You were proven correct. Things have reversed from what they used to be. The overnight action used to be Up and regular hours playing catchup. Now the overnight action is often Down and the regular hours activity follows that. For the moment, the uncertainty in Europe is driving the action in the U.S. Markets. The Greeks are unlikley to <i>Make their Numbers</i> and it could lead to what should have already been done. Far better to get it over with now, than live in some fantasy world thinking that things will turn out OK.
This is not important. Doesn't matter how many times ur right and how many wrong -- it's how much $$$ u make when ur right and how much $$$ u lose when ur wrong :grin: I am not aware of any used-to-be norm, and if i had been aware it wouldn't have mattered -- cuz as soon as u or ur computer model figures out the market, it will have already switched up gameplans on u anyways Unfortunately the market only judges the future for us in cloudy vagueness. I am not even going to attempt to predict what the reasons are for the past few weeks of downward pressure. But the market has now made it clear that something indeed cruel, whatever it may be, lies ahead.
sounds odd that you wouldn't try to think of all plausible scenarios and how you and the market would react. it's a good exercise. also, i think we know the primary reason for the sell off. huge bullish sentiment and money flows preceding the flash crash and mkt pullback. further, we've had significant strengthening dollar relative to the euro in the past month due to events in europe.
well there's a difference b/t daydreaming about possible scenarios (ie. china, NK war, euro, great britain, spain, etc, etc) and actually allocating precious capital to an idea based on those empty guesses. in the final analysis the reasons don't matter and by the time i'd definitively figure out the reasons they will have already been discounted by the market anyways. only making $$$ from point A to point B matters btw, i posted smth for u in the SF Chron Warrior thread in the GARM
There was a tendency for Monday to be an Up day, but that looks like much more shaky than it used to be. A primitive computer model could have seen that. That was probably visible to those who don't even have any computer models. Perhaps too much concentration by too many in Momentum situations and not enough participation by <i>Buy & Hold</i> types. Boring Large Caps like: XOM WMT T JNJ KO etc haven't accomplished that much since March 2009. The more exotic Large Caps like: AAPL GOOG GE SPG GS etc have had huge moves Up since March 2009 and have much of the responsibility - fame - glory for <i>Moving the Numbers</i> for SPX since March 2009. I would suggest that too many were in the high Betas and the Market was distorted because of it. Now that some of the high Beta - momentum trade is unwinding, things look rough.
The short term risk is to the UPSIDE, as there are oversold conditions on almost every time frame that I look at. It is a very hard buy here, as it has that falling knife feel to it, but I would definitely not initiate a short position here. I will be waiting patiently for 1120+. With that said, the technical damage being done here is confirming my medium/long term position, that the cyclical bull is all but done, and what is next is a continuation of the longer term, secular bear spanning the last 3-10 years, depending on which sectors you are looking at. Throughout history, these mega bull/bear cycles tend to last up to 20 years. We have always been fed this fantasy that the stock market always goes up, returning ~15% a year, the best investment vehicle out there. While statistically true, tell that to those who invested in 1930, they had to wait until the late '50s to break even. Tell that to those who bought in 1966, they had to wait until the '80s to break even. Assuming that your average investor starts in his early 20s, during his first job. He has an investment life span of ~40 years, until he retires in his 60s. Take a 20 year mega bear cycle out of that, and it absolutely cripples ones investment plan. If you invested in the 1940s, or 1980s, good for you. My point is that the market is not as consistent as "they" would like you to believe. Which brings us to now, and where we are at in the mega bull/bear cycles. If our current mega bear started in 2000, then it is 10 years old, with plenty of years to go. If it started in 2007, then oh boy, it is still in its infancy. My point in all this, GET YOUR MIND OUT OF THE BOX. Out of the "buy buy buy" mentality. Fortunes were made in the 1930s as the country fell into ruin. Great short sellers like Jesse Livermore prospered on others pain, because his mind was flexible enough to go either way. He was not stuck in the box "they" put you in. If the market unfolds the way I think it will, and we enter the next phase of the great Bear, there will be plenty of money to be made. On the long side AND short. As long as you are not stuck on being an "investor", you can, and SHOULD take advantage. Good luck.
for me personally, buy & hold is a great strategy from a tax standpoint. however dividend yields have been crap the past decade and the market on the whole (US markets) has gone nowhere for more than 10 yrs now. buy & hold is 99% dependent on what price level you get in at. and right now stock prices do not look like values to me.
Excellent point. I have long gotten pass the "why"s prevalent in the psyche of most "investors". "Why" is irrelevant. Just "if, then" + stoploss. 2012, duh.
OT, but jesse livermore led an a interesting life. He was one of the richest men in the world and died broke. Kind of like pro athletes. What is the best way to do a really longterm short? I think gps makers will be in trouble with msft and goog giving away free gps.
nah he is still a tool. i didn't say the market wasn't soft when he posted it, but good god could he have been more dead wrong on his past few market calls?
I realize that one has to be very selective in looking for <i>Value</i> at the moment and had already mentioned how some of the boring Large Caps have done little coming off of the March 2009 bottom which was still quite a bit lower from current levels.
Livermore was a great trader, but there's no denying that he had some gamble in him. Reminiscences of a Stock Operator was based on him, and he definitely had his fair share of going broke in there. Being a big gambler, taking on big risk, and swinging a big **** is not necessarily a requirement for being a great trader. Although your reward is a function of the risk you take, there are plenty of traders out there that can control a drawdown, and can make money consistently rather than swinging. My point in bringing him up was just for people to see both sides of the coin, not just the Warren Buffets. Fundamentals is something I stay away from. For a core position I will be in the E-minis. For equity sectors I will pick through them and see who is the weakest when we turn over. Banks, REITs, semis, metals, OIH etc. Whichever lags will be the one I jump on.
i always keep my eyes, ears, and mind open, but this guy sucks from all the recent equity market calls i have seen. lol the hits never stop coming from him. i just looked up some more nuggets of gold from him. he called for an unprecedented world boom starting in may of 2007 :grin: http://www.tradersnarrative.com/richard-russell-dow-theory-buy-signal-925.html like i said before...at least he was right about gold.
I currently agree with the bear trend coming up. But I think there's money to be made for a small bull run starting in June. Cxbby, what do you think about a few S&P call options for June?
you are paying a lot for vol but the skew is to the put side on the vol premium. Do a call spread if you can.
Very nice bounce today. We may take the elevator up to the 1085 S&P level on this move. But, I agree with everyone else the long term move is down, way down.
Historically people flock to treasuries for security reasons right? Since the treasury auctions went badly today, this was a sign that people are not over-worried at this point (yet). I think after the auction, people got into the market instead and hence we had a rebound today. Anyone else feel the same way?
