Dispassion

Mike Shedlock has posted some futures data for US House Prices, predicting a trough in Q4 2010, wiping 8 years off house price rises, with a 36% fall from the peak.

http://globaleconomicanalysis.blogspot.com...9-analysis.html

interesting article, in which John Dizard argues that gold is going below $800 over the next few months:

http://www.ft.com/cms/s/0/b8d36560-21b1-11...144feabdc0.html

I plan to start a thread on Larry Pesevanto's techniques. Perhaps we can discuss it there

 

Meantime, take a look at the Gartley pattern:

http://www.traderslog.com/gartley-pattern.htm

 

"The next step in the development of this pattern was the addition of the mathematical relationships of Sacred Geometry (which includes the Fibonacci Summation Series). Adding the Fibonacci Ratios to this pattern gave the Pattern Recognition Swing Trader the tools to determine price entry, exit points and stop levels for risk control. The final step was empirically and statistically testing the validity of these patterns. Gartley had emphasized that the pattern was correct approximately 70% of the time. Testing weekly, daily and intraday patterns over the past 40 years has proven that Gartley’s original premise was indeed accurate."

I was referring to a reference on fib ratios in markets before 1900's.

The link you give says that Gartly was pretty much at exaclty the same time to Gann and Elliot:

Gartley stated in his 1935 masterpiece that over a 30 year period...

I don't doubt the occurance of Fib ratios in modern liquid markets. Only the application of them to less sophisticated markets where they don't have widepread intentional use by the market participants, such as the housing market.

Fibonacci retracement ratios show up in nature

 

Okay. Now it is.

But look back at prices before 1909, and you will find these patterns too. In fact, you will find them

even before Leonardo Fibonacci was born in Pisa, Italy in the 1300's.

I'm in interested in any reference material you have on this.

Okay.

But that proves my point. They used the ratios to make money because fibonacci ratios were showing up in price moves.

 

But these remained fringe ideas, understood and used by few, until Prechter became well know, and published The Elliottwave

Principle in the late 1970's.

 

That's my opinion anyway.

Yeah, I see your point, it's a bit of a chicken and the egg situation. Perhaps, some of it's psychological, but the rest is self-fulfilling prophecy. Whether the early momentum came from ill-founded notions or not, they work because other people use them. I use TA for liquid markets, but my opinion is that only the most naive TA is relevant to the housing market.

I'll look into the history of fib ratios, because I can't see that they'd have an impact before they were widely used.

Gann published in 1935 and was active in market trading circles in 1909.

Elliot published in 1938, his theory uses fibonacci ratios.

SURE. You find these numbers are over nature. I dont think people spoke about fibonacci ratios before the 1970's. Go back and look at charts of 50 or 100 years ago, and you will find the ratios in stock prices.

I see a big difference in the strategies used by stock investors and property investors. A large percentage of money on stocks is invested by people who use fib retracement, but virtually no money from property investors uses it. It works as a self-fulfulling prophecy, but only if the message is widespread enough. The only fib level that I can see having any significant impact in the housing market is 50%.

I'll look into the history of fib ratios, because I can't see that they'd have an impact before they were widely used.

Haha. Of course they never heard of fibonacci. Price moves are a reflection of human sentiment, and the cycles of sentiment trace out these patterns. And it has always been like that, whether people were watching the fibonacci points and trendlines at all.

 

I know it sounds unbelievable at first, but I have seen these patterns develop so many times (to within a percent or two of my calculations), that I have confidence in using them as part of my arsenal of technical tools. If you study enough price moves , and calculate the Turn points, you will see what I mean.

For me, fibonacci retracement only works if enough people use it, which is why we see them in liquid markets which are dominated by sophisticated traders. Do you mean that there's something inherently psychological about these retracement levels?

I have a very precise "best guess", and that is that the Nationwide index will fall -46% from the top.

Do remember, it is only a guess.

 

Pds.186,000 x 54% = Pds. 100,000 on the Low ?

 

Hong Kong fell 69% from 1997 to 2003, and I wouldnt rule out a similar fall, maybe a fibonacci 61.8%

in the UK. (Note: 186,000 x 38.2% = Pds. 71,052 )

I don't see the housing market as that technical. The vast majority of homeowners have never even heard of fibonacci retracement. It's all about sentiment and mortgage availability. I think we'll be comfortable that we've seen the bottom in stocks and the peak in unemployment before we the housing market has bottomed out.

The derivitives market on UK residential property is predicting:

38% peak to trough in Q4 2010 (spreadfair)

42% peak to trough in Q4 2011 (tradition)

Spreadfair closed this market so the data's a few months old.

The tradition trough has shallowed from 45% a month earlier.

It's coarse data, but the liquid market doesn't see this as the bottom. It's a market that could be skewed by hedging against over exposure to property and we've no reason to believe that it's any more efficient than any other market. For me, it's the best predictor we've got and conveniently matches where my rationale would seem to lead me.

I expect to see relatively flat house prices for about year at the trough, so I see no reason to rush in.

Is the conference call recording available?

Oil is plummeting fast, it remains well correlated Euro/Dollar, commodities and gold.

I'm increasingly certain, that it's the Oil Producer's Cartel that hold the key to direction of gold.

A bottom in oil is a critical point for all markets in my opinion.

These collapsing commodity and stock prices indicate a serious lack of faith in reflation, if the banks don't reflate company prices soon then I think we're going to see some serious public sector action in Europe, including nationalisation, but I don't see this happening in the US.

Gold needs to find a bottom here.

 

More likely at 700 then a countertrend rally to somewhere near the top of the channel before the next move down.

 

[url=http://g.imag

The correlation between the gold/dollar with euro/dollar and oil/dollar have been resumed over the last 2 weeks.

I'm not sure that we'll see a turn around in gold until we see a turn around in oil.

I hope Ologhai hasn't topped himself

 

Seriously though, by Crimbo, we'll be laughin' !

"This time next year we'll be millionaires"?

this is much more deeper than you think, but it is very simple explained, could you build a house without drawing an exact plan? no? well, how can you build a portfolio if you don't have a plan on a chart? that's it

I'm interested in how it's deeper than I think or if anything in my statements about TA can be invalidated, but I can't go with the analogy. I could add an element of numerology to my portfolio planning and use the same comparison. I love TA charts, because I love data, but if my first statement about TA holds

1. TA is like paper scissors stone (rochambeau), if you invest at a random time, then you're as likely to profit as lose from market timing, hence the average use of market timing must be zero and if there is merit to market timing strategies then it must be to the detriment of other market timing strategies.

how can I know if my TA is good TA or bad TA?

Hi Ker

 

Whats your view of the price of gold over the next six months? What about silver?

I love Ker's charts, I'm a dataholic, but since we're on the subject of TA I'd like to offer my view on it's usefulness, partly cautionary for anyone who would put too much faith in it and partly because if I'm wrong I really want to know about it.

1. TA is like paper scissors stone (rochambeau), if you invest at a random time, then you're as likely to profit as lose from market timing, hence the average use of market timing must be zero and if there is merit to market timing strategies then it must be to the detriment of other market timing strategies.

2. If TA is compleltely ineffective, we'd expect a normal (gaussian) distribution of the performance of individual strategies, only distortions to the distribution indicate beneficial or detrimental stratgies.

3. We can place an upper limit on the maximum value added by TA, based on the number of people who are known for amassing wealth from TA. eg. 1% profit per trade would turn 10,000 into 10,000,000 within 695 trades. So, for example, a stratgey producing a profitable trade of 1% every 5 days for 10 years must be very rare.

4. If the trade is motivated by TA, the average gain must be in excess of the trading fee to be profitable.

5. If TA is used to add value to an otherwise motivated trade then the requirement that it's profitable is removed along with the need for the gain to exceed the trading fee, hence widespread use of TA doesn't demonstrate profitability.

any comments gratefully recieved.

$3.25 now.

 

Screaming buy?

- or -

Don't touch it with a barge pole?

I think all the majors have got to be seen as very cheap, if you think the gold bull is still alive and well.

They have been selling off through deleveraging and with other commodity miners and are in a strong position to seriously benefit from a recovery in stocks and/or the gold price.

--

I was looking at these triangles yesterday.

What weight do you assign to your bearish prediction and what weight to your bullish prediction?

It seems to be stating the obvious really, but...

 

If you judge a big drop to be highly probably, then on average it's a good idea to sell, perhaps with a view to buying back in at a lower price.

Looks like the resistance from all three down channels has been broken for a second time today.

I'm thinking that the gold price in euros is playing a role here as it tests the 600 region.

here are the key prices for monday:

Looks to me that the down channel resistance was broken soon after opening of the gold market in asia.

Gold's New Records - James Turk 18/10/08

 

Gold closed this past week with new record highs against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold's long-term charts against these currencies.

 

Gold did not close this week with a new record high against the euro or the US dollar. But gold remains in a clear uptrend against both of these currencies, as we can see from the following long-term charts (the price of gold in Deutschemarks is used until it was subsumed into the euro).

 

Importantly, the debasement of the dollar is becoming so profound as central banks create "unlimited" amounts, the gold cartel will no longer be able to stop the watchdog from barking by capping the gold price. I expect new record highs in gold against the dollar and the euro by the end of this year.

How on earth does that data work?

I see a weekly change of about -10% in gold against AUD CAD and GBP.

I can make it work if you run the chart to the 10/10/2008 instead of 17/10/2008.

Ok - just spent a few minutes getting my head back round pnf charts for gold - i used to swear by them when i believed in shares...and they helped me get out of the market with some nice profit once i realised the house always wins...

 

Using this chart:

http://stockcharts.com/def/servlet/SC.pnf?c=$gold,P

 

and a ruler, I think we are in for a world of pain...I guestimate that we could go to lows of 740(hopefully), 715(medium) or even 700(worst). Also 860 looks like the resistance level - if we break that then we could go to 920...

 

Just my opinion - please don't take this as investment advice....but please keep me updated if you think I am wrong or right. I would like to refine my methods...

I posted this in another thread

I consider these to be facts about market timing that we should use to establish discipline in investment strategies. I'm interested to hear if anyone disagrees with any of them:

* If you're trying to predict what the markets will do then you're trying to predict what other people do and if they follow TA you can profit from it too.

* If you invest at a random time, then you're as likely to gain as to lose from your timing, so TA can only profit where people try to time the markets but lose. So the average use of market timing is neutral. [Compare to paper, scissors, stone].

* The maximum gain from TA can be calculated based upon measurable upper bounds of annual returns from market timing, by considering known limits to wealth growth.

Can anyone find anything positive to say about the sale of my house falling through today and not having a large pot of cash to buy gold with?

Easy - 'They' are more likely to confiscate your gold than your house.

Jim Willie was talking about how he's heard about China Russia and middle east forming a new reserve currency which would be constructed from basket of currencies includinga Gold backed Ruble

 

It was a radio interview so can't remember the link.

 

True or not - some interesting "noises" being made......

I can't believe that the emerging and BRIC economies will accept dollars for exports for much longer, but I'd expect progress to be made through WTO talks rather than esablishing a currency that doesn't have the backing of the US and Europe.

Looks like the 2 day long triangle converging on around $840 is due to pop before europe opens tomorrow.

Just for fun, I'm saying it's very likely to break upwards.

I'm not trading it, but does anyone want to wager an ounce of gold on it?