Is March the New May?

[Tomanyiron]

I have been looking for a system that foretells a market turn for going on 7 years and umpteen-thousands of hours. I have said to myself many times, “I think I’m about to have this thing figured out”. But inevitably as with all systems that are “figured out”, other people see what you see and jump on board. All the “other Toms” start using the same system and before long, it’s gets weaker or even disappears.

However I have determined a few wasteful predicting methods;
1- It can’t be just about the numbers, or all the computer whiz kids would be rich. Well most of them are, or going to be. But that would remove the “market” aspect of the market. Don’t you think?
2- National and world news events play a part. But often it looks like they just cause a hiccup.
Finance news? There are so many people not watching, or can’t understand the lingo. They just buy or sell irregardless of what the “talking heads” are saying.
3- Oversold and overbought, “This rally is long in the tooth”. Which is the idea that prices are too high (or too low), and can’t go any further that way. That one has burned me more times than I can remember. May have some value in the “risk v reward’ department, I guess.

I think the secret lies within the study of human behavior. Not the smart guys, but the mob/herd mentality.
The greed/fear aspect of the market. And how the heck do you see that? Well I’m looking and I found a few. I’m using chart patterns. Now let me say “this is more an art, rather than a science”. And it takes lots of self-discipline. There-in lies the problem, have you ever seen a self-disciplined artist? I think they are called engineers or architects. Which gets back to the “whiz kid” thing.

OK, enough of the mumbo -jumbo. I present one chart of what I think interprets human behavior in the markets. See the “W” bottoms buys, it means something in the mob/herd mentality, I’m sure?
(I apologize for some diagram mistakes)

http://schrts.co/WCYFbM


Oh, and for the title, has global warming and the “sell the rumor” changed “Sell in May, and go away” to “The Arch forms in March”?

[docrings]

Great post, and great observations! This "game" is tough... unless you dollar cost average over an entire lifetime. But, that's not the challenge of this website.

I think you are on to something!

[cswift01]

I'll let the others reply to your self-made chart, although one thought that comes to mind is that it only shows July 2015 as the beginning. Maybe a 10 year period would give more info?

One comment I would like to make is the sickness that I get from reading different pundits. Particularly, I've been spending my time looking at Marketwatch (probably a bad website), but I found the daily banter of bull vs. bear to be entirely misleading and quite annoying. I'm not sure if others have better suggestions...but I'm ready to give up on reading about the market from the pundits point of view.

Me

[Tomanyiron]

I'll let the others reply to your self-made chart, although one thought that comes to mind is that it only shows July 2015 as the beginning....

Thanks for looking, and I know it only shows resent market action. For a good while before 7/15, everything was "V" bottomed. What changed market participants behavior?

I think the market is fluid, and never can be expected to have fixed shape. That goes back to my OP. All systems before long get weaker or disappear.

Anyone got any thoughts on what cause the "V" bottoms to change to modified "W"s, for the past 21-22 months?

[GodWeTrust]

Oh, and for the title, has global warming and the “sell the rumor” changed “Sell in May, and go away” to “The Arch forms in March”?

The whole global warming narrative is a myth put out by the socialist left to further their own agenda. Don't let them suck you in.

[evorgsumaf]

Probably a stupid question, but...

Why not buy on the first bump instead of the second one? Wouldn't you gain a little more when it goes back up?

I honestly don't have any idea, I do what the seasonal gurus tell me to.

[Tomanyiron]

Probably a stupid question, but...

Why not buy on the first bump instead of the second one? Wouldn't you gain a little more when it goes back up?

Yes you are right, but that would take lots of discipline. Look at Sep-Nov last year. From Sep 22 (first bump) to Nov 4 (true bottom) the SP 500 dropped another 3.6%.

However you would have gained it back plus more before Christmas. And if held on until today gained about 10%.

[evilanne]

I think the secret lies within the study of human behavior. Not the smart guys, but the mob/herd mentality.
The greed/fear aspect of the market.
<snip>
I present one chart of what I think interprets human behavior in the markets. See the “W” bottoms buys, it means something in the mob/herd mentality, I’m sure?
(I apologize for some diagram mistakes)

http://schrts.co/WCYFbM

I'm not sure if you are referring to the top or bottom part of the chart when you refer to the "w" bottoms buys. When I look at the INDU part, it looks like W bottom for Sep-Oct 2016 (think this was oil/china issues) & Jan-Feb 2016. It seems like much of the volatility from 2014 - 2016 has to do with the unwinding QE by the FOMC and market tantrums all which relates to the psychologic aspect of the market.

[crondanet5]

Nice chart Tommie-- Number 4,632 I believe. Two things I note in today's Pending Allocations: TSPBuilder is going 100% G Fund and Tomanyiron is not going into the market on this second bump. Contrarian moves here?

[mattch45]

I agree with one thing you said, Tom. The key seems to be in studying human behavior. I would suggest the only predictive value in chart patterns is to predict the apophenia of others.

[crondanet5]

match45 also watch the price of oil at 1500 EST.

[Tomanyiron]

I agree with one thing you said, Tom. The key seems to be in studying human behavior. I would suggest the only predictive value in chart patterns is to predict the apophenia of others.

I was about to take offence.
Apophenia, the human tendency to perceive meaningful patterns within random data.
But then I saw the "of others", Ha Ha Ha.
I do sometimes see clouds that look like bunny rabbits.

[Tomanyiron]

I'm not sure if you are referring to the top or bottom part of the chart when you refer to the "w" bottoms buys...

Yeah, in the top portion of the chart, the Price Momentum Oscillator (PMO). That's where I'm seeing my apothecia messages.

[evilanne]

Yeah, in the top portion of the chart, the Price Momentum Oscillator (PMO). That's where I'm seeing my apothecia messages.

That is a much better descriptive....so it should be Buy on the 2nd apothecium rather than bump

[Tomanyiron]

I started off too complicated, what about these patterns? Does anyone see the pareidolia? Use the link below the chart, to look up close and to follow in the next days/weeks/months.


http://schrts.co/QMkIYT

Pareidolia gets a bad name, but I like to argue that our ancestors may not have survived if not for using patterns they found. The seasons, animal behavior, and patterns in materials, they learned. And we are hard-wired that way. The trick is to not succumb to confirmation biases on a position already taken.