Start of a new bear market?

[pdp-brugge]

I start this new thread because I have just viewed the last webinar from Dr. Elder.
Although Dr. Elder is normally bullish minded, in his latest webinar the tone was very clearly bearish.
He predicts that the current bull market (that started in 2009 and had 3 parts) has come to an end.
The last (third) part from this bull market started somewhere November last year and ended this week on Tuesday.
Dr. Elder is clear about it: we are going to face a bear market for minimum the next 6 months.
According to him, the presidential elections are a determining factor.
If Obama wants to get his reelection, he has got to do something to the economy.
The problems is that the FED is afraid to start QE3.
If Romney would get elected, then this bear market would come to an end.

I am a novice trader and had only 1½ year experience.
There are a lot of more experienced members in this forum.
I would like to hear their opinion.

PdP

[adam ali]

How did Dr. Elder describe the bear market to come? Most investors classify a bear market as a 20% decline. Is this what Dr. Elder is expecting over the next six months?

[ernsttanaka]

I start this new thread because I have just viewed the last webinar from Dr. Elder.
Although Dr. Elder is normally bullish minded, in his latest webinar the tone was very clearly bearish.
He predicts that the current bull market (that started in 2009 and had 3 parts) has come to an end.
The last (third) part from this bull market started somewhere November last year and ended this week on Tuesday.
Dr. Elder is clear about it: we are going to face a bear market for minimum the next 6 months.
According to him, the presidential elections are a determining factor.
If Obama wants to get his reelection, he has got to do something to the economy.
The problems is that the FED is afraid to start QE3.
If Romney would get elected, then this bear market would come to an end.

I am a novice trader and had only 1½ year experience.
There are a lot of more experienced members in this forum.
I would like to hear their opinion.

PdP

PdP,

I think you did great work developing a variation/addition to Pascal's method with your combo-mf. You have backtested it -- and are now executing it in reality. I think Elder's and the others should have limited place in your mindset. Don't worry too much about the prognosticators -- "the method will win and not the opinion".

I personally execute my option method by the rules -- and allow me some 'smart' freedom to make discretionary decisions. For instance my method says to make an adjustment when my position delta hit a certain value. When hit - I might wait with the adjustment till we move - par example over a recent high. That way I am not making my adjustment and see the market take that as a sign to turn on it heels.

I learn from Billy over the years that he allows himself similar 'freedoms'.

Please keep posting your daily updates, maybe you can add a monthly recap of the results.

Thks,
Ernst

[pdp-brugge]

Ernst,

Thanks for your words.
I'm going to make work of a track report for the combo-mf.
Yesterday (Friday) I got hit real hard due to the fact that the combo-mf turned long EOD Thursday but then everything went really down again.
It ended with the combo-mf again in cash EOD Friday.
I think it is all part of the game those whipsaws.


Adam,

Dr. Elder did not made a prediction of how steep the bear market decline would/could be.
He expressed that it probably would not be as deep as 2008 but most likely more than what we had last summer.
He isn't talking over a small pullback but rather a very large move down spread over several months.
The webinar can be viewed at http://www.elder.com/product/detail/w20120410.
He charges a fee of $ 49.00

PdP

[senco]

PdP,

I would echo the sentiment expressed by Ernst. Myself, I try as much as possible to follow backtested strategies, and I ignore the opinions of prognosticators. In fact, I make a conscious effort to ignore my own opinions if I have any :-)

CXO Advisory group tracks predictions made by about 60 well known ‘market gurus’ whose opinions are expressed in publicly available material. As a group, on the average, 48% of their predictions proved to be correct. The best are at a prediction win rate of about 65% .

At any point in time you will find some prognosticators – as well as anonymous traders - that say ‘bull’ and some that say ‘bear’.

Will Dr. Elder’s prediction materialize? I do not know. No one does. When I trade a system or follow an indicator I know it will not be right all the time. But the indicator or system do not have an opinion that needs to be proven right or wrong - the intention in using them is to make trades with the expectancy of positive results over time. It might be better to follow over years a trading system based on Dr. Elder’s indicators than to follow his expressed opinion at random.

At this point in time, indicators with long backtested history I look at indeed signal warning, and are on the verge of pulling the full exit trigger for long positions. Pascal’s 20DMF turned short. We may be just at the start of a bear market. Or we may not. Next week or next month the indicators may show something different, and I will act accordingly.

[Rembert]

The bear is contained ... for now.

http://ibankcoin.com/chessnwine/files/2012/04/awesome_17.jpg

[pdp-brugge]

Let's see what happens April 24...
Will the first domino trigger the huge descent of the entire market?

http://www.marketwatch.com/story/parabolic-move-makes-apple-a-short-2012-04-12

PdP

[Rembert]

I'm just guessing like everyone else ... but my feeling is this will be a normal 5-10% correction and not the start of a bear market. I have to agree with what has been said earlier tough. No need to guess ... just follow the rules of your trading systems/strategies.

http://marketsci.wordpress.com/2012/04/19/visualizing-the-bear/

[Charl]

The bear is contained ... for now.

http://ibankcoin.com/chessnwine/files/2012/04/awesome_17.jpg

I wonder how long this BEAR can stay under water ?

[ernsttanaka]

Pdp,

A couple more random thoughts related to your MF-Combo posts.

It is my understanding you enter a trade the moment your signal flips. At times this is when, very short term traders are expecting a contrarian move against the new set trend. Giving you instant pain kind of directly after trade entry.
How about finding a better entry method to protect you against this.
For instance you could enter in a break out over the first 5min high, or 15min high. You could enter close to the range of the pivotpoint support zone (for a long) or close to the pivot point resitance zone for a short.
But several other come to mind.

A book (http://www.amazon.com/Fortunes-Formula-Scientific-Betting-Casinos/dp/0809045990/ref=sr_1_sc_1?ie=UTF8&qid=1335734720&sr=8-1-spell)I read years ago - which I liked for a description of a formula which help you calculated the size of your "bet'/trade.

I also liked reading details of the "Turtle" method. They gave me some good insight in entering a trade, managing risk and adding if and when a trade was working in their favor. U can find the turtle method nowadays for free on several website.

BTW before I get everyone reacting that the Turtle method doesn't work anymore, that is not what I am trying to say. My interested is in the thoughts behind the method, I am interest in how a great trader thinks, not on what ever he might think on a particular moment in time.

TTY all Monday AM

Ernst

[gannfanatic]

Or one could follow the cycles......

13990

[pdp-brugge]

Ernst,

I just bought the book that you have referenced. I am going on a short holiday starting on Wednesday and will read the book on the road.
Meanwhile I have created a list of trades following my Combo-MF rules. I used TQQQ as vehicle because I believe (with the backtests that I have done) that I can rely on this trading model. The trades are these that the model should have generated from September 29, 2011 as Pascal has used this period for his ongoing "20DMF with gaps" study. For each trade I have deducted a 0.50% due to transaction and other fees that each trades has to wear.
I am looking forward to the new study from Pascal regarding the 20DMF with gaps because I believe this will further improve my model. Maybe I will not need the VSTpro model in the end...

PdP

13997

[grems8544]

A book (http://www.amazon.com/Fortunes-Formula-Scientific-Betting-Casinos/dp/0809045990/ref=sr_1_sc_1?ie=UTF8&qid=1335734720&sr=8-1-spell)I read years ago - which I liked for a description of a formula which help you calculated the size of your "bet'/trade.


As a simple note, I would be very careful about betting the Kelly size on any trade. Not only will a series of bad trades reduce your equity quite quickly, the intra-trade drawdown will most certainly cause you to abandon the strategy after just a few bad trades.

Many individuals, and one I know personally, use about 0.8 * Kelly size to size their positions. The gentleman I know has taken his portfolio down over 50%, and is now in process of rebuilding it back at a pretty good rate because the markets are cooperating. If you can tolerate 50% realized loss, then perhaps this is a good strategy for you.

Before any decisions are made, I would review Van K. Tharp's "Definitive Guide to Position Sizing". Pricey, but one poor trade saved by your learned knowledge from that book could pay for it quite easily.

By the way, the Turtle's method of adding 0.5% position as the equity moves up 0.5%N is quite a solid concept and one that I track with my own trading (paper, I don't trade this method).

Regards,

pgd

[gannfanatic]

As Gann once said "Time makes price right"

Im sure he would have said the same about Effective Volume. Time makes volume effective.

It baffles me why most traders are so preoccupied with price.

[pdp-brugge]

Or one could follow the cycles......

Gannfanatic,

Could you elaborate a bit more on that principle ("follow the cycles")?
I am curious...

PdP

[gannfanatic]

Gannfanatic,

Could you elaborate a bit more on that principle ("follow the cycles")?
I am curious...

PdP

The chart i previously posted incorporates 1 of three cycle methodologies.

The cycle i included in the chart is a natural cycle, however, i also create a geometric cycle and also an astronomical cycle. Which i have not shown.

It is possible through a technique that i devised to extract these cycles in these 3 different forms and extrapolate the results into the future therefore producing the most likely points in time for swing high and lows. I trade these, nothing else, i dont even worry about price.