1993: early warning as blow-off conditions develop in the background. factors predefined
TRANSCRIPT
Momentum Structural Analysis
© 2011
Momentum Structural Analysis (MSA) has provided proprietary technical research exclusively to institutional
clients since 1992.
MSA has taken technical analysis beyond
the old orthodoxies of “price chart analysis.”
Price chart action is literally what everyone sees, fundamental and technical market-watchers alike. Too often price action imparts a
false sense of confidence in a trend, and misleading notions of
support and resistance.
MSA seeks to trend changes, before such changes become widely
noticed and acted upon by investors and
portfolio managers alike. This professional
objective requires both a solid method and
experienced application of that discipline.
anticipate
Technical analysis, if properly used, should be done by
professional technical analysts, in the same way fundamental analysis should be done by professional fundamental
analysts.
We do the work.
As a professional technical research organization, we
functionas an adjunct technical department
to our clients.
The client firm then utilizes this technical input in the manner
best-suited to its style and needs.
We produce the analysis.
Any fundamental or technical research firm can cherry-pick from
among its many reports to highlight research successes.
Instead of that approach, this short visual introduction to our method
will focus on The 6 Major Market Trend Events
of the past seventeen years.
We will show via actual, archival MSA reports , what we said and when we said it.
MAJOR MARKET EVENT #1
THE BLOW-OFF OF 1995-2000
Analysis:
•1993: Early warning as blow-off conditions develop in the background. Factors
predefined.
•February, 1995: MSA signals that the blow-off has now begun.
February 8, 1993
“…clear presence of a major momentum
justification for a blow-off…the preconditions being delineated at this time.”
“The blow-off is a rare market phase which is built from pent-
up frustration…(from an) inability to reach a level which
equalizes supply/demand factors.”
“Blow-off ‘solves’ the problem by pendulum
swing to historical excess…”
Identifying technical pre-conditions is helpful, but it is more important to identify
trigger points - the points of action. Massive downtrend line on quarterly momentum of Dow (and S&P) was waiting overhead. It would be 8 quarterly bars later before this oscillator would break
out over this structure.
February 23, 1995
Quarterly momentum structure on S&P 500 breaks out. (This oscillator
in point-and-figure format).
“Expect increased volatility to now
begin, and probably not to return for
several years.
MAJOR MARKET EVENT #2
2000 TOP
Analysis:
•Annual momentum breaks massive support in first days of
Jan. 2000•MSA forecasts this as major top - equal and opposite to the blow-
off buy signal of Feb. 1995
Before we look at the 2000 reports, a broad-stroke look at
price and momentum from 1994 to end of 2000.
Price chart on the top is in quarterly price bars. Note:
uptrend intact through end of 2000.
Major structural violation in first days of first quarter 2000.
Unequivocal breakage!
Prior low of late 1999 also not violated. Therefore, no major
price chart damage. Price chart breakage did not occur until 2001, three hundred points
from the high.
Annual momentum oscillator (bottom chart) shows quarterly
ranges plotted vs. 3-year average.
Momentum provides a different vantage point from widely-watched price charts.
Momentum usually warns of price change.
Jan. 4, 2000
“S&P annual momentum breaks 5 year uptrend”
“…equal and opposite signal to Feb. 1995 buy signal…”
Jan. 9: “Last week did damage…I, as a technician, can’t overlook or forgive the
breakage.”
“The market might for a while ignore and forget what it did due to countervailing and more near-term pressures to the upside in miscellaneous sectors, but I think this signal is a solid sign that the year 2000 is likely to turn out differently
from the past 5 years. It’s been ‘pre-announced’ in my opinion.”
MAJOR MARKET EVENT #2
2000 top Minor event: Enron
Analysis:
•MSA warns of pending downturn in ENE
•Specifies actionable numbers
“…heightened concern about the
health of this trend…”
Suggested sto
p-
out below $75
MAJOR MARKET EVENT #3
2002 Bear Market Low
Analysis:
•Prior to the bottom MSA explains the “Major” long term nature of upcoming
market low•Pre-defines price zone of
bear market bottom
July 20, 2002 Weekend Report
At time of this report, S&P was at 850 and collapsing
in slabs. The following week, it would make its
first low at 775, to be followed in October by a
final low at 768.
“The market’s obvious intent to destroy all of its previous mal-investments in one fell-swoop has shortened (the)
natural clock, and made the likelihood of a major low – in this move – all the
greater…market forces want to be cleansed totally and in excess now. So
be it.”
All long-term momentum trend factors were arguing for
a major low. And in each case, the indicator provided a
general level for that low. Plus, there was much
agreement between the various indicators.
For example, the 10-yr. avg. oscillator of S&P, tracing back decades, argued for support along the bottom of the
massive trend channel.
The consensus of long-term momentum indicators of the
S&P 500 suggested a likely low for the bear market
“between 815 and 757.”
The final low was in October 2002 at a price of 768.
The report concluded “The market has now put itself into
the category of years which were major lows: 1931/1932,
1938, and 1974.”
MAJOR MARKET EVENT #4
2008 Sell Signal, S&PAnalysis:
• MSA defines nature of pending annual trend breakage
• Specifies actionable number
Annual trend breakage specified as trade to
1456
Signal soon occurred; index dropped 200
points in the next two weeks
MAJOR MARKET EVENT #5
2009 Bottom, S&PAnalysis:
• MSA defines action from October, 2008 to early 2009 as bottoming
process
• February 24, 2009 report specifies target low
10 days before bottom.
Forecasted Major Low “soon”
Low close was 676 the following
week.
At time of this report, S&P was at 772.
Target low specified as 722 for that week
or 670 if low occurred following week.
MAJOR MARKET EVENT #6
2011 TopAnalysis:
• End of 2010, S&P at 1257. Most analysts project S&P to reach1500
in 2011.• In contrast, MSA projects
minimum downside in 2011 to reach 1170s
“MSA’s technical view…issued at the beginning of 2011, was that at some point in
2011 it was highly likely that the S&P 500 would at bare minimum trade down to its 1-
year moving average.”
At time of this mid-year report, S&P 500 still above 1300.
By August, S&P reached MSA’s bare minimum downside objective of 1177, and then some.
Only then did Major Wall St. firms rapidly revise downward their previously positive
projections.
THE 6 MAJOR MARKET EVENTS
Of The Past 17 Years
•Blow-Off 1995-2000•2000 Top
•2002 Bear Market Low•2008 Sell Signal S&P
•2009 Bottom•2011 Top
Momentum Structural Analysis
•SPECIFIED actionable numbers
In each of these major events, the proprietary methodology of
•ANTICIPATED the massive trend changes
•PRE-DEFINED the nature and time-scale of the changes
Basic Research Services•Ongoing assessment of major U.S. indexes
on all time-scales: long-term, intermediate, and near-term
•Assessment of sectors and sub-sectors
•Technical relative performance of sectors v. broader market and relative technical performance of component stocks within sectors
•Continual monitoring of key markets outside of U.S. stocks: bonds, oil, gold, dollar, and major foreign indexes
Expanded Research Services(in addition to Basic Services above)
•Portfolio sifting: monthly assessment of each stock in client portfolio Includes full technical health assessment of stock – support, resistance,
trend-change potentials, working targets
Contact usFor more information, please contact
Michael Oliverat
(720) 379-8416 (phone)(336) 706-0471 (cell)
MSA is happy to provide a complementary 30-day trial of our research services to institutional clients. Please make your request via email to the
address above.