Posts filed under “Markets”

Chart of the Week: 10 Week Moving Average AAII Bullish Sentiment

Kevin Lane notes the moderating of excessive bullishness
recently is a net positive for the markets:

10 Week Moving Average AAII Bullish Sentiment   
click for larger chart

10_week_ma_aaii_bulls_217

Source: Technimentals

KL:  “The fact that bullish sentiment has moderated, not
expanded, on this recent move up in equities is a positive. It suggests to us
investors are NOT totally complacent yet.”

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Random Items:

IBM taking open source on world tour

Plugging Into Your Home

China, India move closer in trade

Silicon Insider: R.I.P. Microsoft?

No monopoly on modernity

Can This Black Box See Into the Future?

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Quote of the Day: 

"We must not, in trying to think about how we can make a big
difference, ignore the small daily differences we can make which, over time,
add up to big differences that we often cannot foresee." ~ Marian Wright Edelman

Category: Markets

Granville Predicts 2005 Dow Crash

Joe Granville is a very well regarded technician (now in his 80s) who has had some terrific calls in his career, and a few duds  as well. On Bloomberg, there was a story on his most recent commentary, but I cannot seem to find it now; It more likely got moved than disappeared for nefarious reasons.

Anyway, Joe just got Bearish big time. Here’s an excerpt:

"Joseph Granville, who accurately forecast in 2000 that U.S. stocks’ bull market would end, is at it again. He expects the Dow Jones Industrial Average to suffer its biggest annual loss this year since the Great Depression.

“We’re in the critical portion of a coming collapse and the market’s screaming to get out,” said Granville in an interview from Kansas City, Missouri. “Everyone’s bullish. There’s going to be a tremendous surprise and it’s going to be to the downside.”

"Granville, publisher of the Granville Market Letter since 1963 and a technical analyst for almost 50 years, also foretold a stock-market decline in 1976. He misfired in 1982 and 1995 by calling for losses before share prices surged.

The 81-year-old analyst expects the Dow average to retreat to at least 7400 by year-end. The forecast amounts to a plunge of 31 percent. The last year in which the benchmark fell that much was 1937, when it lost 33 percent.

As a technical analyst, Granville predicts the market’s direction by using criteria such as trading and price patterns, rather than earnings and economic growth. He started developing his stock market theory at what was then E.F. Hutton & Co., a New York-based brokerage, from 1957 to 1963."

That bodes well for my 2005 forecast, as Joe tends to be early. I’m still looking for one last strong move up — Dow 11,700, Nasdaq 2600 — before it all heads south. Note that also gives me the opportunity to stay long if the uptrend remains in tact.

One of the key mistakes to avoid – call it the peril of predictions — is to  never marry a forecast, especially your own. People wrap up too much ego in what is essentially educated guesswork. If you start with the assumption that your prediction is going to be wrong, its real easy to reverse yourself when necessary . . .

If you are interested in learning more about Granville,start with this article — Just Like Old Times as Joe Granville Yells `Sell’ — it gives some background on him if you are unfamiliar with his work.

Some more background on Granville:

Timing the Market
http://www.vectorvest.com/research/timingthemarket.htm

Joe Granville, father of the On  Balance Volume (OBV) and its analysis
http://www.paritech.com/paritech-site/education/technical/indicators/strength/onbalance.asp

Bibliography of Published Books
http://www.amazon.com/exec/obidos/search-handle-url/index=books&field-author=Joseph%20E%20Granville/104-3776013-8226334

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UPDATE: March 18, 2005  7:09 am
Mark Hulbert provides the details on Granville’s track record. Not impressive (unless you are a fan of the Black Swan event . . .)

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UPDATE: I still cannot find this anywhere, but a friend captured the text. Here it is for your enjoyment:

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