monday, page-4

Hi all, not sure whether this is right home for this but lots of clever folk over here that I would not mind my thoughts exposed to. This is a long post so just skip to next post if you do not want a read.

I have been trying to make some sense of world markets that IMO have been so out of whack with common FA perceptions & my gut feel. Over the years gut feel has proved fairly reliable IMO eg. When things seem crazy on the market they usually turn out that way. I have spent Xmas periods reading a lot (TA & FA) and doing all sorts of playing with my charts to try & get some answers!

This series of charts show an interesting scenario IMO based on the Dow history and one scenario for its future. Not really a prediction just a sharing of some TA that I have been exploring.

Recent Chart of Dow (notes on chart)



DOW 2,000 high



Dow 2000- 2002 downturn



The big picture



Can The Past tell The future?



Other observations: One of the real benefits of TA and looking at LT charts is that they do not lie, Never ceases to amaze me just how much markets move over time & I think most people tend to forget how extreme the moves really are (I know I do) Eg From this simple study highlighting how the Dow has stood still over 11 years (a fact that in itself staggers me; and I watch the market most days) we see 4 very obvious trends easily spotted by the pink 41 EMA:

- 1st, 2 year 8 month 39% DT
- 2nd 5 year 97% (7000 points if you don?t mind) UT
- 3rd 1 year 4 month 54% DT
- 4th 1 year 10 month 81% UT
-
Getting back to the serious matter of investing if you were to capture only 50% of those swings that would result on a compound return of over 300% .... in a market that stood still. Thats sort of Compelling! Surely any TA worth its salt should be able to get 50% of the big swings? Willing to bet that the majority of readers here did not make more than 300% on there money in last 11 years?

Stop Press: Just showed this to my partner & she challenged my statement that 50% of the big trends are easy to get; next challenge is to prove I can by studying past performance!! Thinking of simple MA crosses as the most fool proof method at this stage.


So in conclusion: the more I read and the more TA I do I conclude that world markets are in for some more shake out some time over next period; the main question for me is whether that period is months, quarters, year or years??? I personally have been shocked by the following markets:

-Everyone seems to talk of Europe generally and Euro in particular as a basket case; most seem to think EU as we know it will NOT survive into the med term. So why has DAX been unstoppable (the buck appears to stop with the Germans one way or another) and risen nearly 100% (3,500 points) since 2009 lows? Poms economy seems absolutely down the toilet but FTSE up 76% (2600 points) in same time frame including an amazing 1100 points in last 5 months of 2010.

-US performance; just check vid attached to T91 Post: 6167068 on Friday XJO thread; I cannot put it that eloquently!

-Japan, most think it is the biggest prob of all.

-China, must hiccup soon if no one is buying its products?

Asd always very happy for feedback!

Cheers g