Wednesday, January 23, 2008

Fanning the Flames of Panic


Here are images of the past two days' front pages of The New York Times. I last commented on this subject here.

When a stock market drop is a front page headline in the Times three times in four consecutive weekdays you can be confident that the worst is over. In my 40 years of experience the principal lesson I have learned is that the best opportunities occur when people around you seem to be losing their heads and when the temptation to flee the market is strongest. I believe this market is scraping bottom and will soon embark on an extended rally above the 1600 level.

Today's front page (top image) did bring me a chuckle. The heading "Worries that the Good Times were a Mirage" must have been written by a newbie at the Times. Any regular NYT reader knows that that there were never any "good times" since George Bush was elected president in 2000.

22 comments:

Anonymous said...

Carl,
I appreciate your commentary but were you ever going to admit you were wrong and short the market? I mean, you've missed banks falling 50-80%, retailers down terribly and now natural resources cratering. When will you recognize this as a decline? When the market is down 70%?

Carl Futia said...

Long time readers of this blog know that I never brag about my good calls and never apologize for my bad ones. This is in line with my policy of focusing on the future, not the past. If you are waiting for me to abase myself before you and then do something very stupid to boot, you will have a very long wait indeed.

The reality of trading and of forecasting is that you will inevitably get things wrong from time to time. The test then is whether you loose your nerve and make a bad situation worse, or whether instead you continue to use you methods with confidence, knowing that the odds favor longer run success.

Anonymous said...

Carl

The papers were full of similar doom and gloom in Jan 2001 (similar emergency rate cuts and breakdown of monthly technicals). Clearly, this was not a good buying opportunity.

Solrac said...

Dr. Futia,

Thanks again for sharing your views & experience.

(My attempts to read the NYT resemble wading more than reading).

Solrac

bear said...

For all your 40yrs of experience, i still think you have not learned a thing... You have been wrong this whole month and yet you post new market highs and blah blah blah!!!!

Open up the newspaper and read this... WE ARE IN A BEAR MARKET!!!

Anonymous said...

Carl,

I pointed out some months back that your previous domed house-analysis maybe from July looked to be spot on. A number of sub-indexes such as SOX and Transports looked very good in that framework ... if you weren't married to the exact timing.

Looks likes the same holds for the S&P. I think your resistance to being flexible on the timing lead to you to miss the big fall. Nothing in human dynamics works to such a strict timeframe as you or your reading of G.Lindsay's work were espousing.

Your system has a lot to say for it and is very close to something excellent. Of course no one gets anything right and in this business you only to be slightly better than 50% to make money. I amazed how many levels you do get right or close to it. So you may be doing fine, but I think you are close to something really good if you could work out some of the false signals.

I would love to see the Domed-house analysis again and where you think that you might have gone wrong so we can all learn.

Anonymous said...

"I would love to see the Domed-house analysis again and where you think that you might have gone wrong so we can all learn."

Carl is never wrong.

Anonymous said...

Maybe this will help

http://preview.tinyurl.com/yum4xq

Anonymous said...

Carl,
Following up w/ the Domed-house. Your analysis on June 29 and July 30 looks pretty spot on, except for a little bit on the timing as I have mentioned before.

So you got it right, but you abandoned it!!!

kimo said...

Carl, thanks for your blog, and the courage of your convictions. It seems you are on the contrarian side of my blog list, now. I don't know which seems farther, 1600 or the end of the first quarter.

For my part, I will watch for further developments, the passing of October being the only visible event holding promise right now for bullishness. I am sure others will occur between then and now. Thanks again, for sharing your views.

Carl Futia said...

"So you got it right, but you abandoned it!!!"

Well, I have been bullish for the past 5 years. In 2003 I thought that the bull market would end in early 2005. I abandoned that forecast too! And a good thing I did!!

So the moral of the story is that at each point in time you have to exercise your best judgment, informed by experience and statistics. The chips then fall where they may.

Anonymous said...

Front Page headline in today's WaPo Business Section:

Bear Looms Over Wall Street

http://tinyurl.com/25qvsn

TOMTHETRADER said...

Carl ,

tremendous read on the market ..too far too fast and a blow up 300 2 days in a row and finacials lead the way !!!

You don't need to listen to the bull ...just keep trading ...

http://www.ttthedgefund.blogspot.com

Tom

24/7

Gary Gagliardi said...

I agree that your domed house analysis going into the summer was right on. I got out of securities at that point and am just now starting to buy again. As I remember, part of the reason you began readjusting your analysis was because of all the negative stories in the NY Times meant that the peak of optimism hadn't been reached. You may remember that I commented at the time that this was no longer a good indicator because politics required the NYT to bash the Bush economy no matter how good it was. This makes it more difficult to call a bottom now based on the NYT. Normally, the number and density of these stories would panic everyone into selling (and some of your commenters are clearly at the "everyone knows this is a bear market" state that is the real buying signal), but the problem is that no one really believes the NYT anymore. I am waiting a few more weeks for a little more bad news to wring out the market. (And because my treasury notes don't mature until Feb.)

Trend-Signals said...

Hi Carl,

What a powerful reversal day!!!


Today, we have intraday range of:

DOW 631.86 points (5.15%)
Nasdaq 117.59 (5.08%)
SPX 69.04 (5.16%)

Qs 2.54 (5.77%)
QID 6.35 (12.60%)

http://trend-signals.blogspot.com/2008/01/big-bang-day.html

http://trend-signals.blogspot.com/2008/01/big-bang-day.html


I think that you don't need to post harassing or attacking posts since that is a waste of time. I know it since I had 1000s in the past.


Good luck,

Sharon

Anonymous said...

i do not forcast. i simply map the market and trade based on medianlines. when lines from two sets come together, it is considered important... i have a pivot sitting right above the market that is the conflunce of six sets based on all the pivots since march. the point.. is the only way price and that pivot could come together is if price moves there tomorrow....based on the dow, the pivot is 800 points above the market... i do not believe it myself, but the geometry of the market holds out the clear possibilty.

Chris said...

Hi, with regard to the 1998 analogue, readers of this blog should look at the action of the US 10yr treasury bond yields now compared to fall 1998. The statistics are the same.

Anonymous said...

Carl, I respect your technical work and your sharing of them publically on your blog. As for the ongoing NYT Front Page contrarian signals... bleh. That's like a farmer planting seed 6 weeks earlier than usual based on Punxsutawney Phil.

Anyway, it's not the NYT that's calling the bottom. They're just reporting the news. The FED panicking like a chicken with no head and the markets doing gyrations like they have no confidence in any Bush stimulus plan or the FED's desire to turn us into Japan with 0% interest just happens to be the news that's fit to print recently.

The bull technicals are broken. Yes, perhaps a good time for the dead cat bounce relief rally, but monstrous damage. I fully expect more NYT front pages from you detailing the upcoming carnage in the upcoming months and longer.

Anonymous said...

If anyone posting here is suggesting that they can "see" the future, please report directly to your family therapist. There are plenty of market indicators that will show where the boys are putting their money so you can follow their lead. But, to suggest that you know what the future will bring is......let me candy coat it....unwise. I think Carl's recent record is showing this.

Anonymous said...

HEY CARL
anonomous joe here
with all do respect to your 1998 thinking the dow is following a very close scenerio as 1966 .
even the reversal today is very close interms of time yet the percentage decline is less than
by approximately 1200 points in todays prices on the dow . we
will see how the next few years play out , if we do see a move up from here that is a bit weak and then another low into early march ( march 6th to be exact ) it might just be a double bottom or closing low . this wont be the exact as the 1966 decline but the basic closing pattern will be very close
i got faked out on the bounce above 13700 and the high in oct .
other then that the timing and the patterns in comparisons to the dow in todays prices compared to 1966
( from the july top ) are damn near the same thing time wise .
it is certainly something to dig into . in the broader sence
this would be a larger point 26
in a much larger 3 peaks domed house pattern . shorterm term
we would see a continued rally from early march into 2009
and also a move into early to mid 2010 . but the decline in 2010 into early 2012 would be point 28
down to around 9700 in the dow
and then we would see a new 3 peaks domed house devlope which would take the dow up towards 15000
before a devestating bear mkt begins taking the dow back towards
7100 or lower . this is a bit long term i realise yet so far it has been showing itself and must be considered . there is a lare resistance band in the 14704 to 15024 area that will be very dificult to get through as i see it .

ianjrblack said...

Carl, you said GOOG had support at $625 now it's $550 and next it'll be $??? or maybe $??

In truth we have been in a Bear since 2000. The DOW hasn't made new highs allowing for inflation and certainly not when the 30%+ fall of the US$ is taken into account. We have, probably, another decade of falling real values and the DOW will bottom below the 2002 nominal lows.

Yes, we will bounce now to relieve the oversold condition and to bring the bulls back to the market. This bounce won't last past the 1st week of February.

Anonymous said...

All I want to know is, was today a record number of comments on your blog?

And was it a fib number?

Take care, and good trading to all!