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Wall Street close watch

  • #1
  • First Post: Edited Jan 25, 2008 10:12am Jan 8, 2008 11:59am | Edited Jan 25, 2008 10:12am
I've learned somewhere that once Dow breaches the 10% off the last high, a corrective period is declared.

That is, not a short term correction or profit taking.

It would be the (temporary) end of the bullish period (that goes back to 2003, if I'm not mistaken).

I want to know it this 10% off is indeed a milestone to start seeing the market in a different way.

Not in the following chart, lines show the big bounce off 12.5K that was 10% off the 14 K high and the bounce off 12,723 that was 10% off 14.2K

In time, Dow is close to the 10% (12,700) area again, after a monster rejection off 12.9K this morning

For the records, the reason of this thread is because I'm trading carry trades only.
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  • #2
  • Jan 8, 2008 12:59pm Jan 8, 2008 12:59pm
Adding to the cause:

Troubles in housing-related markets proved too much for the broader market to overcome and Wall Street once again saw chances frittered away for its first rally of 2008.
(...)

But the market remained rife with the belief that unless the Federal Reserve steps in with bold moves at its meeting later this month Wall Street is heading into a prolonged bear-market correction.
  • #3
  • Jan 8, 2008 1:29pm Jan 8, 2008 1:29pm
Quoting cesarnc
I want to know it this 10% off is indeed a milestone to start seeing the market in a different way.
this 10% correction thing is just a baseless tradition. there is a lot of history in the US stock market, and we have developed all kinds of names and sayings to go along with the price action.

the word "correction" itself implies that when the stock market goes down its only a temporary thing, and that soon the stock market will resume its normal course (which is up, of course). obviously this is a bunch of BS... when the yen goes down in value, we dont call that a correction, we say the price is going down!
Relax and be happy.
  • #4
  • Jan 8, 2008 1:37pm Jan 8, 2008 1:37pm
Well, it looks like an important level, at least psychological, at least for the short term takers.

Bulls are catching Dow Jones's underware everytime it drops under the 12.8K
  • #5
  • Jan 8, 2008 2:25pm Jan 8, 2008 2:25pm
Quoting cesarnc
Well, it looks like an important level, at least psychological, at least for the short term takers.

Bulls are catching Dow Jones's underware everytime it drops under the 12.8K
Just lost the underware... Now it's all about trading naked in The Street
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  • #6
  • Jan 8, 2008 2:30pm Jan 8, 2008 2:30pm
Hey ces,

One thing you might trying to get a slightly different picture, if your software will do it, is to plot the dow prices on a logarithmic scale. Ive found that method will simetimes give a slightly different picture.

Beartrade
  • #7
  • Jan 8, 2008 3:32pm Jan 8, 2008 3:32pm
Not only lost the 12.7K as it lost 12.6K and was saved by the bell just bellow... LITERALLY!

Let's see how the dreaded 10% off highs will play out now.

If not a big time milestone, it's sure support turned into resistance now..

Cya all as soon as another creepy biz pops up in NY
  • #8
  • Jan 8, 2008 3:41pm Jan 8, 2008 3:41pm
See what I mean?

Stocks skidded back into correction territory as investors worried that the tumbling economy may not only cripple mortgage lenders like Countrywide Financial but create problems for other companies like AT&T.

The Dow Jones Industrial Average and S&P 500 moved back into "correction" territory, having fallen more than 10% from their recent highs for the second time in recent months.

- CNBC
  • #9
  • Jan 8, 2008 8:57pm Jan 8, 2008 8:57pm
The low on the S&P for 2007 is only a quick drop away at 1363.98

Ominous !!

Maybe a triple bottom will line up with March and Aug '07 lows?

Will be watching keenly.
  • #10
  • Jan 8, 2008 9:03pm Jan 8, 2008 9:03pm
Well according to Martin Zweig's book, a corrective or bear period comes in when the market falls 20%. If i remember correctly.
  • #11
  • Jan 8, 2008 9:37pm Jan 8, 2008 9:37pm
While somewhat arbitrary, many traders consider 10% a "real" correction. However, it doesn't always signal a bear market. There were quite a few 10%+ corrections from 1997 to 1999, but each year ended with double-digit gains. (1998 saw the S&P 500 falling about 20% during the LTCM fiasco, but it had a massive recovery in the late Fall.)

Perhaps the volatility was a warning sign of things to come (2000-2002), though.
  • #12
  • Jan 8, 2008 10:09pm Jan 8, 2008 10:09pm
Yes since there are corrections in bull market and bear market.

A correction is a retracement against the dominant trend at the moment whether that trend is up or down.

More than a retracement of 10% in an uptrend is when it starts to be called a bear market. How much more I don't know. You'll know it when you see it.

But upto 10% is just a correction.
  • #13
  • Jan 9, 2008 2:01am Jan 9, 2008 2:01am
Quoting John Pope
While somewhat arbitrary, many traders consider 10% a "real" correction. However, it doesn't always signal a bear market. There were quite a few 10%+ corrections from 1997 to 1999, but each year ended with double-digit gains. (1998 saw the S&P 500 falling about 20% during the LTCM fiasco, but it had a massive recovery in the late Fall.)

Perhaps the volatility was a warning sign of things to come (2000-2002), though.
I see...

This 10% area would be then a gray area. If there is no reason to go "bear" it's a awesome discount to build positions. If there is, it's the milestone to declare bears inda house...

Let's watch...
  • #14
  • Jan 9, 2008 5:05am Jan 9, 2008 5:05am
Just heard Piracy up 10% on the year (International maritime bureau) could explain where it's all going from the markets!

It's mostly happening off the coast of Somalia. Is this where one ends up as a sacked bluechip CEO?
GOD IS NOT SHORT OF CASH
  • #15
  • Jan 9, 2008 6:30am Jan 9, 2008 6:30am
Thread's name changed so we can extend the discussions here.

Today Dow futures point to +50 open, right at the dreaded "line in the sand" 12.7K.

Bargain hunting pointed as the reason. Question is whether or not there are nervous sellers right there waiting for a window to sell because there were stucked to the "it will get back soon" motto yesterday :
  • #16
  • Jan 9, 2008 11:48am Jan 9, 2008 11:48am
Quoting SunTrader
A correction is a retracement against the dominant trend at the moment whether that trend is up or down.
not on wallstreet!!! in the US stock market, a correction means a down move ONLY. this stems from the belief that the normal course for the stock market is up. to me its quite foolish to believe that any market has a "normal" course - ANYthing can happen, and does!
Relax and be happy.
  • #17
  • Jan 9, 2008 11:50am Jan 9, 2008 11:50am
Quoting cesarnc
Bargain hunting pointed as the reason. Question is whether or not there are nervous sellers right there waiting for a window to sell because there were stucked to the "it will get back soon" motto yesterday :
it aint looking good for the longs right now!! LOL

at this point im thinking the panic will overshadow the bargain buyer and drive the market lower. are you in this thing cesar, or is it only the carry trade aspect you are concentrating on??
Relax and be happy.
  • #18
  • Jan 9, 2008 12:44pm Jan 9, 2008 12:44pm
Quoting merlin
it aint looking good for the longs right now!! LOL

at this point im thinking the panic will overshadow the bargain buyer and drive the market lower. are you in this thing cesar, or is it only the carry trade aspect you are concentrating on??
Only the carry trades, which, by the way, are not responding to the whole US freakout.

Asia is selling Yen for higher yields and the panic and the NY selloffs are not hitting the Yen.

But UJ is already squeezed in a triangle (flag, wedge, whatever) and should break out of this range soon.

I'm just grabbing bites in GJ because of the GU freakout ahead of the statement, just like last month, that GU was soldoff hard before the news...

In this case, sell the rumour, buy the news LOL.

P.S. Dow just turned red today. Bargain hunters turned to prays. LOL.... 12,5K is the next key figure (Aug low).

Below that we will be back at the "Is Bernanke next on the hitlist" thread ROOOFFLLLL
  • #19
  • Jan 9, 2008 1:08pm Jan 9, 2008 1:08pm
Quoting merlin
not on wallstreet!!! in the US stock market, a correction means a down move ONLY. this stems from the belief that the normal course for the stock market is up. to me its quite foolish to believe that any market has a "normal" course - ANYthing can happen, and does!
I've heard some refer sometimes to a correction to a correction?
  • #20
  • Jan 9, 2008 4:27pm Jan 9, 2008 4:27pm
Dow found bulls on corporate data and closed at the 12.7K lord of the truth.

20 days to Bernanke "cut, but inflation is a concern" BS

All bets are off, imo.

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