Comments on: Are we Nearing a Top?

By: chrisperruna.com » Blog Archive » A Natural Correction or Top?

chrisperruna.com » Blog Archive » A Natural Correction or Top? — Fri, 22 Jun 2007 13:35:21 +0000

[...] On May 24, 2007, I wrote an article titled: Are We Nearing a Top [...]

By: chrisperruna.com » Blog Archive » Don’t be Greedy

chrisperruna.com » Blog Archive » Don’t be Greedy — Tue, 19 Jun 2007 13:54:20 +0000

[...] Are we Nearing a Top? [...]

By: dk

dk — Mon, 28 May 2007 13:59:10 +0000

Nice post. The idea of not selling until a true sell signal comes along is worthy advice. I typically evaluate each posiiton on its own merits. This approach finds me holding many stocks during pullbacks, as they never flash true distribution. These often possess the bonus feature of bouncing back the fastest of all.

By: David

David — Sat, 26 May 2007 12:32:46 +0000

Hello Chris, this is my first reply, your website is the shit, anyways, I’ve only been investing in stocks for 2 months, do you think it is best for me to buy large cap stocks instead of small caps because of the markets strange behavior at this present time and my lack of experience.

By: Terry Zink

Terry Zink — Sat, 26 May 2007 04:07:18 +0000

Oops, a copy and paste error led me to make some erroneous conclusions. Let me fix them right now.

Starting March 2003, on the Nasdaq, SP-500, Dow, NYSE, Russell 1000 and Russell 2000, there is a negative correlation between the year-over-year gain and the % gain 1-6 months out.

However, for the Nasdaq, SP-500, Dow, and NYSE, going back to 1991, the relationships are statistically insignificant for all time frames. On the Russell 1000 it is slightly positive (except for 1 month where it is insignificant). On the Russell 2000 it is a negative correlation. So, this indicator depends on what time frame you pick. The decision for the investor right now is if the 2003-2006 pattern will hold, or if the historical pattern will hold?

By: Terry Zink

Terry Zink — Sat, 26 May 2007 03:49:27 +0000

I just checked the NYSE, SP-500, Dow, Russell 1000 and Russell 2000. The relationship on all of these indexes is statistically significant, and there is a negative correlation. The higher the year-over-year % return, the smaller the gain 1-6 months out.

By: Terry Zink

Terry Zink — Sat, 26 May 2007 03:44:33 +0000

These numbers bear out on the Nasdaq. I did some historical testing and calculated the year-over-year % return and then calculated the % return over the next 1-month, 2-months, 3-months, 4-months, 5-months and 6-months. I then determined the correlation between the two.

In each case, there is a negative correlation and the relationship gets more negative the longer the time frame. This is true for all historical data on the Nasdaq and using a more limited time, beginning March 2003.

By: Chris

Chris — Fri, 25 May 2007 13:04:17 +0000

Only sell shares if they hit your stops. Don’t sell for the sake of selling! If anything, take a portion of your profit if you don’t feel comfortabel (maybe 1/2 or 1/3 off the table). But again, don’t sell for the hell of it because you can’t outsmart the market.

By: Mark

Mark — Thu, 24 May 2007 18:01:59 +0000

Chris,

Thank you again for your warning sign!!
Because your signs have been pretty important indicator for me, i am very concerned with my market involvment at this time. Just like many traders, i am bearish about the market, yet my portfolio is fully invested. Should i get rid of some of the shares i have??