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Archive for February, 2011

Mimicry among stocks can predict stock market crashes

Posted in technical analysis on 2011-02-15 by Strategesis

From PhysOrg.com:

Since early October 2008, when the Dow Jones Industrial Average began its drop that reached a low point the following March, many questions have been raised – particularly about what caused the crash and if it could have been predicted and somehow prevented. Some possible answers involve market volatility, changes in regulations, bank failures, easy credit, or any combination of external influences and internal market dynamics. In a new study, research analysts have found another clue to stock market crashes: high levels of collective stock movements – or market mimicry – tend to precede crashes, which suggests that measuring the mimicry level of the market could provide significant advance warning of an impending stock market crash.

Market Turning Points (Andre Gratian)

Posted in education, price chart, technical analysis on 2011-02-14 by Strategesis

From Safehaven.com (Andre Gratian):

Because of the potentially powerful long-term cycles which are slated to make their lows in three to four years, I thought that the decline which started in October 2007 would be the beginning of a secular bear market. However, the strength of the recovery since March 2009 is causing me to reconsider. It’s possible that, instead of a seven or eight year bear market, we may be in the midst of two consecutive cyclical bull/bear markets. From a practical view point, the distinction does not really matter – except, perhaps, to academia.

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A New Way To Look At Bar Charts and Candle Charts – Kase Bars

Posted in education, price chart on 2011-02-06 by Strategesis

From TraderInterviews.com:

Cynthia Kase: …the case bars is essentially equal range on the x-axis, but the bars and the candlesticks display like an open-high-low-close bar or a candlestick normally displays. And here for example, you can see that there was a huge dropdown in one hour, and on the case bars, that one big hour gets broken up into many, many different hours, I think maybe six or seven, excuse me, six to seven bars, and you can see the decline much more clearly and trade it much more easily. And then the sideways move to place overnight gets compressed into a couple of bars as opposed to the sideways small range action that we see overnight on the on the hourly candlesticks.

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Crowds and Credit

Posted in education, fundamental analysis, liquidity analysis, price chart, socionomics on 2011-02-05 by Strategesis

From Safehaven.com:

Manias are fascinating to study in history, but are hard to accept if you are living through one. The most memorable ones in history require two elements, crowds and credit. While today’s global markets are littered with some of the most complex financial instruments in history, anyone studying the history of financial markets quickly recognizes that many of today’s tools for speculating on future price movements can be found as far back as the Amsterdam Exchange, founded in 1610. This exchange allowed speculators to take out margin loans, invest in shares of the East India Company, and purchase futures contracts on tulip bulbs. That’s right; tulip bulbs.

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A Tick Trick for Day Traders …

Posted in education, technical indicator on 2011-02-04 by Strategesis

From Safehaven.com (Marty Chenard):

Notice what happens if you draw a horizontal line at zero and watch the green Smoothed Moving Average as it rises above or below the line.

When it is above zero and trending higher, the SPY (seen on the bottom of the chart) has a nice intra-day up rally … see the white circles.

Now, look at what happens when the green Smoothed Moving Average falls below the zero line where the orange circles are. The SPY had an intra-day drop worth paying attention to.

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