Trading eminis with cycles

[theplumber]

Closed my short position I averaged into for break even. It was a bad trade as I should have honored my stop and re-entered short at a higher price. Of course now the market will go down like crazy who knows. What bothers me is seeing all the puts being bought, which has the dealer putting pressure down as he hedges but the market doesn't go down big, maybe nothing maybe something but has me curious and on the sidelines with swing positions just the same. The chart is the yield curve for Oct 2000 (shown with the arrows) and now (shown with the hand). I really do not think there will be a recession but instead no growth , i.e. stagflation.

[Anson]

Hey Plumber,

Love to read your posts. Any updates?

[theplumber]

Originally posted by Anson
Hey Plumber,

Love to read your posts. Any updates?

I haven't made any swing positions yet as I want to see if any decline brings any real selling. My guess is the S&P500 goes sideways into year end because of bonus'. The chart below has the bullish percent for the S&P 500 index ( nice index data Esignal needs to get) and the index is right about ripe for selling/shorting. The claims index is what I'd be watching for 07 because a rise in claims will come before any recession. According to trimtabs they claim real time employment data via tax reciepts and state the economy is stronger than the numbers show. Who knows but I have various models that show a rise in volitility and a down market for the second half of next year. All this has me cautious and day trading so sorry to disappoint

[Anson]

Hi Plumber,

Thanks for the update.

I agree with your view on the Bullish percentage charts.

The NYSE new highs- new lows also looks ripe for a top. Equity put/call ratio is pretty close to "ripe" but not quite at the ideal levels compared to some of the previous tops.

Still watching to re-enter short after my last attempt fizzled and all profits vanished.

[theplumber]

Originally posted by Anson
Hi Plumber,

Thanks for the update.

I agree with your view on the Bullish percentage charts.

The NYSE new highs- new lows also looks ripe for a top. Equity put/call ratio is pretty close to "ripe" but not quite at the ideal levels compared to some of the previous tops.

Still watching to re-enter short after my last attempt fizzled and all profits vanished.

Just a little info if your still short or thinking short going into year end; When October averages a historic volatility below 10%, the rest of the year tends to gain 4.15%. When October averages a historic volatility between 10% and 20%, the rest of the year tends to gain 2.61%. When October averages a historic volatility above 20%, the rest of the year tends to gain 0.76%. This last statement does have a couple of “outliers” in the data, namely 1931’s year-end loss of 31.87% and 1937’s loss of 11.26%. However, even if you remove those outliers from the data, the result for when October averages a historic volatility above 20% is still a relatively low 2.42%. This past Oct was about 6%, or very low in historical terms and add year end bonus' to get 1400 or a little above by year end.Of course this is mostly sideways right now but still a good range/channel trading time.

[Anson]

Thanks Plumber.

We're at 1400 today.

[Anson]

Anything interesting, Plumber?

I'm looking at some data that points to a potential downside soon. Maybe next week.

Put-call ratios mostly looking quite ripe. Equity one caught up more or less and is pretty ripe now too.

[theplumber]

Originally posted by Anson
Anything interesting, Plumber?

I'm looking at some data that points to a potential downside soon. Maybe next week.

Put-call ratios mostly looking quite ripe. Equity one caught up more or less and is pretty ripe now too.

Still looking for a range from 1380-1420 into year end. No one I talk to wants to be short or sell for that matter until year end. An interesting chart from Jeff Saut.

[Anson]

Thanks Plumber.

Risk-taking seems good for my perspective. Still waiting on another good short setup. Have taken 5 and most ended up with miserable profit. I'm just glad they weren't losses. Knock on wood.

[theplumber]

The chart below is from Oct 27 (sorry I can't post these forecasts or updates because of other obligations) and shows maybe Fed Tuesday is a small down turn but the high still should be Jan/Feb of 2007

[theplumber]

Some realtime data using my own stuff or a cycle composite (in red below price in the indicator pane) and a form of Ganns Master time factor overlayed with price (yellow being more realiable than the red one over time) . The composite shows a high this coming week and the Master Time Factor is showing a drop that will be bought and new highs coming. Will be interesting to see what happens.

[theplumber]

Anything this guy writes ir required reading

http://www.minyanville.com/articles/index.php?a=11786

[Anson]

theplumber,

Thanks!
Guess you were right... it is now highly likely any downside will be in 2007.

[SERGIO.M]

$SPX

Hi Theplumber and Anson,

How are you?
Have a great Christmas and new year

Look this chart, this is one possibilty, we will see later.

[theplumber]

Year 2007 predictions and thoughts ; This time next year the US will be using the D word, deflation. No inflation is good until it isn't and the second half of 07 will see no growth. The things you need will go up in price but the things you want will go down. That is the new paradyn in the USA. 07 will be a down year (maybe I'll get it right this time ) and volatility will rise. The bond market is reflecting this possibility now but equities have shaken it off, what happens if bond yields stay down or lower? Equities will follow.

The other side of this argument is the cycles point to an up year after a rough start. The S&P 500 could reach new all time highs (as it's possible the 4.5 year cycle is in) before any correction, get a dip mid year and then rocket right back up. The liquidity out there is huge. Anyways I'll go leaving the charts below, on the left is a model for 07 and the right is the cyclical picture for 07.