Get started

Intelligentinvesting

My crazy partner is Mr. Market!We are used to the fact that the world's most prominent investors are known for their outstanding deals, returns and stability of results over a long time horizon. Yes, all this is certainly a sign of excellence, but no investor has gained his popularity through books. The books he wrote. This man created his writings back in the 1930s and 1940s, but they still inspire anyone who has taken the path of smart stock investing. You've probably guessed by now who we're talking about. It's the humble author of The Intelligent Investor and Warren Buffett's teacher, Benjamin Graham. It's amazing that after many years, this book is still considered the bible of investing on the basis of fundamental analysis - Graham wrote such a thorough description of how a person investing in stocks should think. His insight into the market can be useful to anyone who is exposed to this chaotic environment. To understand Graham's philosophy, imagine that the market is your business partner "Mr. Market." Every day he stops by your office to visit and offer you a deal on your mutual company stock. Sometimes he wants to buy your stock, sometimes he wants to sell his own. And each time he offers a price at random, relying only on his gut. When he panics and is afraid of everything, he wants to get rid of his shares. When he feels euphoric and blind faith in the future, he wants to buy your share. That's the kind of crazy partner you have. Why is he acting this way? According to Graham, this is the behavior of all investors who don't understand the real value of what they own. They jump from side to side and do it with the regularity of a "maniac" every day. The task of the prudent investor is to understand the fundamental value of your business and just wait for another visit from the crazy Mr. Market. If he panics and offers to buy his stock at an extremely low price - take it and wish him luck. If he begs to sell him the stock and calls an unusually generous price - sell it and wish him luck. Of course, after a while, it may turn out that Mr. Market was not bad at all and made a very profitable deal with you. But the fact is that on the long horizon of time his luck will be washed away by a series of stupid things he will inevitably do. As for you, rest assured that tomorrow you will meet another Mister. So, as Graham has taught us, is teaching us, and will continue to teach us - you just have to be ready for it. Understanding the fundamental value of the company, this meeting will bring you nothing but pleasure!
Editors' picks
TVC:DJIEducation
by Be_Capy
22
Citigroup LongHi all, I noticed looking at a few filters on my screener that there was some high dividend yielding companies all showing good benjamin graham numbers. It was immediately obvious to me that the vast bulk of them were in the financial sector, with the narrative of most of the worlds developed populations life changed by huge degrees and the flow of money slowed for most that lending would in turn go down. I got in at $45.31 in onctober and have bought in every other month since. current total position is sitting at +22%. My initial investment was going to be long term (10Y) but I will re-evaluate if/when we reach the top of the window shown on the chart.
NYSE:CLong
by SparkTrades
S&P500: 3200 reached! What's nextLast week I showed the TVC:SPX would reach 3200+. See here . BINGO we have arrived. What's next?! Most likely a few more scribbles higher to finish this impulse off the 3070 low and then a move down back to 3070 for wave-4. As this market continues to count well as an impulse up and not as some sort of over-extended b-wave or what not, applying the impulse wave-count and the associated Fibonacci-ratios is clearly the best way to go to be as accurate as possible in forecasting this market. Extensions of this up wave are of course always possible, so don't be surprised if it blasts to 3230-3255. But all we can go by initially is standard patterns and for now it is following these standard patterns. A break and close below 3180 will go a long way to suggest wave-4 is underway. Once wave-4 is complete (and yes after 3 always comes 4!) then we should see wave-5 of wave-iii blast up to 3300s :-) Trade safe!
SP:SPXLong
by intelligent_investing
1
S&P500: ending diagonal forming?!The price action on the TVC:SPX since the May 1 high has been rather frustrating and overlapping. For one, the index is only up 3.9% since then. IMHO this means the TVC:SPX is working on a larger ending diagonal Primary V wave. Ending diagonals move in 3s (3-3-3-3-3) most of the time and this means (red) intermediate wave-c of black major wave- 3 is now underway. This wave-c then subdivides further into three (green) minor waves, which in turn subdivide into once again three smaller (grey) minute waves. Price should now and ideally be in minute wave-b of minor-c of intermediate-c of major-3 of Primary V. This means once minute-b has completed we should see a rally for minute-c to about 3175 to complete major-3. Then all that's left is major-4 and 5 which should draw well into 2020 and I suspect will complete by the time the US presidential elections come about... The alternate options is that we're dealing with a standard subdividing impulse (labeled with "alt"), but IMHO this count hinges on one data point: red intermediate wave-ii MUST be the August 23 low. If it's not then the advance of any of the other lows made in August to the mid-September high was only three waves with a final c-wave made up of 9 smaller waves. Yes the quadruple bottom in August leaves a lot to be desired. IF this impulse is however operable, then we haven't even had a (orange) micro-4 wave since the TVC:SPX 2893 low made on October 10 as that was a 67p drop while the largest pullback since then hasn't been more than 33p... So IF there will be an orange micro-4 and 5 then price will have to bottom around TVC:SPX 3040-3010 and then move to about 3125-3140 to complete minute-i. IF that happens we can then focus on the standard impulse wave. IF price drops and closes below TVC:SPX 3010 I'll be looking for minute-b of minor-c of the ending diagonal pattern to complete at around TVC:SPX 2975 +/- 25p. One of the reasons why I think we'll see once again higher prices even after a 100p possible correction is because market breadth as measured by the A/D lines, Bullish Percent Indexes and other indicators has been strong enough during the October rally to allow for higher prices once the current rather overbought readings and complacency in sentiment (low VIX, high CNN fear/greed , low put/call ratios) have been taken care off. Trade Safe!
SP:SPXShort
by intelligent_investing
4
SEMICONDUCTORS: Are you ready to get knocked off your SOX?Using Elliott wave one can determine once an uptrend has ended as the market simply has run out of waves. Here I assess the waves off the November 2008 low (yes the NASDAQ:SOX ) bottomed well before the other major US indices and has thus been a market leader since. However, it's price pattern off the December 2018 low is all but ideal and in elliott wave terms looks very much like a (very large) ending diagonal. In technical analysis terms its called a rising wedge. This is a bearish price pattern because once it completes, and it appears very close to completion especially considering today's price action, price will rapidly (here the time frame is weeks, so "rapidly" is relative) move back to the start of the diagonal which is around $1285. Given that the leader is in that case becoming the laggard, it will be quite obvious what this will do to the broader market indices. From that level we should see at least a decent bounce as ultimately the low 1000s should get revisited. Note that the big-picture elliott wave count for the TVC:SOX is not necessarily the same as for the other major US indices such as the TVC:SPX , NASDAQ:NDAQ or TVC:DJI as each index obvioulsy tracks different parts/segments of the overall economy and those are each at different stages of their social and business cycles, which is exactly what Elliott wave tracks and qualifies. Price will have to break above $1650 on the TVC:SOX to tell me my assessment of the chart is wrong, but given the very ragged (overlapping) price action this year, rather similar to October 2014-June 2015 and which was followed by an ~27% correction into early 2016, I prefer to err on the side of caution for now. Trade Safe!
NASDAQ:SOXShort
by intelligent_investing
S&P500 chopping around in the ideal target zoneNot too much to add to Tuesday's update as price continues to remain in the ideal target zone. Seems like it "wants to" tag that upper red trend line around the round TVC:SPX 3020 level, but for that to happen, 2983 must hold. A move and close below it targets low 2960s AND direct overlap with 2960 then make the whole move up off the 2855 low only three waves. Holding 2961 and then rally could shift favor to the Bulls. TBD. Bottom line; as price is staying within the ideal b-wave target zone taking profits/moving stops up is never a bad idea. But for now the trends remain up, until proven otherwise, so watch 2983 and 2960 going forward for downside setups.
SP:SPXLong
by intelligent_investing
1
NDX: Bulls only hope is a diagonal higher, but odds are slimLast week price on the TVC:NDX overlapped with what could potentially have been a wave-i of an five-wave impulse (i,ii,iii,iv,v) higher, making it therewith most likely only a wave-a of a three wave (a, b, c) sequence higher where wave-c was 1.618x a. Today the Bulls had the change to try for a possible diagonal pattern. Namely, in diagonals the 4th wave (iv/e) and 1st wave (a/i) - I label it as both numbers and letters to distinguish the diagonal from an impulse and from a corrective move- can overlap. It's not necessary but it happens most often. This overlap then confuses most traders and elliotticians not until often after the fact (when the diagonal completes). Thus diagonals are often hard to track and trade due to the overlaps. That said, the Bulls had the chance for a diagonal pattern this morning as price moved above the red downtrend line, but stalled at the 20d SMA. Obviously the Bulls need price to close above both to unlock that higher potential wave-v/e target. Alas, to no avail, as price did a 180 today and if it breaks and closes below last week's low then $7300-$7200 are most likely next (based on simple symmetry), which then gets us already into the ideal green target zone for (green) minor wave-c of (red) intermediate wave-a or possible all of a (Red) intermediate wave-ii. So, we need not worry yet about that low being either wave-a or ii, as there's yet a lot of price action to come between now and then to help us assess which it will be and at what more exact price levels. Until then, my short-term trading-system, which I feature in my StockTwits Premium Room among others ( stocktwits.com ) remains "long AMEX:SPXU = short" since last week, and with the MACD on a sell since last week as well, (not shown here) and price below its 20d and 50d SMA it is for now prudent to look down short- to intermediate-term with a focus on these aformentioned and shown price target zones. Once reached it's time to re-assess the charts and see what's most likely next. Trade safe!
TVC:NDQShort
by intelligent_investing
NDX: no impulse up off August low. Expect lower pricesThe NASDAQ100 (NDX) broke below its August 22 high and therewith invalidated its potential to do five (i, ii, iii, iv, v) waves up off the August lows. Instead it became only three: corrective. Namely, when a new move starts, even if it is five waves up or down, we can never know beforehand with all certainty if that move is an impulse (wave-1 of a 1,2,3,4,5 move) or part of a larger correction (wave-A of an ABC move). See my tweet here for example. Hence, why we must label such initial advance as wave-1/a, the retrace as wave-2/b, and the subsequent advance as wave-3/c, until one (1,2,3) or the other (a,b,c) is disproved by the markets. In this case the impulse was disproved as price overlapped with wave-i/a meaning the current decline can not be a wave-iv and so there will be no wave-v and thus thus the entire rally was a wave-a,b,c UP. Simple! In addition the wave-iii/c was only seven waves up, which means it is corrective as impulses travel in 5,9,13, etc waves. Another line of evidence pointing towards the recent rally having been corrective and not impulsive. Now that we have proper, intellectually honest Elliott wave labeling out of the way, lets look at the bigger picture options. Price can do a nice c-wave down into the orange target zone based on the standard c=a to c=1.618x a Fibonacci extensions and as long as it doesn't move below the June low it can still be a larger wave-ii of an even larger 3rd wave. IF it breaks below the June low, and especially in a five waves down move, then we have a lower low on our hands. In addition price can then not be in a (red) wave-ii anymore because 2nd waves can't go below the start of the prior same degree 1st wave, and we are then looking for a much, much larger ongoing correction, which I would label as major wave-c of Primary-IV, well into 2020. Trade safe!
TVC:NDQShort
by intelligent_investing
S&P500: can we get some downside to ignite the upside?Currently, IMHO the ideal setup would be a small c-wave down into the ideal wave-4 target zone followed by a rally to SPX3045-3075 which would then provide for a nice setup for a larger decline into late next month to adhere to the pre-election year seasonal average pattern this market has been tracking well all year so far (see here ). A break below SPX2940 from current levels would put this Bullish thesis on high alert as then only three waves up have been made: a b-wave. However, it seems somehow all roads somehow lead to Rome, where even that b-wave scenario can see SPX2700+/- 50 without any impact on the bigger picture move to SPX3800-4200 going forward. I posted about these bigger picture scenarios here . Trade safe!
SP:SPXLong
by intelligent_investing
9
S&P500: the market took the alternate route.Last week I presented two options " The first is that the S&P500 has completed classic symmetrical triangle. It is a continuation pattern, meaning that the move going into the triangle will continue. In this case it was the move from 3029 DOWN to 2822 that was the initiation move. Assuming SPX2939 was the top of the b-wave, then simple symmetry targets: 2939 - (3029-2822) = 2732. Applying triangle "rules", then depending on where exactly price will move below the lower trendline of the triangle -say at 2829- then we're looking for 2622. So we have a SPX2732-2622 target zone, which we can refine once more price data becomes available. The other options the market still has at this moment is to complete a diagonal pattern (labeled as "alt: 3", alt: 4"). A simple 5=1 then targets SPX2957. This would best count as what is called an ending diagonal in Elliott wave terms as the sub-waves count best as 3s and not 5s. A break and close below SPX2890 will take IMHO this option off the table. Note how price so far pretty much bottomed right there today... keeping us guessing a bit longer... ;-) " While the 1st option looked best, also because the QQQ's had a nice triangle pattern forming (see here ) up to last Wednesday, on Thursday the markets threw the proverbial curve-ball as it often does and thus kept us guessing longer and yet again. The price pattern in the current rally still looks and counts best as that of a diagonal, albeit it has already (far) exceeded the ideal price target of SPX2957 I was looking for in that case. BUT, with today's price action we're right back at it as price reached the 78.60% retrace of the prior decline in early August ;-) So what does all this mean? 1) the recent price action continues to morph into other options as the market provides us with its twists and turns. This constant morphing and adjustment of Elliott wave counts keeps me cautiously bullish as price is moving higher, but normally Bull runs are more straight forward and require less re-adjustments as impulse move much more predicable than corrective structures. 2) There's a considerable amount of upside gaps left below current prices, which may need to get filled first. 3) price is currently sitting right at support, which must be respected until broken. 4) not shown here, but the 50d SMA is currently sitting at SPX2948 and price will have to close below it to change trends from up to down. So as the markets continue to pull all sorts of confusing stunts I am therefore still viewing this as part of a very complex b-wave. Currently, I have no clear immediate downside set up in place, and with price above its rising 20d, 50d and 200d SMA I am therefore cautiously Bullish. IF you wonder if the rally to SPX2800-4200 has started, I must admit I have no high probability count for that yet. Until then, being cautious is probably the best approach for now. Watch the 50d SMA for further clues.
SP:SPX
by intelligent_investing
4
S&P500 got as complex as it could get: symmetrical triangle?!The month of August was very hard to forecast, track and therewith reliable trade as price raced back and forth in a 120p range on the S&P500. Life would be very easy if we'd known beforehand this would happen. But how could one know!? After several back-and-forth races the triangle option became more and more likely and today's price action combined with Friday's adds more certainty to this potential. Because remember that the market always has options to chose from at any moment in time, and it is up to us analysts to try to elucidate which option is the most likely. Unfortunately, triangles are one of the hardest to forecast and track. It's not until at least three legs have completed that it starts to move up the list from "possible" to "probable" and when the fourth leg completes it is then much more "likely". Note that triangles can even have nine legs... Because for all we know, price could have done a simple a,b,c corrective move in the form of a zigzag or flat. So we need to track all these options at first and eliminate them one by one as more market data becomes available. So, after you have read this it should become clear there are NO certainties in the markets. If you want certainty, please put your money in a savings account. If you can come to grips with this uncertainty, and realize that Elliott wave is thus a great forecasting tool that can track multiple options at the same time, and where if/then scenarios based on price breaking above or below a certain price level help eliminate options and that those price levels can help you in your trading for profit taking and/or stop(losses), then you're really starting to master your understanding of how markets work. With that in mind, let's look at the options currently available. The first is that the S&P500 has completed classic symmetrical triangle. It is a continuation pattern, meaning that the move going into the triangle will continue. In this case it was the move from 3029 DOWN to 2822 that was the initiation move. Assuming SPX2939 was the top of the b-wave, then simple symmetry targets: 2939 - (3029-2822) = 2732. Applying triangle "rules", then depending on where exactly price will move below the lower trendline of the triangle -say at 2829- then we're looking for 2622. So we have a SPX2732-2622 target zone, which we can refine once more price data becomes available. The other options the market still has at this moment is to complete a diagonal pattern (labeled as "alt: 3", alt: 4"). A simple 5=1 then targets SPX2957. This would best count as what is called an ending diagonal in Elliott wave terms as the sub-waves count best as 3s and not 5s. A break and close below SPX2890 will take IMHO this option off the table. Note how price so far pretty much bottomed right there today... keeping us guessing a bit longer... ;-) Lastly, and as said, triangles can even have nine legs... so although at this stage I don't find that pattern very likely, we should simply be aware of that option and keep it in mind until disproved. Trade safe!
SP:SPX
by intelligent_investing
5