Stock Market Prediction

[PaceAdvantage]

Originally Posted by ReplayRandall

So the FED says no rate change up or down today.....Interesting.

Look WTF just happened to GOLD $1385, 6 year high.....Concerning.

Fed funds at 2.37, while the 10 year yield drops to 1.97!.....Inversion worsen rapidly.

Doesn't this look like the same script Ben Bernanke was following right before it all imploded?

They have to figure out SOME way to make sure King Donald doesn't get reelected...insurance plan #1 hasn't panned out despite all their best efforts.

What, you thought that was going to be the end of it?

A nice little market crash + recession will ensure without a single doubt he wouldn't win reelection, and would probably guarantee he doesn't even run if they can bring it about early enough in the cycle.

Here come the tin-foil-hat images....as GWB once said, BRING 'EM ON.

[Saratoga_Mike]

Originally Posted by ReplayRandall

So the FED says no rate change up or down today.....Interesting.

Look WTF just happened to GOLD $1385, 6 year high.....Concerning.

Fed funds at 2.37, while the 10 year yield drops to 1.97!.....Inversion worsen rapidly.

Doesn't this look like the same script Ben Bernanke was following right before it all imploded?

The gold chart looks outstanding.

Under BB, the explosive move in gold was a flight to safety. I suspect gold's current move is a store-of-value play (i.e., you can't print more gold).

Keep in mind the yield curve (10s less 2s) inverted in early 2006, after which the S&P 500 moved up an additional 18% or so.

[Saratoga_Mike]

Originally Posted by PaceAdvantage

They have to figure out SOME way to make sure King Donald doesn't get reelected...insurance plan #1 hasn't panned out despite all their best efforts.

What, you thought that was going to be the end of it?

A nice little market crash + recession will ensure without a single doubt he wouldn't win reelection, and would probably guarantee he doesn't even run if they can bring it about early enough in the cycle.

Here come the tin-foil-hat images....as GWB once said, BRING 'EM ON.

This wasn't the message from Powell at yesterday's press conference, imo. He's very concerned about the global economy/trade issues and will act soon, barring some unforeseen positive exogenous factor.

[reckless]

Originally Posted by Saratoga_Mike

The gold chart looks outstanding.

Under BB, the explosive move in gold was a flight to safety. I suspect gold's current move is a store-of-value play (i.e., you can't print more gold).

Keep in mind the yield curve (10s less 2s) inverted in early 2006, after which the S&P 500 moved up an additional 18% or so.

There's an old joke out there that the inverted yield curve has predicted 15 of the last four recessions.

[ReplayRandall]

Originally Posted by reckless

There's an old joke out there that the inverted yield curve has predicted 15 of the last four recessions.

There's always a joke out there that our economy is red hot....

[Saratoga_Mike]

Originally Posted by reckless

There's an old joke out there that the inverted yield curve has predicted 15 of the last four recessions.

It actually has an excellent track record, but the recession isn't always instantaneous.

[AltonKelsey]

Originally Posted by PaceAdvantage

You have to admit, you've been king asshole regarding this topic.

I've pointed it out nicely a few times in the past, but now we're up to attempt #135 to beat this dead horse...thus...you get more colorful responses from me each and every time.

Not too hard to figure out.

I'm not sure I qualify as an asshole, unless I have company.



This pink sheet nonsense was touted as the BEST STOCK on the boards , using multiple criteria.



I balked at that analysis. Unless you were very nimble and traded in and out at the exact right times , you got blown away.



This while the overall market has RIPPED!!!!


We also had someone claim that a buy signal was 5% away and nothing should be bought before then . Let the price get away from you , THEN buy!



10 days later .....





so if I'm an ahole , I have good company here.

[highnote]

Originally Posted by AltonKelsey

We also had someone claim that a buy signal was 5% away and nothing should be bought before then . Let the price get away from you , THEN buy!

Not sure if you're referring to someone's post about a particular stock or if you're posting about my post about stock market timing/momentum indicators.

In case you were referring to me, I want to clarify my point...

My post was actually about the buy signal being a 4% rise from a recent bottom -- assuming that at some point the market had fallen 4% from a previous top.

This is a Martin Zweig indicator. He did pretty well for himself and I have had good results using his indicators...

I use the value line index.

So for example, let's say you're just starting out as an investor, the market has been weak, and the index is at 100. If the indicator rises 4% to 104 a buy signal would be triggered. Since 104 is the new high, you would go long the market and stay long until a sell signal is triggered. A sell signal would be triggered if the index fell 4% to 99.84.

The beauty of this indicator is that you can update it every Friday afternoon at the market close and be fairly in touch with the market's direction.

You'll get similar results using the S&P, but it is not quite as sensitive as the Value Line. You can also use it with individual stocks. I have a feeling Jesse Livermore probably used something along the lines of a 4% model. Zweig favorably mentioned Livermore's trading methods in his book.

As I mentioned before, you might get whipsawed on occasion as this headline from today states:

https://finance.yahoo.com/video/u-st...184159973.html

[AltonKelsey]

highnote, the stock has nothing to do with you



As for waiting for a massive bounce before stepping in, I think this might have been good advice 20 or 30 years ago , not now.



Maybe this backtests well, maybe not, but I'd feel a bit awkward sitting around rooting for the S&P to move 100 points higher so I can hit the buy key

[highnote]

Originally Posted by AltonKelsey

As for waiting for a massive bounce before stepping in, I think this might have been good advice 20 or 30 years ago , not now.

Maybe this backtests well, maybe not, but I'd feel a bit awkward sitting around rooting for the S&P to move 100 points higher so I can hit the buy key

The Value Line index is slightly more volatile than the SP so a 4% move happens pretty often. Zweig wrote that 3% might be more appropriate for some investors. He also wrote of several other indicators in his book and he also said he did not give away all his indicators because he used them in his fund for his clients.

Professionals who are in tune with the market can surely do better. I am a casual investor and the model has worked well for me, but I am sure there are better models.

In case you're interested, here is a link to a copy of the paper I co-wrote with Bill Ziemba (a.k.a. Dr. Z) about using the Zweig system in the "modern era".

https://www.tandfonline.com/eprint/t...XTTRjDAIZ/full

[ReplayRandall]

Originally Posted by highnote

In case you're interested, here is a link to a copy of the paper I co-wrote with Bill Ziemba (a.k.a. Dr. Z) about using the Zweig system in the "modern era".

https://www.tandfonline.com/eprint/t...XTTRjDAIZ/full

Zweig suggests three crucial conditions for a bear market:

1. Extreme deflation. This is not present in 2016.

2. PE ratios of 18 or above.The current PE of the S&P is around 22, which Zweig says is bearish.However, he says the exception is when profits are low (causing high PEs) because of a business downturn. This is the case in 2016 with poor earnings.

3. Inverted yield curve. An inverted yield curve last occurred in early August of 2008. It is not inverted in 2016.

What year did we last have "extreme deflation"?.....Doesn't exist, especially extreme.

Bear market Time is here.

[highnote]

Originally Posted by ReplayRandall

What year did we last have "extreme deflation"?.....Doesn't exist, especially extreme.

Bear market Time is here.

One reason the FED did Quantitative Easing on a mass scale starting back around 2009 is because they were terrified of a great depression caused by extreme deflation. Money printing was supposed to cause inflation -- or at least prevent deflation.

I suppose it's a good idea to have a little precious metal in your portfolio in case of extreme inflation or deflation.

[AltonKelsey]

Originally Posted by highnote

In case you're interested, here is a link to a copy of the paper I co-wrote with Bill Ziemba (a.k.a. Dr. Z) about using the Zweig system in the "modern era".

https://www.tandfonline.com/eprint/t...XTTRjDAIZ/full

I certainly know who Marty Zweig was , but I'm not a big systems guy , so never got interested in the workings of his 4% method.



Got up to some speed on it via the miracle of the internet . This paper is quite interesting and has an actual back test thru 2015 or so , which seems to confirms my theory (underperform since the glory days) . No idea how its done since 2015 (murphy's law , probably great, just to make me look bad)



The_four_percent_rule_applied.pdf




I was looking for a recent performance study, but strangely, quite hard to come by. Do you have the numbers ?



I do respect Zweigs notion that you don't stand there like a patsy when it hits the fan.




PS Your paper with Ziemba is nicely done.

[PaceAdvantage]

Originally Posted by AltonKelsey

I'm not sure I qualify as an asshole, unless I have company.

Come on! You know what you're doing each and every time you bring that stupid penny stock up.

Doesn't the phrase "WE GET IT ALREADY" mean anything to you?

No? That's why you're an AH.

[highnote]

Thanks for the link to the study. I have not done one. I just use it, but not as a hard and fast rule. There have been times it has dipped below 4%, but I stood pat (the '87 crash for example. I was pretty sure that was a temporary blip. But in the summer of '07 I went 100% into cash because of the huge daily swings. That's the sign of a crash. And it crashed big.) I sold maybe a third to a half on this most recent drop even though I knew the economy, overall, is strong. I just didn't know how long the tariffs would be a factor. So I lost a little in the whipsaw, but it was cheap insurance.

Zweig recommends using his Super Model. I pay more attention to that.

His strongest indicator is the ratio of advancing stocks to declining stocks over a 10 day period, but this indicator is not part of the Super Model. When the ratio is 2 to 1 or higher it is a major buy signal. The 2 to 1 ratio happened earlier this year and Zweig showed that the market goes up at lest 15 percent on average in the proceeding 6 months, which it has.

The Super Model is actually neutral right now. So I'm basically long, but with some cash on the side.

So I guess the way I invest is like handicapping -- part art, part science, and part fortune teller. Interpreting the indicators is like reading tea leaves.

Originally Posted by AltonKelsey

I certainly know who Marty Zweig was , but I'm not a big systems guy , so never got interested in the workings of his 4% method.



Got up to some speed on it via the miracle of the internet . This paper is quite interesting and has an actual back test thru 2015 or so , which seems to confirms my theory (underperform since the glory days) . No idea how its done since 2015 (murphy's law , probably great, just to make me look bad)



The_four_percent_rule_applied.pdf




I was looking for a recent performance study, but strangely, quite hard to come by. Do you have the numbers ?



I do respect Zweigs notion that you don't stand there like a patsy when it hits the fan.




PS Your paper with Ziemba is nicely done.