Nov 12, 2007 - Issue #084
Bear Market? Not so fast...Keep things in perspective!
On the daily charts, sure, a case can be made for a bear market in many issues. But on
many weekly charts??? Some yes. For others, a correction. Bear market in the major
indexes? Not yet. It might come, but is it here yet? It doesn't look like it to me. Does
that mean you should rush in to buy? No.
Does that mean you should be observing; waiting for optimum conditions? Yes. Successful
traders/investors are 'serial opportunists'.
There are always bull and bear markets somewhere everyday. You just don't notice them. Why
not? It all depends on ones' time horizon. Everyone chooses the time frame their most
A market year, for instance, has an opening, a high, a low, and a close. In between the
years' range is a lot of activity.
Same for a daily chart. Each bar has an opening, a high, a low, and a close. In between
the days' range is a lot of activity.
If, on a particular day, the opening was also the high and the low was also the close
clearly the market was a 'bear' that day. It might trade like that for several days
It might not matter all that much to investors, but from a 'day' trader's perspective it
clearly matters a lot.
A 'day' trader operates on 25% margin, as long as all positions are closed by days' end.
Otherwise, margin requirements increase to 50%. Therefore, each day is a 'year' unto
To appreciate just how much activity takes place during a single days trading, a 'day'
traders screen typically shows intra-day bars of 5 minutes duration. Each bar has an
opening, a high, a low, and a close. In other words, each 5 minute bar is like a day.
A market session is 6 1/2 hours. That's 78 bars, just for one day. During that time frame,
the trader decides whether to go 'long' or 'short', but whatever position is taken each
day ends as it began; 'flat'.
Each day is a whole new 'year' and everyone of them is filled with 'bull' markets, 'bear'
markets, or 'in between' markets.
So you see, it all depends on ones' perspective.
Dow score card for the week ending 11/9/07.
DJ-30: 13042.74 -552.36 -4.06%. The Real World DJ-30: 53.48 -2.27 -4.07%.
UP: 4, Down: 26.
Trends (weekly charts): This is the subjective part.
Rising (Generally Higher Highs/Higher Lows) 7 (-3) 23%:
GE, INTC, KO, MCD, MO, MRK, UTX.
Consolidating (Generally Lower Highs/Higher Lows) 10 (-1) 33%:
+*DD, DIS, HON, HPQ, JNJ, -*MRK, PG, T, VZ, XOM.
Declining (Generally Lower Highs/Lower Lows) 13 (+4) 43%:
-*AA, AIG, AXP, BA, C, -*CAT, -*GM, HD, -*IBM, JPM, MMM, PFE, -*WMT.
+/- denotes change of direction.
* denotes change of category.
Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!