Stock Market Top Appears In (9 months in, and 750 points lower.)

[McD5]

Hi all.

Take it for what it is worth, and time will decide how correct I am.

From using technical analysis for 19 years, my experience and charts tell me that we topped yesterday for the entire year of 2010.

10,723.76 was the precise high, and we should not go above that again.

Exactly 10 years to the date of the last stock market top.

Not to cause any alarm, but what should happen next is a severe drop lower.

Last year's market lows should be tested, and we may even break through them.

The market trades mainly on patterns and movement, and not so much on news. And the market typically moves 3-6 months before the news is known.

I believe 3 months from now, that people will furious, as they realize that the stimulus plan created no new jobs, and the American household received no money from any of it.

Banks got paid. No jobs were created. And Americans still have a ton of debt.

I hope I am incorrect. But the charts say otherwise. They are forecasting severe pain.

I post this to try to help people from falling into the buy-and-hold farce, and destruction that resulted from it over the last decade.

The market is below where it was ten years ago. 10 years of nothing.

The average American lost 33% of their entire retirement portfolios last year alone. Hopefully they will be smarter this time, and use sound money management.

Basic stop-losses should be applied.

I will bump this later this year to see if we aren't several thousand points lower.

[Mark The Homer]

This will be fun to follow...

[mjah]

So should I keep all that SEP-IRA money in cash instead of dumping it into mutual funds? What do I do?

WHAT DO I DO?!?

(That prediction doesn't sound as far-fetched to me as it once did...)

[SkinsHokieFan]

So should I keep all that SEP-IRA money in cash instead of dumping it into mutual funds? What do I do?

WHAT DO I DO?!?

(That prediction doesn't sound as far-fetched to me as it once did...)

In my case, should I even keep contributing money at all?

[McD5]

Some will say to just buy-and-hold.

Many of those people and firms, have spent the majority of the last year writing checks back to investors for following such a strategy, and for allowing such large losses to transpire.

For a decade that has been wrong. If you believe that is the best way to continue investing, you might also be upset that Vinny was fired.

Prudent investing would suggest that simple stop-losses be entered.

Pick a % amount. 5%, 10%. Whatever amount of a drop that you are comfortable sustaining.

If the market drops that %, then take the appropriate action. It isn't difficult.

If I am totally incorrect, and the market just continues higher, you are still invested.

If I am correct, you are saved.

Good luck to all.

[Burgold]

In my case, should I even keep contributing money at all?

If you are feeling skittish there are actually quite a few really good stocks with very low PEs high earnings and solid yields (+4%). You'd do better than most CDs or bonds and still have more than a fair liklihood of capital growth especially if you have a decent sized time window.

[McD5]

In my case, should I even keep contributing money at all?

I would. But into a FDIC insured money market for the time being.

[Destino]

Some will say to just buy-and-hold.

Many of those people and firms, have spent the majority of the last year writing checks back to investors for following such a strategy, and for allowing such large losses to transpire.

For a decade that has been wrong. If you believe that is the best way to continue investing, you might also be upset that Vinny was fired.

Prudent investing would suggest that simple stop-losses be entered.

Pick a % amount. 5%, 10%. Whatever amount of a drop that you are comfortable sustaining.

If the market drops that %, then take the appropriate action. It isn't difficult.

If I am totally incorrect, you are still invested.

If I am correct, you are saved.

Good luck to all.

Good advice. I always use a stop loss because frankly you never know when the slide will start. Stocks fall FAST and they aren't secured by anything. All my investing activity has been on real estate the last 6 months and will be for the next year at least. In fact I'm already looking for additional funds offering nice returns... sadly it will be taxed as income.

[McD5]

This will be fun to follow...

Only if it is 100% incorrect.

Otherwise, just like the same pattern the market followed in the Great Depression--one year bounce, then violently lower to new lows, it is going to suck hard.

[Burgold]

Only if it is 100% incorrect.

Otherwise, just like the same pattern the market followed in the Great Depression--one year bounce, then violently lower to new lows, it is going to suck hard.

Unless, you are wrong. The market does tend to follow certain historical patterns, but it isn't particularly rational or predictable in the very short term. Generally, you don't get into very predictable patterns until you look at five year snapshots.

[McD5]

Unless, you are wrong. The market does tend to follow certain historical patterns, but it isn't particularly rational or predictable in the very short term. Generally, you don't get into very predictable patterns until you look at five year snapshots.

Agreed on the longer the time, the more predictable the pattern.

And the patterns I am talking about right now are very long in time.

Just everyone please be smart.

[nyskinsfan56]

In my case, should I even keep contributing money at all?

You need to still contribute just for the tax breaks now at least. I've been readjusting my SEP lately to a more cash/high yield bond position and less in stocks. Also not contributing as big a % - good to have cash on hand (as worthless as it may become!) for emergencies/big purchases if credit becomes more scarce.

[da#1skinsfan]

In your buy and hold strategy, what have you grossed in the past year?

You do not need to give real numbers, ratios are fine. Jan 1 2009 start $1000, Jan 1 2010 end _____.

[Burgold]

Just everyone please be smart.

This is always good advice. Always build a measure of caution. Being greedy gets one killed.

[greenspandan]

Last year's market lows should be tested, and we may even break through them.

i find this extremely hard to believe. the market bottomed out around 6500 last year. i would be willing to bet a large sum that it does not go below that mark in 2010. i'm not saying it will go up by any means. but i am saying that predicting a 40% decline is irresponsibly alarmist and unwarranted.

[McD5]

In your buy and hold strategy, what have you grossed in the past year?

You do not need to give real numbers, ratios are fine. Jan 1 2009 start $1000, Jan 1 2010 end _____.

I don't buy and hold anything for more than a few weeks in most cases.

I am not suggesting doing that at all.

The market is lower than where it was ten years ago.

[China]

Hi all.

Take it for what it is worth, and time will decide how correct I am.

From using technical analysis for 19 years, my experience and charts tell me that we topped yesterday for the entire year of 2010.

10,723.76 was the precise high, and we should not go above that again.

Exactly 10 years to the date of the last stock market top.

OK, I'm a little confused as to what you mean by this. Are you referring to the DJIA? That topped out at 13,930.01 in 2007, not 10 years ago. Can you please clarify what you are referring to?

[McD5]

i find this extremely hard to believe. the market bottomed out around 6500 last year. i would be willing to bet a large sum that it does not go below that mark in 2010. i'm not saying it will go up by any means. but i am saying that predicting a 40% decline is irresponsibly alarmist and unwarranted.

It seems extreme for sure.

Almost hard to type.

But that is what the charts are telling me, much like a Dr. uses x-rays.

Just be careful. The market has rebounded sharply--mainly due to money being printed by the gov't, and employment prospects and GDP appear bleak.

I would simply suggest some stop-losses to protect from any sharp decline happening.

[McD5]

OK, I'm a little confused as to what you mean by this. Are you referring to the DJIA? That topped out at 13,930.01 in 2007, not 10 years ago. Can you please clarify what you are referring to?

If you have access to Dow charts, take a look at 1/14/2000.

The Dow hit a high of 11,750 on that exact date, ten years from yesterday. And exactly 1,000 points higher than yesterday.

And look at what happened after.

The Dow dropped to 7,197.

The same pattern should repeat here.

[FanboyOf91]

Only if it is 100% incorrect.

Otherwise, just like the same pattern the market followed in the Great Depression--one year bounce, then violently lower to new lows, it is going to suck hard.

I don't know if it'll play out like that. We have far more extend-and-pretend this time around than in the 1930s.

[China]

I understand you are predicting a drop based on a previous pattern. However in your initial post you stated that the "last" top was the one you are referring to 10-years ago. I am stating that was not the "last" top. There was one more recently, i.e., in 2007.

[McD5]

I don't know if it'll play out like that. We have far more extend-and-pretend this time around than in the 1930s.

I pray it doesn't.

I hate negativity, and I certainly don't want to be the one spouting it.

But, a lot of people thought the housing market would only drop 10%.

Our dollar is damaged, job prospects nationally aren't great, and the American household received nothing from the bailout.

They had a chance to correct this--by giving large tax rebates directly to the people, which would have created new jobs, it would have stopped foreclosures overnight, and it would have saved the banks too.

Instead, they left the American people out. They paid the banks, and special interest groups.

And the consumer is still there, trying to avoid foreclosure, with job prospects getting worse.

Just be careful is all I am saying. Trying to help people avoid a bad situation.

[McD5]

I understand you are predicting a drop based on a previous pattern. However in your initial post you stated that the "last" top was the one you are referring to 10-years ago. I am stating that was not the "last" top. There was one more recently, i.e., in 2007.

Actually, that top ten years from yesterday was the all-time high, inflation-adjusted.

Even higher than in 2007.

The Dow did go higher in 2007, but not in inflation-adjusted terms.

But didn't mean to confuse.

If you have charts, you can see what I am talking about.

[China]

Actually, that top ten years from yesterday was the all-time high, inflation-adjusted.

Even higher than in 2007.

The Dow did go higher in 2007, but not in inflation-adjusted terms.

But didn't mean to confuse.

Inflation-adjusted. That's the clarification I was looking for. Thanks.

[McD5]

Inflation-adjusted. That's the clarification I was looking for. Thanks.

Yep. Sorry. I should have made it more clear in the original post.