Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Tuesday, October 17, 2006

Calling the NASDAQ Bottom

I‘ve had a question through e-mail about my Fibonacci retracement charts and how they were late to calling the bottom of the NASDAQ market. That is fine because I don’t need to spot the "exact" bottom of a market, I just need to spot the reversal and hop on. Those of you that follow MSW and this blog on a weekly basis do know that one of my strongest talents is nailing market reversals when they happen because it’s something I have done for years while investing in CANSLIM type stocks.

So, I invite everyone to visit this post titled: Déjà vu on the NASDAQ? posted up on Wednesday, July 26, 2006 and determine for yourself if I did see the bottom developing.

Here is some of the text from that blog entry and the chart I posted almost three months ago (July 26, 2006) and an updated chart from my annotated stockcharts file:



7/26/06: “As I was researching my archives on MSW (the archives from 2004 and 2005 are open to everyone) I found some interesting data that correlates the NASDAQ in 2004 and 2006. So far in 2006, we have had 15 down weeks and 14 up weeks. At this time in 2004, we had 19 down weeks and 10 up weeks and the NASDAQ was at a nine month low (very similar to now as we are near 10 month lows). In 2004, my daily and weekly screens started to turn south on May 9th; in 2006, they started to turn south on May 15th (about the same time).

If you look at the two charts presented in this blog entry, you will notice how the market started to weaken in May and June and with a bottom near the end of July into early August. This summer is not over but I am wondering if the pattern will turn out to be similar to the one from 2004. The old saying: “sell in May and go away” has held up over the past couple of year with opportunities resenting themselves during the fall (towards the end of October).

Several of things I was saying back in 2004 are very similar to what I have been saying over the past two months. The similarities are amazing and the current NASDAQ chart may be forming a pattern that could take a similar route as it did in August of 2004. Only time will tell but history repeats and traders are always learning from history.

NOTE: when I say history repeats; I am not saying that it repeats exactly but the charts do resemble similar formations and seasoned traders and investors can capitalize on these situations.”

Click the link for the rest of the post! Déjà vu on the NASDAQ?
Piranha

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3 Comments:

At 12:22 PM, Anonymous Anonymous said...

I am curious about your discussion on the market bottom using Fib.. It seems you are CANSLIM follower...where is the discussion about follow through days. I would also note your example of a cup and handle pattern is really a cup with a high handle. Look at the major leaders of the 1990's like MSFT, HD, etc. They formed a classic cup and handle pattern. Just a little insight from a fellow CANSLIM investor.

 
At 3:41 PM, Blogger Chris Perruna said...

There is no follow-through day with this latest move because it is not a traditional rally. We are not in a bull market because the NH-NL ratio has stayed weak. This latest move was a trend buying opportunity. As for the cup with handle pattern – one hasn’t formed for the market with the latest NASDAQ or DOW move.

My CANSLIM is a modified version – I have been using CANSLIM and IBD for six years now and have modified it into my own version of trend buying and swing trading. I clearly understand what a cup with handle is and have examples all over my main site and a few throughout this blog.

 
At 6:58 PM, Anonymous Anonymous said...

Actually there was a follow-through day for the market, but it did not come in 4-9 days after the low. It came a little later in the count and those can be riskier in terms of success. As for it being a traditional rally or not, that is not the issue. The important thing is, especially if you are a CANSLIM guy, are there quality stocks in a timely position to be purchased. And, are those stocks emerging from solid bases holding their gains. The NH-NL ratio is secondary. Also, I was not saying you did not know what a cup and handle was, but only offering you some model book ideas from the key leaders that underpinned the big market advances of the 1990's.

 

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