warn to those whom see fit to send in outright hostile, or stupid criticism in an effort to waste my time, or in some vain attempt to ruin the learning experience here for others, that I may at my discretion temporarily, or permanently, ban your IP address if you get stupid.
Naturally, this warning pertains only to a small fraction of our blog readership that seem to refuse to act and write civilly.
To most of you as readers, it is probably already inherently too obvious, that some people while using the internet, believe that since they believe they are hidden, or can remain anonymous, they thus have unlimited power to feel free to say, write, or do anything at their own will.
The internet and use of this blog is a privilege to all, and I remind everyone that democracy and the internet, and this blog included, is not a right to do or say as you want - but rather as you ought.
If the hostile comments, sarcasm and ridicule issue became problematic, I might also elect to password protect the blog in the future. Worse, I would do a paid-only blog which I already know is feasible given the content I can post.
Therefore, please remember to act and write your messages to me or this blog accordingly.
This means - think carefully before sending this blog or me personally verbal attacks including sarcasm or ridicule emails, and posting stupid comments on this blog. I do not suffer fools gladly.
Back onto the more important topic of this financial blog, while acknowledging the bulls have been correct in the short term, and that the bear may need to be patient a while longer, there are several very real problems I have with being bullish at present.
Moreover, if you have followed the blog in detail over recent weeks, you would already essentially know all of the following that are highly problematic with being a bull:
1. The Elliott Wave (EW) Count of a coming fifth wave is bearish. The longer term EW count for 2011 could in fact be quite ominous, and to add complexity at present, I am working with both a primary or preferred EW count, but also, a secondary count.
The two counts were recently explained and both are near term bearish. I have already pointed out that they allow for minor amount of upside room. Assuming the market illusions of grandeur continue, and the pigs continue buying, or that the market is being manipulated higher by hidden forces, I want to acknowledge that the SP500 may even reach the 1335 level.
Yet frankly, that would not make me necessarily wrong (assuming you follow my market logic) but only serve to make me more bearish using the EW and other theory involved in that same market logic.
2. Consider that at present and for some time, there are considerable negative divergences in technical indicators (the new high-low ratio posted below is yet another example). Although negative divergences do not tell exactly when a correction might occur, and markets can tend to stay overbought for prolonged periods (as they are now), my experience has taught me not to ignore these negative divergences.
3. Additionally, I have repeatedly discussed the ongoing possibility of outright market manipulation. This was made even more obvious (as a matter of fact) given the FED 's aggressive monetary policy and moral suasion even to the point of a Bernanke December TV appearance.
Expressed using cycles - and as I have also taught here of man-made upset mechanisms (which temporarily change or invert natural cycle trends), a cycle inversion has now likely taken place due to this Bernanke FED policy of QE2 - and the current highly abnormal FED monetary policy of near zero interest rates for a prolonged time, which eventually I believe will pose more problems than solutions.
4. Finally, after going bullish on this blog at the beginning of September, and for several months now I have stated on the blog that I expected a significant market top in the first quarter of 2011.
So far, that same forecast made months ago continues to look and potentially be very accurate. The first quarter is not over and time will tell.
Yet frankly, some of you have asked or prodded already that I should capitulate and change based solely on greed or what I see as buying close to a top. It would be extremely foolish, if not outright stupid, to tell everyone to get bullish just a few days, or even a few weeks - from a major market top.
My caution in recent weeks is in essence, to prepare our readers of my views in advance of that potential major top, as opposed to telling you all - after the fact.
Although I do not usually talk of specific cycle details, KRTT has in it's possession and applies considerable advanced cycle work in making many of our market projections. This included the projection of a top in Q1 or 2011. Our blog has already featured some interesting and educational cycle education in both Fibonacci and even Astro Cycles.
This cycle inclusion in that regard makes this blog absolutely unique and far more valuable.
At present, there are several prominent cycle targets within the first quarter, that I am now looking at.
For instance, one important cycle target comes later this week about January 19-20th, 2011. Another comes in early February.
Last but not least, and for the record, I was there advising friends and clients to buy when the SP500 was 666 in March of 2009, and was also there advising this blog to buy the SP 5090 1010 low of late August, and early September. Moreover, I was getting bullish using an analytical swing trading approach in advance.
Again, the idea to make and generate a profit is by beginning with a lower risk entry point, and therefore in essence to buy the lows, and not to revert or be forced to buy the highs or even adopt a higher risk entry point - solely based on greed.
So, for you persistent bulls that those that believe all trees grow to heaven, and to all those that wish to aggressively say in emails or sarcastic comments and whom want me to now capitulate, I say to you; go ahead and buy here.
Equally, let me also suggest to you that you may wish to consider learning the old market maxim about bulls, bears and pigs.
Bulls and bears have a far longer life span on Wall Street and Bay Street. Yet they are frequently wrong, but nonetheless have some basic market intelligence. Their wounds over time will teach them to increase their market knowledge and education. As a result the best animal on Wall Street is the hybrid bull-bear.
On the other hand, the greedy pigs whom usually laugh at both bulls and bears, appear to be very stupid financial creatures, and often aggressively buy the tops (or sell the bottoms). Usually, as a result the pigs soon go to the slaughter.
Expressed more simply, the equity market as measured by the SP 500 has statistically outperformed dramatically since late August 2010, (when I turned bullish after the summer correction) and done so in the middle of a highly questionable economy.
Longer term fundamental analysis such as PE ratios (an excellent tool used by value buyers) also now suggest that the current North American equity market is extremely expensive and thus highly vulnerable - especially if the market mood or the economy should reverse or worsen.
I believe that more than anything, the major explanation for all of the the most recent bullish events is solely being fueled - not by sound market logic - but rather is being driven by a highly risky US FED policy that will someday probably cause considerable angst.
There should be no secret that the Central Bankers globally, and especially the Bernanke led FED, are intent on monetary policy intervention tactics that have created and fueled a boom-bust economic cycle - time and time again.
After all now months later, there has been NO realistic equity market correction for some time.
This is now statistically abnormal. Therefore at the very minimum, I would want to see some form of more realistic sell-off before I became anything even close to bullish. Again, market entry points are made on lows - not highs.
Finally and perhaps most important, this commentary relates and applies only to the SP500 index, although as I have pointed out several times, there is also a high correlation to certain other global stocks and indices. Frankly, on certain equities and asset classes and even selected economic sectors, I am outright bullish.
Lessons Learned
The entire concept of money making and profit, in any investment or trading forum, is generally to buy low and later - to then sell the high. Unfortunately, human emotion (especially fear and greed) and usually a distinctive lack of financial education, make this very hard for some to achieve.This is exactly what this blog attempts to educate on.
Also keep in mind for you own capital protection, that there is no 100% accurate market advisory in existence.
Some of the sarcasm and ridicule comments mentioned above, and that I have reviewed look extremely foolish, or depict a highly amateur or unskilled nature.
Moreover, as I have taught before on this blog, it is only a matter of time and experience, when one day a trader or investor wakes up and realizes and fully comes to understand, that to be a savvy financial professional, or even a good amateur trader, will requires placing risk management and risk determination, first and foremost.
This means risk and overall market risk, as well as trade or investment risk must be assessed well ahead of any feelings of greed or a desire to profit. Once in a trade or investment, the market dynamics will also require ongoing risk management. In that regard, what some of you may see as wrong, is essentially my personal views towards pro-active risk management.
Those however still wishing to convert or change this blog, or those whom believe or want a 100% percent accurate financial blog written while using simple trend following - is also not a problem. Actually it would be very easy for me to generate.
After all, a trend following approach is simply generated after the fact.
I know of one such paid sight that has thousands of paying subscribers. Is that what you really want? Trend following is also one of the first tools and most basic technical tools and market techniques taught by me (and KRTT).
So if you wish, go ahead and cast your votes. Speech now or forever hold your peace. Frankly and again, it will also be a lot less time consuming for me to generate and publish such a simple trend following blog.
Here is what a simple yet 100% accurate trend following blog might look like given 100% after the fact accuracy. Is this what you really want?
5 day trend - up
14 day trend - up
60 day trend - up
200 day trend - up
This is easily set-up even by an amateur investor with little experience, using the most basic form of spread sheets, moving average, or more accurately by applying mathematical regression analysis.
What this blog attempts to teach and educate on is a great deal more.
In my own personal opinion, this blog takes you as a reader, or as a financial student or hobbyists, or even as a financial professional (we have a few pros and even portfolio managers that read this blog) far beyond the obvious real time trend-following market advisory service as provided here on the SP500 Index.
Yes, this blog uses and has adopted a swing trading and far more difficult - forecast in advance - approach. Then going much further, it attempts to generate and create the highest quality financial education on a wide number and range of topics that I have decided to teach the public .
Is it valuable? That is up to you the readership to decide? Naturally, I would enjoy receiving every readers feedback.
Finally, for the vast majority of our silent readers whom usually do not post on this blog, perhaps more of you should join into the comments section, and if you wish, make positive or realistic suggestions for change.
As I promised more of our ongoing analysis - here are three updated charts which have my usual mark up comments. They are self-explanatory.
James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom
No comments:
Post a Comment