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PRICE-TIME
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7/24/2005 5:41 P.M.
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FOR SUNDAY, JULY 24, 2005:
AND THOSE ITEMS WHICH CAN BE SELECTED AT THE MAIN
MARKET-VIEW MENU (A1 ON YOUR LEFT), HAVE BEEN UPDATED.
THIS PAGE--WAS--UPDATED FOR 7/24/05
THE MAJOR NEW
COMMENTS FOR 7/24/05 ARE ON THE
NYA
ANALYSIS PAGE
BY THE WAY, the OLD S/R Postings
and MISC. analysis can now be found by clicking the "MISC. ANALYSIS" tab
on the bottom of the A1 menu (at your left).
THIS MENU STYLE AND THE ROTATION BETWEEN UPDATING THE FOUR INDEXES
LISTED ON THAT MENU (SPX, DOW, CMPX, AND NYA), AND THE OTHER THING-EE'S
LISTED THERE, WILL BE OUR NEW FORMAT.
Andrew Quiggly
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Weekly Quote or Technical
Information:
" Charts are records of past market movements.
The future is but a repetition of the past. There is nothing new. As the
Bible says 'The thing that hath been, it is that which shall be.' History
repeats and with charts and rules we determine when and how it is going
to repeat. Therefore, the first and most important point to learn is how
to make charts correctly because if you make an error in the chart, you
will make an error in applying the rules in your trading."
The Basis of My Forecasting Method
The Gann Angles Course W.D.Gann
(1943)
"Gann and SQUARING"
When W.D. Gann talked of "squaring" a price point,
a time period, or a "range" for the price OR time covered during a major
rally or correction, he meant "GEOMETRIC SQUARING" is such a way that
all four sides of a geometric square, drawn between four points on his
chart paper, were equal and the diagonal lines across
the opposite corners were equal.
He did not mean mathematically "squaring"
(as in x^2) a number, nor finding the "square roots" of any number,
and those who say otherwise are totally off mark...to put it mildly.
Now, near the end of his life, Mr. Gann did layout
a totally different "thesis" for a method he was using in an "attempt"
to find some predetermined points (in price and time) along a 2nd degree
polynomial curve (a quadratic curve--ax^2+bx+c).
However, as best I call tell, he never thought much of this method
and from the few and sporadic inclusions of it into his work we must
assume he had little actual success with it.
From our own "backtesting," we find that those mathematical
squaring methods are very unreliable, eventhough, they do "hit" on occasion.
Therefore, we have included them in our Gann Analysis
in an attempt to locate "clusters" of price and time "points," where
a CIT is more likely to occur than random. That is to say, there
may be some CITs were even just one big Gann Trader using this "low probability"
method could make the critical difference.
This mathematical "squaring method" is referred to as "the
Square of Nine," and we will discuss it's key tenets in a future technical
lesson.
Now, getting back to "Geometric Squaring," we note that
to apply Mr. Gann's square and angles to some paper charts, or to a video
screen, requires some basic knowledge and the selection of a "valid
scale" for the stock, or index, you are working with.
We will discuss chart scale next week, and how to actually
draw a perfect Gann square on any chart of any scale, regardless of whether
it's displayed on graph paper, toilet paper, or a computer monitor. But
for now, let's cap this week's lesson with the actual requirements for
a geometric square.
First of all, and most importantly, a "geometric square"
must meet some exact mathematical requirements. Secondly, a "geometric
square" DOES NOT have to look square in order to be "square"; eventhough,
we, at PTR, try to "adjust" our browser or software video displays such
that our Gann Squares are both mathematically square and visually "look
square" to the human eye.
While this is a fairly simple task for us, because of the
main charting software we use, it could be a lot more trouble for those
using something different, and in many cases their "squares" can be made
to be mathematically correct, which must be done, but they may not be able
to make their square look "visually square," which they do not have
to be.
To move along, look at these next two graphics,
posted below, read all the text on them, and then pick back up for the
lessons final paragraph, which follows below the the second graphic.
Example #1: A Geometric Square
that is also visually square!
Example #2
At the bottom of example #2, we have a geometric figure
that is a perfect mathematical square, so regardless of the fact that
it looks like a rectangle it is a "geometric square" and could be used
as a Gann Square.
Furthermore, while the diagonals of that lower square
sure don't look like a 45 degree angle, they are in fact both 45 degrees
from the horizontal axis, AND since the ratio of it's sides are
1:1 (rise to run or 2:2) then they are clearly Mr. Gann's key angle and
the "diagonal" of an exact mathematical square.
Next week, we will illustrate
how to draw a mathematical square on any video display chart
regardless of the actual scale it's displayed in and the limitations
of how much adjustment there is available for the display.
Once these "squares" are formed,
then we can easily draw the six "key" Gann angles...in the correct scale,
which is the ultimate objective for applying Gann Analysis to:
"detect the most likely direction and strength of a trend."
For the Price-Time
Review
Andrew Quiggly
Editor
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SOME "THING-ee"s
to keep in mind over the next
few weeks
and months ahead:
posted 6/19/05
Added 2 Changes on 6/26/05, 1 on 7/1/05,
1 on 7/10, 1 on 7/17/05,
and 1 on 7/22/05
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1) Stock
Options [were] are "due" to be "expensed"
after 7/1/2005 (unless wiped out by Hood-Robin
[not!]).
While this is "technically" a "Nuclear Winter" event
for technology stocks, it has been a long time coming and
could be "bought on the news," as priced it...for awhile.
2) Earnings "comparisons" will now be
"up against" record earnings in Q3-Q4 of 2004.
3) The semi-con and "technology" hype is now "bullish"
and has been for about two months, since the April
29, 2005, low...of course. However, this is a
typical "seasonal pattern" and it will, in all likelihood,
run out of BS by the end of the "back to school period,"
or Turkey Day at the very latest.
4) Watch Germany's
DAX index
, if it goes >5171 (50% retrace in linear scale),
then we (meaning PTR's forecast) are in big trouble.
BY THE WAY, a 61.8% retrace in log scale is "near"
4967 and the index is near 4600 now.
[sic
at 4836 on 7/22/05]
5) Watch Microsoft (MSFT), as it's now
retesting the wedge break, at $25, from below, and
is "hanging" by a thread. Any break here and the Dow
is "color me gone," so we will get out fast.
[However: As of 7/22/05, we see that
the last drop did not make a lower low, so the Bull's still have another
shot at busting this to the upside by breaking trough $27. Therefore
I will be watching $27 like a Hawk, and any break up through $27-$27.50-$28
on volume will probably signal that this market is going ballistic up
into 2008 rather than down and sideways into 2006...like we think it
will].
6) WATCH the DOW index to top no later
than September 1st, as a leading indicator of coming
events, and to make a low below 10,000 by October of 2005...most
likely at or below 9700. WHY? See the DOW's cycle analysis
graphic, above, or
here!
BY THE WAY, if
this index drops below 10,360 then run for cover
as fast as you can..."in coming"
[AS of 7/22/05, the Dow is still the
weak link in the chain and it's having a real hard time at the old
"diamond pattern apex, formed near 10,650-10,750 back in 1999-2001.]
7) Last year, Allan, always in the rear view mirror
man GreenSpam, said "he didn't see a housing bubble in
the making," and then last month he said "the housing market
may be excessively extended."
Of course, this is the same moron who didn't see any
problem with the frothy lending by hundreds of Savings and
Loans back in the late eighties either, and that "ridiculous
assumption" only cost the tax payers $680 billion.
In my un-educated opinion (in economics), this policy
of holding interest rates at 4% to keep the bubble from
busting on his watch is tantamount to the foolish farmer who
eats his seed corn. Of course, in this incidence, "these
fools" aren't eating their own seed corn, they eating yours, mine,
and especially our children's.
Anyway, WATCH housing stocks, eventhough, I don't think
they will fully blow up until sometime in 2007-8.
8) On more "thing-ee" here: To the eternal bullish at heart
looking for a new DOW top here in 2005, I say "be careful
what you wish for...you may get it."
In my opinion, if "the boyz" are going to get a run back
up in 2008, and that is CLEARLY "THE
PLAN," then they would be border-line
insane to put a big frothy top on it here in 2005. Of
course, the problem with not doing so would most likely be
a nasty decline down into 2006, since that would be a DOW
THEORY non-confirmation (with DJT), and "look like" a failed
5th wave. Therefore, the way I see it is that there will
be no free lunch one way or the other.
Be
sure to check that last
NYA chart
9) 6/26/05: While they have
not put on their full Bear Mask just yet, we think that
both Hewlett-Packard and Texas Instruments are hanging
by a thin thread. See full Analysis at :
< SR-Menu 6/24/05>
[As of 7/22/05, HP is coming
unglued as it approaches it's double top to $29, but TXN is driving
for that double top, at Fibonacci $34, like a mad man on a mission. Needless
to say, here is another real critical level to watch, since semi's have
both a weak one year cycle and "somewhat better defined 21 month to two
year cycle, and last years low was made "somewhere between on 7/21 and
8/13, of 2004.]
10) 6/26/05: The "heart"
of "earnings warning season"
will start next week, 6/27/05, and with the 13 week cycle
now past the apex, I fail to see any chance that this market
can pull off any serious rally until mid to late July at the
earliest.
[sic 7/17/05: WRONG ON BOTH
COUNTS! Boy! Someone just plain sneaked in and yank the
chain early, and since we are seeing alot more of these "sneak attacks"
in the last few years, we have to always be on guard against some
Hedge Fund guy just making a quick buck by catching those die hard shorts
holding for the last drop of blood, or in this case, the last dime of profit
going into options X. I know, I was one of them...ouch!]
11)
7/1/05: Based on what we see with the SPX analysis, only,
since that's all we had time for this weekend, the 8-13 week trading
cycle (10.5 mean) looks like it's already in week 10-11 now, since
the low "looks like" it was nearer to 4/20/05 than 4/29/05. Therefore,
the "trough" (low) could come as early as
7/15 to 7/21, or just after this next options expiration on 7/15.
If the market can hold above SPX 1160
until then, or maybe even as low as 1136, then the final "finale"
should run right into 9/1 to 9/19. However, a low below SPX
1160 also looks to be the point that would wipe out any retest of
the 2005 high too. In other words, the indexes will "very likely"
rally off this next 13 week cycle trough, one way or the other, but
that rally is likely to be very lame IF SPX < 1160 now...in any serious
way.
[sic 7/22/05: This last cycle turned up somewhere before the
end of June, or right after the July 4th holiday at the latest, so that
means the last cycle was very short at only 9-11 weeks. That should
mean that we are in the strongest part of the next 13 week, and it should
be bullish to "somewhat bullish" all the way out to at least Labor Day.
All I can say is that Bears now have their backs against the wall and
are under heavy attack, eventhough, they have some technical "thing-ee's"
clearly in their favor.]
12)
7/1/05: DID ANYONE even notice the "big event" that occurred
here in the U.S. over the last three-four weeks? What event
is that, you ask?
The U.S. 30 Year bond "successfully
retested," so far, a forty-seven year low, when it went to a daily
low of 4.15 (id) to 4.22 (close) verses a 4.14 (id) to 4.17 (close)
low made on 6/13/03.
Of course, low interest rates are "bullish"
for stocks since all "future value" models carry a "discount rate"
based on the long rates, for a 10 year or 30 year government
bond or 20 year corporate bond. Furthermore, investments in
stocks, or real estate, have less competition from bonds when rates
are low, and especially if rates are low and rising.
In other words, for the positive effect
from low interest rates the probability is at least better than
50:50 that this is at, or getting close to, "as good as it gets."
Of course, rates may just stay down here in Goldie-Locks land
forever, and "I think" that may end up being the case for the "long term";
eventhough, long rates are "trying" to break out of a 25 year "downward"
sloping triangle pattern...which is "usually" bearish for low rates
(predicting a nasty rise).
The last world economy to follow this
low interest rate path for many years, now in year ten, was Japan
back in the 1990's, and they are still "playing with" a Big Bear
market, in stocks, that has already lasted fifteen years...and "counting"
toward 20+?
(13) 7/7/05:
For me, OIL at $61 means nothing
from a long term pattern basis, and, in my opinion, IF it can stay
above $55 it will go to $89, and probably sooner rather than later.
I think it's now becoming very clear
that prior world production and reserve data was the "big lie"
that many claimed it was, yours truly included, since nearly every
"geological audit" made during the 1990's turned up "well short"
of the prior "estimates," that were cooked up out of thin air in order
to secure low cost financing for drilling in third world countries.
Some companies, like Shell, were even found to be committing
fraud with their "funny numbers."
While this could easily blow up into
a major crises, and it may well be the near term "Boogie-man" that
the Boyz, including GreenInk, will roll out here shortly to do
their dirty work, I'm not convinced, yet, that the "real serious damage"
from this is still not two, three, or four years away.
For example, at some point, IF the price
of oil "stops rising," AND holds steady at "some big number," say
$55 or $89, since the last "consolidation" was between $21 and $34 for
nearly ten years, then the Pollyanna's will stop buying overpriced oil
stocks but the "effects" of high oil prices will linger on.
At that point, economies will have to eat
the bad effects on both ends, while these oil stocks are now a big
contributor to holding stock markets together. By the way, how
is it that 17 of 30 DOW stocks are down to down big from 2000 yet the index
is only 10% below the all time highs? Magic? Voodo? Manipulation?
EXXON!!
For example, just look at the US-DOW: GM
blew up! Wal-Mart blew up! Intel, Microsoft, GE, and the drug-ee's
all down more than 50% from the 2000 highs YET this index is just
10% below it's all time high...say what?
That El-correct-O! Of course, look
at where Exxon is now compared to the 2000 top and you'll see what
is holding this air ball up on the rim.
Furthermore, It's my opinion that high oil
prices are actually driving low interest rates, as high trade deficits
(a huge part of which is oil imports) are "typically" returned to
the U.S. by foreign countries buying bonds or stocks, since they don't
really want our goods and services, and when this oil plateau is reached,
@#it is going to hit the fan.
So...when is this going to happen? 11/3/2008
with the DOW @ 11,750!?
7/8/05
14) The
INVESTOR'S INTELLIGENCE SURVEY
is now showing Bulls at 55%, which is a level only
exceed at a few prior historical tops, for whatever that is worth.
However, "we think" that the current 55% Bulls is still
not "bullish enough" to cap this market, and what we need to see
is one more run up as the 2005 "finale," that we are expecting into
9/1-9/19, and have the Bulls jump on the bandwagon in a big way.
If we can get 60%+ Bulls then we are going to start
looking "seriously" at shorts, and maybe even take on a small
position at that point.
(15) 7/17/05:
AT a top, be it a huge Bull Market top, a cyclical
Bull leg up, or even a huge Bear Market rally top, the NEWS at the
top WILL NOT BE BEARISH! To the contrary, it will be BULLISH, VERY
BULLISH, or INSANELY .BULLISH
For the big brokers, the stock market is about
SALES, and when they have a lot of "inventory" to liquidate they
can't just make a phone call and dump millions of shares onto the market,
or they will wipe out their own selling price.
That is to say, they must SALE someone else
on the notion to buy it. Of course, this often leads them into
using "questionable" sales tactics in order to do this, and one of
those tactics is the K-Mart style "blue light special." That is where
they market it up this week so they can market it down, as bargain, next
week.
Jay Bernstien, originally with ML, once said:
"if you can't sell a $15 stock for $20 then raise the price to $30
and drop it back to $20...there will be stampede of bargain hunters there
to scoop it up." If you know what he means by that!
(16)
7/22/05: China's "devaluation"
A Yuan or yawn..ho, ho, ho??
The last time the "Boyz' made a test run on this
the market reacted bullishly to stocks, this time all we got was a yawn.
However, the action taken was nearly nothing so it's hard to say
will happen over the next few weeks, but I could see this becoming the
Boogeyman we are looking for...real or otherwise!
7/24/05:
(17) The
INVESTOR'S INTELLIGENCE SURVEY
is getting more bearish and not more bullish, like I wanted
to see for a top , so we either arn't there yet, which would be no
big surprise, or we are not going to have a top...which would be.
For The Price-Time Review
Andrew Quiggly
Editor
All content is copyright(2005) PriceTime
LLC
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