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Quinn
Saving Enthusiast
Joined: 06 Feb 2005
Posts: 181
Cash Points ££ 2817.02
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 Posted: Wed Jun 07, 2006 10:33 pm Post subject: Bull market is over - Statistical Analysis |
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Statistical analysis says that the bull market since 2003 is over !
Okay probably over 
The problem is that economic statistics are useless when it comes to trying to forecast the stock market ! As the market tends to lead the news, so rallies in bad news and falls on good news.
So what statistics are worth looking at ?
Historical statisrtical analysis
FTSE-All Shares index has fallen by 4.6% in the 15 trading days from April 21 to May 15. Despite May's poor reputation, prices rarely fall so steeply near the start of the month. This year turned in one of the bigger 15-day declines since accurate daily records were first collected in 1936.
Trading conditions associated with previous big declines at this point on the calendar are worth thinking about. There were 10 other big late-April to mid-May declines since the Great Depression. Seven occurred during bear markets. They ranged in pain from a 27 per cent drop in 1951-52 to a whopping 73 per cent decline in 1972-74, the biggest drop of the last century.
It is not common knowledge but these seven big April/May drops were usually linked to painful Budget Day announcements a few weeks earlier of rising taxes or rising interest rates.
Two other painful April/May declines occurred in 1953 and 1986. Neither one turned into a full-fledged bear market. It is worth noting that the Spring Budget in both years featured significant tax cuts.
The sole exception to this budget-linked trend occurred in 1983. According to George Blakey"s The Post-War History of the London Stock Market, that year"s June election played a significant role in creating this exception. Labour"s Manifesto pledged withdrawal from the European treaty, a far-reaching re-nationalisation programme, exchange controls and drastic increases in public expenditures. The financial markets took fright in early-May (accounting for the big decline) but quickly regained composure once it became clear in mid-month that the Conservatives would return to power with a solid majority.
On balance, the historical evidence associated with painful late-April to Mid-May declines is plain to see. Putting political triggers aside, painful stock market drops at this point on the calendar typically occur during bear markets unless there is a tax-cutting Chancellor in power.
Here is another trend worth thinking about that popped up a few days later in the second-half of May.
As of Wednesday, May 24 shares had fallen by over one per cent in five out of nine previous days. The total nine-day drop (up days included) was almost five percent.
There were 115 other similar occasions in the last 50 years with a host of big drops in a nine-day period. History teaches that a bear market was running in 103 of those occasions.
part from 1975 (which was a fluke year), there were 106 similar periods in the last 50 years and a bear market was in place in 104 of those years !!!
If the past is any guide, a sudden burst of positive economic news or a surprise programme of tax cuts could change the underlying trend. Barring these developments, history hints of low odds for any rapid stock market improvement in the next few months.
So Those looking at this for a buying opportunity may be disappointed. |
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Joanne
Stranger
Joined: 26 Jan 2005
Posts: 8
Cash Points ££ 108.28
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| Posted: Thu Jun 08, 2006 4:23 pm Post subject: |
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| You may be right there ! Looks like its having a pretty bad day today ! Was down over 100 points last time I looked ! |
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redrose
Beginning Saver
Joined: 04 Apr 2005
Posts: 33
Cash Points ££ 544.14
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| Posted: Sat Jun 10, 2006 1:40 pm Post subject: |
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Up , down, up, down whats going on ?  |
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Quinn
Saving Enthusiast
Joined: 06 Feb 2005
Posts: 181
Cash Points ££ 2817.02
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| Posted: Sat Aug 12, 2006 1:30 pm Post subject: |
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Got this interesting email in my inbox on the state of the markets and how now is a good time to sell short on the FTSE and DoW
The up-trends in both markets from the 2002/2003 lows count to a conclusion at the April/May highs. What we're looking for now, therefore, is a pattern of five waves down and three up to confirm that the trend has changed from up to down. And that's exactly what we see in both markets. It's not a question of whether to short the market, but when. I've consistently been arguing that the June and July (in the US) breaks below the original lows were false, and that the market would rally. So it has. Now the rallies are on the brink of completion. FTSE would look slightly better if it pushed through to one more high, and note that the 78.6% retracement is at 5994. Could FTSE make it to 6000 again? Not impossible.
I've also consistently said that the Dow could push above its July high, and now it has. Is this a genuine breakout or a bull trap? The Elliott waves suggest it should be a bull trap - a false breakout, though quite how much higher it's going to go I'm not yet sure. Perhaps all the way to 11464, the 78.6% retracement. Wherever these rallies top out, the argument for shorting these markets when they've turned is compelling. The wave patterns suggest a target for FTSE of about 4900 and for the DJIA of about 9750. The present up-trends are the last push up before the down-trend, which should eventually take us to these lows, kicks off. Exactly where to place the trade and where the stop-loss should be put are not yet visible.
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Wade
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Joined: 17 Feb 2005
Posts: 185
Cash Points ££ 2569.94
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| Posted: Tue Sep 05, 2006 12:20 am Post subject: |
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Looks like its on target to hit your charts Quinn !!!
Its just about at 5994 ! Will see if it breaks above 6k or not ! looks very interesting ! |
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Quinn
Saving Enthusiast
Joined: 06 Feb 2005
Posts: 181
Cash Points ££ 2817.02
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| Posted: Tue Sep 05, 2006 4:56 pm Post subject: |
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| Wade wrote: | Looks like its on target to hit your charts Quinn !!!
Its just about at 5994 ! Will see if it breaks above 6k or not ! looks very interesting ! |
Yep, september going into October is usally the worst period for the stock market
I'm shorting the market on the rally towards 6k, looking at least at 5500 on the FTSE ! |
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Wade
Saving Enthusiast
Joined: 17 Feb 2005
Posts: 185
Cash Points ££ 2569.94
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| Posted: Sun Sep 10, 2006 5:56 pm Post subject: |
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True, so some analysis about september being the worst month for stocks, and looking by recent action its goign to live upto it  |
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