Louetta's Lore

[skiracer]

Sure it would. Reread my post, Rob - what is needed is an indicator or pattern to alert you that the stock has exhibited bottoming action. Whether it's a bullish divergence between price and a technical indicator, or something like Paul Desmond's 90-90 indicator, there has to be some indication to distinguish between further selling (distribution) and an end to the selling (accumulation).

Dave,
I Googled Paul Desmond. Actually his name is the same as the Paul Desmond that played saxaphone for the Dave Brubek Quartet so most of the stuff in the Google was on that Paul Desmond. I did find something on him and it was an interesting read and did mention his 90-90 indicatior. Apparently a pretty sharp trader with some interesting and sound thoughts on the markets.

[IIC]

Sure it would. Reread my post, Rob - what is needed is an indicator or pattern to alert you that the stock has exhibited bottoming action. Whether it's a bullish divergence between price and a technical indicator, or something like Paul Desmond's 90-90 indicator, there has to be some indication to distinguish between further selling (distribution) and an end to the selling (accumulation).

I hate to admit it...But the more I read what Dave has to say the more I have to agree with him...OK...Not really...LOL...Well Maybe???...Actually, Dave and I got off on the wrong foot at another group which we both since quit over at Yahoo last Fall...Maybe because we both like to be right???

But I will publically admit that the reason I like Dave is because he posts stuff that makes me think and re-evaluate...I don't always agree...But who is right???...No matter...I like people who make me think and he is one of the ones that does that...Thx Dave...You have been a big help...Doug(IIC)

[Lyehopper]

Here's a little more, ah, mystique. I want to keep this basic photo because I had a request for more eyes.

Hey college girl, I recognize that garment!....

http://new.wavlist.com/movies/163/ah-toga.wav

[ParkTwain]

Desmond's 90-90 idea

This seems to be relevant to the entire market, not to individual stocks.

http://www.silverbearcafe.com/private/needtoknow.html

//
Desmond went back over 70 years of market history to search for volume and price patterns that marked the end of bear markets. He found that the final down leg of every bear market had what he calls 90-90 days. These are days in which 90% of the stocks in the market fell and 90% of the volume on that day was to the downside. Once the down leg ends and the market takes an up turn and that rally has had a least one 90-90 day to the upside.

According to Desmond, "important market bottoms are preceded by, and result from, important market declines. And important market declines, are for the most part, a study in the extremes of human emotion. The intensity of their emotions can be statistically measured through their purchases and sales. To clarify, as prices initially begin to weaken, investor psychology slowly shifts from complacency to concern, resulting in increased selling and an acceleration of the decline. As prices drop more quickly, and the news becomes more and more negative, the psychology shifts from concern to fear. Sooner or later fear turns to panic, driving prices sharply lower, as investors strive to get out of the market in a panic. It is this panic stage that drives prices down to extreme discounts - often well below book values - that is needed to set the stage for a new bull market."

Desmond uses 90-90 days as a sign of panic activity in the market. It isn't enough that the market just drops, but that it drops with intensity. 90-90 down days come "when downside volume equals 90 percent or more of the sum of upside volume plus downside volume, and points lost equal 90 percent or more of the sum of points gained and points lost."

Such days come during the final down leg that ends to form a bear market bottom. They are then confirmed with an up leg that has 90-90 days to the upside. It is important that the bottom is confirmed with at least one 90-90 up day afterwards, as a confirmation that real buying is taking place.
//

Also, am I wrong to think that the end of distribution in a stock is not the same thing as the beginning of accumulation?

The volume in the market was declining through the month of August, and the indexes (and most stocks) were declining during that time. This tells me we have an absence of buyers. Most participants are selling. Things turned back up again, when the buying interest returned after the Fed decision.

As I had posted elsewhere, for an individual stock, if the ADX's -DI measure stays low in an absolute sense (<12), then even with an absence of buying interest (a more volatile yet downtrending +DI), I can still have confidence that the next move is likely up.

[IIC]

Here's a little more, ah, mystique. I want to keep this basic photo because I had a request for more eyes.

Well...I'm glad that I have so much influence on what women want to post as their avatar.

Geez...We go from Sis's watch to Louetta's eyes!!!

BTW...We have a thread under the PORTRAIT GALLERY thread called WHO ARE YOU where we encourage people to post pics of themselves and families.

My pics are 2 years old...I don't have a digital camera so I don't have too many...However, on Saturday we are going to Miami and a 7 day cruise on Sunday...13 of us going and someone will have a digital camera so I will post what a "FUN GUY" really looks like...Unless they all come out crappy in which case I won't post my pics.

That reminds me of when I went to my 20th HS reunion back in '91...Alot of people said that I looked the same as I did in HS...At work the next week I told this woman what they said...Her response..."Oh, you looked 38 in high school"?

[billyjoe]

Louetta,
Don't tell me you were Jugdish's girlfriend in Animal House.

------------billyjoe

[IIC]

Don't be too hard on yourself. Poormans model is off 6.8% for the year. His selected mutual funds are up 4.5% for the year though. My recollection is he usually kicks butt seriously in the last quarter of the year. Part of the reason I keep saying I expect to piggyback off his stuff in a month or so. I think last year he gained 20-30% in the last quarter though that might have been 2004.

I don't feel bad...My list is just for new ideas...The reason I am delaying it is because if people visit and the market is not doing so hot and/or the list is not doing well at the time...they won't come back...the success key to a site is repeat visitors....I can get new visitors all day long for a price...But I want repeat visitors...Thx...Doug

[DSteckler]

Dave,
I Googled Paul Desmond. Actually his name is the same as the Paul Desmond that played saxaphone for the Dave Brubek Quartet so most of the stuff in the Google was on that Paul Desmond. I did find something on him and it was an interesting read and did mention his 90-90 indicatior. Apparently a pretty sharp trader with some interesting and sound thoughts on the markets.

Paul is the president of Lowreys Reports and a super-nice guy. He is also one sharp cookie. Paul was a bigwig in the Market Technicians Association and is one of the founding members of AAPTA (American Association of Professional Technical Analysts). FWIW, I sat on the MTA's Dow Award Committee the year his paper on the 90-90 was chosen to be the award winner.

We had lunch together a few weeks ago when I was down in FL and I'll be seeing him again in two weeks at the AAPTA Brainstorming Session.

[DSteckler]

<< Also, am I wrong to think that the end of distribution in a stock is not the same thing as the beginning of accumulation? >>

Nope, you're not wrong. An exhaustion gap, for example, is the clearest indication of the end of selling pressure, but not necessarily an indication of accumulation.

[DSteckler]

Louetta,
Don't tell me you were Jugdish's girlfriend in Animal House.

------------billyjoe

ROTFLMAO!!!!!!!!! This has GOT to be the post of the year!

[Rob]

Dave, I read Desmond's 90-90 paper. In fact I digested all 17 pages. I like it. It is a good study and very interesting. But I fail to see how it in any way contradicts my statement that there has to be a significant number of investors who will begin buying in a technical downtrend when they see good fundamental reasons for it. (Or else how would the 90% up day reversal ever occur? or the back-to-back 80% up days?) So I have to stand by my original observation, i.e. that if everyone were to wait for technical reversals, those reversals would never happen. (This was in response to Louetta's remark about buying stocks that others have been dumping, with which I agreed, with the proviso that there be sound, fundamental reason.) From the foregoing I think I would also logically argue that it is the fundamental investors who in fact make market reversals. I think perhaps Mr. Desmond would concur.

[skiracer]

Dave, I read Desmond's 90-90 paper. In fact I digested all 17 pages. I like it. It is a good study and very interesting. But I fail to see how it in any way contradicts my statement that there has to be a significant number of investors who will begin buying in a technical downtrend when they see good fundamental reasons for it. (Or else how would the 90% up day reversal ever occur? or the back-to-back 80% up days?) So I have to stand by my original observation, i.e. that if everyone were to wait for technical reversals, those reversals would never happen. (This was in response to Louetta's remark about buying stocks that others have been dumping, with which I agreed, with the proviso that there be sound, fundamental reason.) From the foregoing I think I would also logically argue that it is the fundamental investors who in fact make market reversals. I think perhaps Mr. Desmond would concur.

Rob,
Can't agree with that statement about the fundamental investor being the one's that make market reversals. To many different areas of money and trading to make such a broad statement. Who and what are you including in the scope of fundamental investors. I wouldn't include hedge funds in that area. I also think that a large portion of traders/investors are looking at both the fundamental and technical aspects of stocks and the markets in their decision making processes. It is an interesting topic for discussion and points of view.

[peanuts]

...I also think that a large portion of traders/investors are looking at both the fundamental and technical aspects of stocks and the markets in their decision making processes. It is an interesting topic for discussion and points of view.

I will raise my hand here. Precisely the way I approach opening an initial position in my momo and MT portfolio. Not so much for my LT port, as that is influenced primarily by fundamental research, with the timing of the trade restricted to 3, 1-month timeframes out of the year.

Timing of an entry is the key to any trade, short or long. Planning the trade based on an entry point will guarantee the outcome good or bad.

As far as WHAT makes a stock reverse from a recent trend- all I can offer to the discussion is "investor sentiment", but I'm not sure there is a way to put a value on that to determine inflection points where one begins to outweigh the other (long vs short, or buy vs sell) I'm guessing that it must be a combination of factors (i.e market, stock, cycle, news, etc.) which shape the LT sentiment by investors in a stock. Fluctuations in the ST do not mean much to the group of people whom eventually reverse LT trends.

[Louetta]

Hey college girl, I recognize that garment!....

http://new.wavlist.com/movies/163/ah-toga.wav

That is, ahem, a dress.

[Louetta]

I don't feel bad...My list is just for new ideas...The reason I am delaying it is because if people visit and the market is not doing so hot and/or the list is not doing well at the time...they won't come back...the success key to a site is repeat visitors....I can get new visitors all day long for a price...But I want repeat visitors...Thx...Doug

But what will your strategy be? To always recommend people always be invested or to suggest when and when not to buy the list. If the later you need worry less about the list not doing well. Perhaps people won't come back because you tell them to be in cash and they don't want to hear that but others will figure you actually know something about what you're doing and they will stick with you waiting for a recommendation.