An insane prediction

My eleven stocks closed the following amounts above their respective lows of the day:

14.2%
11.6%
7.9%
7.7%
7.6%
7.5%
6.8%
6.4%
6.1%
5.0%
1.3%

They averaged up 7.5% up from their respective lows of the day. That seems to a naive guy like me to be a rather enormous one-day recovery after an irrational and emotional sell-off.

My insane prediction is that today’s lows, those lows for the day, will turn out to be the lows for this correction. Don’t bother telling me how stupid that is to try to predict, I know. But it also would have put my portfolio right in the middle of that support area I wrote about earlier, and that the stocks have bounced off six times. We’ll just have to see. But all my stocks averaging 7.5% off their lows says to me that the market looked at those lows and decided “This is silly!”

Best,

Saul

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Oh now I’m excited! There is so much negativity swirling around. Great time to be investing.

What position was 14% of it’s low?

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What position was 14% of it’s low?

Okta: $47.82 /41.88

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I have a feeling that Jim’s bottom detector will ring the bell again today.

Based on pre-close data, no…not even a short term bottom signal seems likely given current data.
We shall see.

For example, WSJ is showing 366 new 52 week lows so far today on the NYSE.
The same source showed 466 by end of day on Oct 26, and Pinnacle showed 530.

Jim

From the mechanical investing board.

Also note: The Mungofitch 99 day indicator cannot trip before February.

Stsying long.

Cheers
Qazulight

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I know this is completely OT (so please don’t respond), but because it is such a textbook example and visible by just looking at a chart, I felt the need to point it out. The Nasdaq bounced and closed almost perfectly off its daily/weekly vertical support zone. Reistance in Nov 2017, then low in Jan 2018 and March/April 2018.

I don’t use TA to make predictions, just to figure out where logical buy points are located (probabilities). But I deployed a lot of capital this morning. I didnt think I would have a chance to buy TWLO, NTNX, AYX, and TTD this low again (after those incredible earnings), but hey, sometimes things are irrational.

Again, TA is for probabilities not predictions, we could certainly go lower still, very easily, but we bounced strongly off support and seem to be oversold (weekly RSI at lowest point in two years).

Just my thoughts.

Stephen

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I have never heard of the mungofitch 99 day indicator, so I looked into it. It appears to be a 99 day price channel (showing the highest high and lowest low of the past 99 days). I know this is going OT on this board but I spent a great deal of time investigating pricing indicators, channels being one of them. These price channels were popularized by Richard Donchian back in the 1960’s, when he traded commodities. For quite some time back in the 1960’s through the 1980’s, one could make a good deal of money using trend following systems on commodities. Moving averages, price channels, stochastics, Bollinger bands and more were used to indicate the trend. It doesn’t work anymore. You’re lucky to break even since the early 2000’s. You’re more likely to make money writing a book on trend following the commodities market than you would actually trend following the commodities market. Many blame the popularity of such systems themselves as the prime reason for failed breakouts causing a series of small losses, negating the returns when you finally do catch a major trend.

Some use these moving averages on the stock indices as well, saying the Dow or S&P is at, above or below the 200 DMA, or the DMA of your choice.

What these moving averages and trend indicators do is sometimes keep you in major moves upwards, they may even keep you out of a major bear, but they will constantly have you selling in short term corrections, meaning, one is better off staying fully invested at all times if your objective is the highest long term returns as possible. If you’re willing to sacrafice returns for lower volatility, then these moving averages or trend indicators may be of help.

There is nothing out there, no magical indicator, that will keep you fully invested on the way up then have you sell on ONLY the correction that turns out to be a bear. You will sell on all the corrections. This is what hurts long term returns.

You’re welcome to try backtesting yourself, as I have. I know by backtesting to disregard any article that talks about a 200 DMA being a harbinger of things to come. If your objective is long term high returns, the best practice is to remain fully invested regardless of what indicators are doing.

In other words, selling is only beneficial to those who cannot stand the volatility or the volatility does not fit their risk profile, because it most certainly does not lead to higher long term returns. This is because for the past several hundred years of recorded data on the stock market, the long term trend has been up. So when you have a habit of taking yourself out of the stock market, you will eventually overall miss upwards moves in that long term trend.

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I would like to hope that this is bottom. However, we are very close to the low set on 29-Oct at 2603.54 on the SPX. It would have been great if today’s low tagged that low and closed above that especially with lighter volume (That is my technician side). I would be more convinced that the low was put in if that happens. Tomorrow will be another day.

By the way this is my first post and hope this is inline with the rules of the board.

DrSK

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By the way this is my first post and hope this is inline with the rules of the board.

Well, ordinarily technical analysis is way Off-Topic and not welcome on this particular board, but I can’t scold you as I’m responsible for starting this thread. If that’s your area of interest, on the side panel of this post, under announcements you’ll see a link to “Boards that welcome topics that are off-topic here”, or something like that, and you’ll find links to three TA boards, as I remember it. In fact, here’s a link to it:

https://discussion.fool.com/i-thought-it-might-be-useful-to-prov…

Saul

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Yep those lows this morning were much appreciated as I bought many of the names on this board at or near their lows.

I wouldn’t mind a few more days like today though. :wink:

Chris

Thanks Saul and I appreciate the post. TA is not my main focus, I look at it as any other tool to be used in the markets as well look in the FA side of reading a report. Keep up the great work. Love your posts.

DrSK

Someone was getting out of OKTA in hurry y’day morning and once that selling was over the stock gained back to $46 ~ $47 range and held on to level. Right around the same time there was some serious call buying Dec $50 strike. In the pre-market it is up already $1.45.

If you had the conviction and bought y’day, you have some gains to show. I think OKTA with their cash and growth will be fine long-term. I could not buy y’day but thinking of putting some ridiculously low price buy orders out there… just in case.

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My insane prediction is that today’s lows, those lows for the day, will turn out to be the lows for this correction.

Maybe not so insane. I glanced at the premarket and all my stocks are green, and up 0.5% to 6.0%. Maybe I should become a seer.:grinning:

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Figured out how you’ve done so well. You’re either psychic or you’ve hacked into the markets and control all trading.

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Saul,

Please keep those insane predictions coming! :slight_smile:

Jim

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Figured out how you’ve done so well. You’re either psychic or you’ve hacked into the markets and control all trading.

https://metrouk2.files.wordpress.com/2015/10/back-to-the-fut…

He is a doc, he seems to know the future.

Just saying.

Cheers
Qazulight

Saul,
You are known to tinker and rebalance here and there.

Curious if your allocations for top 4 stocks have changed much in the past couple weeks?

Dreamer

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Curious if your allocations for top 4 stocks have changed much in the past couple weeks?

Same four, same order, same approximate allocations. Did add trivial amounts to all four on Mon and Tues.
Saul

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It could be a bottom, or not. If we cannot predict it, why bother trying? Doesn’t that amount to flipping a coin? It can go higher or lower and/or stay low for a while. The days of quick recovery could be over and we could have entered a new regime, or not. There is absolutely no way to tell, is there? Only after the fact the headlines come out and many says:” oh, that is why” on hindsight. It’s never that bad or that good. It’s just a bunch of people ‘just saying’ and sometimes that catches on and sometimes it does not, and the market goes either way.

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Well, these stocks are in the running for “most promising young companies,” and they’re not particularly cyclical, so their actual performance should overcome, over time, much of the selling out of fear of the market in general. They shouldn’t correlate all that much with the S&P 500.

In fact, that might be a good time to sell at least some shares - when one of these companies gets into the S&P 500. For one thing, that event itself causes a bump in the price as all the index funds start buying it.

Though I don’t think it’s nearly as prescient and accurate as Saul’s sense of when to sell, my contribution to that is the idea of selling when the stock pops quite a bit on good news not based on improved performance, but more of a “story” thing that might not continue to inspire optimism. That’s what got me out of Arista the last time it was around $300, and thinking about buying again at $230. I wish I could remember what that news was, but I remember thinking that it wasn’t going to be enough to keep the stock at such a lofty price.

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Anet did get added to the s&p last time it hit its peak a few months back. It’s what caused the pop in share price