I said "significant" resistance. There are always resistance points, but the last time there was a semi-major trend test/bounce was at $7.50. Also consider that the 50 day MA is still all the way up there at $10. This one got sold off really hard.
9500 has been a pretty important level - will be interesting to see if market can finally break above. Congrats to all those who made some during the pop. I have to say I am surprised the rally has lasted this long and am still believing a lot lower before higher while holding almost no positions. Every person I know working in finance at higher levels is talking about funds being on a freeze, waiting for negative trickle down effect of banks to hit harder, consumer spending is at a relative several decade low, waiting for consumer credit crisis, yada yada... Might be another three months before we see a harsher consensus round of negative earnings.
Jobless claims/nonfarm payrolls/unemployment rate are Nov. 6-7. Although with the way things are going now, I'm not sure what, other than the elections being over, could bring it down in the short-term (barring a disaster).
It appears 9500 is a significant hurdle as you suggested. Some have suggested that hedge funds will need to liquidate again to raise cash in a few weeks.
You don't think the markets have already factored in bad numbers on the jobless claims -- unemployment rate? I think it will take a dip because it has been a nice rally and it needs to rest.
I actually do think it's factored in - everyone's expecting it to be a bad number. The problem arises when it's a worse number than expected. This is one stat/number I absolutely hate ... in the short-term it affects the market so much, when in the long-term it's almost always revised to a completely different number. But of course, the market doesn't really correct itself when the number is revised down the road. It's inane sometimes.
DoD Years ago, there used to be a <i>Rule of Thumb</i> that the stock market did somewhat better at the end of the month and the first week of the month. It was attributed to monthly contributions to 401K plans and other regular -- planned flow of funds. Mutual fund managers would be forced to use those funds to buy because that was the mandate that their fund(s) operated under. We have had a significant rally and we have captured the timeframe of the end of month - beginning of month. I don't know if the same <i>Rule of Thumb</i> applies under current conditions and particularly in an Election Period, but my expectations are for a dip in the near future. Even if the unemployment number and jobless claims come in worse than expected, the market has already been given as much good news as there appears to be available and appears to be getting sluggish. Some might say that the market might go down because of unexpected (bad) numbers this Friday, but I think it will go down because the <i>buying power</i> will be exhausted at that point in time.
Kaching. I'm pulling the lever and cashing in my remaining handsome positions. This market is overdue for a correction. Thanks for the nice Obama rally, but you know what they say ... buy the rally, sell the news. There will be buying opportunities galore in the next couple of days.
Mango, If you're saying the market is due for a correction no matter the method, I do agree - for some reason, I just think worse-than-expected numbers on Friday may magnify the dumping. Maybe I'm wrong. I think the current run-up was mostly due to the election combined with overselling of certain stocks. I don't know how much the end of month/beginning of month is a factor. I'll just be happy when we get back to more fundamental trading instead of markets ruled by hedge funds and mutual funds dumping stock or dying. For those of you using technical analysis, what indicators do you rely on? Are any of you strictly technical traders (foregoing fundamentals almost entirely)?
I'm around 85% cash now. The rest is in SMN, since that sector is looking like the most overbought today. Plan to cover tomorrow. When the (expected) correction is complete I'm moving back into solars and basic materials. For DoD... I'm almost strictly technical. I do look at fundamentals from time to time if I need extra confirmation or the technical picture isn't as clear as I'd like it to be, but then, generally I'll just go find something that's more well-defined and trade it. Most of the time it's just simple pattern recognition and drawing trend/support lines ... for extra indicators I like to use the MACD, and of course high volume is usually even more confirmatory. My philosophy on it is -- the market does what the market does, and I'm better off trying to read the market than trying to beat it. Price action often precedes fundamental data, and I've learned from experience that by the time you're finding out a company's got great sales growth and earnings momentum, all the big money guys have already achieved their profit targets and they'll be dumping off their shares on you. So instead of fighting that losing battle, I'll just go with the flow instead. That approach has been working great for me. It's nice to know, but the heck with it--sometimes I don't know why it's moving the way it does, but I don't care either ... all I want is a piece of the pie.
I got around 85% cash too. My only long position in equity are: LDK, FCX, FRO. Im going to go into UYM hard when there is a pull back.
DoD I am expecting a correction because we are due. If we get <i>bad numbers</i> on Friday, it might amplify a downturn some, but the media will likely try to portray <i>bad numbers</i> as a root cause for a downturn. Some things are beyond my control. I set up a Google news page to find stories about <i>Hedge Funds</i>. Some of the stories are dull, but this was interesting: Darwinian rules threaten hedge funds <i> When Greg Coffey, the sleek-haired hedge fund star, announced at the weekend that he had decided against setting up on his own and would join Moore Capital only days after leaving rival GLG Partners, attention focused on his change of heart amid the worst crisis for the hedge fund sector in more than a decade. More surprising, perhaps, is Moore’s move to expand – hiring not only Mr Coffey but a team of 12, just as many of its rivals are predicting a massive contraction in the industry. Already dozens of funds are being restructured, closed to redemptions or simply shut down. And many more are on the way, say both managers and industry analysts. Manny Roman, co-chief executive of GLG Partners, said last month: “In a fairly Darwinian manner, many hedge funds will simply disappear.” He predicted the industry would shrink by close to a third. Goldman Sachs Investment Partners, the fund that has suffered a 15.5 per cent drop in performance since it was launched with more than $6bn (£3.8bn) at the start of the year, highlighted the pressures on hedge funds last month by predicting industry-wide net outflows. Andrew Baker, deputy chief executive of AIMA, says: “There are straws breaking all kind’s of people’s backs at the moment.” Fund managers have been hit by a toxic combination of cash calls from investors and a squeeze on funding by lenders. And it is far from a UK-only phenomenon. Deephaven in Minnesota outlined last week the “extreme and unprecedented market conditions, the sudden and material industry-wide changes in margin and financing requirements being imposed by prime brokers along with pending redemption requests”. The banks acting as prime brokers, which provide a range of key services to hedge funds from custody to lending, have become more risk averse and have in some cases withdrawn financing. Several fund managers, particularly those in illiquid markets such as convertible arbitrage and leveraged loans, complain they have had to provide their lenders with significantly higher levels of collateral against portfolios. Brokers are also applying more stringent tests on the type of assets they will accept as collateral. This is forcing funds to raise cash and reduce their exposure to markets or “deleverage”. “Pressure on hedge funds is mounting from every vantage point,” said one manager. “Selling begets further selling and everyone is deleveraging”. One manager says: “Banks are withdrawing capital from us. They are simply not lending.” Meanwhile, falling asset prices have hit performance, prompting client withdrawals. This in turn has forced funds into selling more assets into falling markets. “It becomes a vicious circle,” says the head of one hedge fund group. “And in illiquid markets such as leveraged loans and convertibles it is a huge crisis”. <b> Even before the latest bout of market turmoil starting in late September, about $30bn was withdrawn by investors in the third quarter, according to industry insiders. That is from a market of more than 10,000 funds and $1,700bn of assets, according to data providers Hedge Fund Research. If client redemptions add up to 15 per cent in total, says one manager, that could mean funds have to find $255bn to pay back to clients by December. “If the average hedge fund has two-times leverage,” he says, “the industry may be forced to sell $500bn in assets between now and the end of the year.”</b> The impact on performance will be severe. Hedge Fund Research reckons that across the board in September net asset values were still more than 11.5 per cent below the high watermark reached in October 2007. “The performance decline is the most significant in duration and magnitude that the industry has ever seen – and it was worse again in October,” says Ken Heinz, president of HFR. The last time the hedge fund world faced such as a severe downturn was in 1998 when Long-Term Capital Management foundered, prompting a systemic crisis. And then, says Mr Heinz, average hedge fund performance fell just four months in a row before recovering. While the market has been horrible for most funds, some special situations have hit certain funds particularly hard. Last week’s leap in the Volkswagen share price, after Porsche claimed to have doubled its VW stake through derivatives, may have hurt as many as 100 funds, according to industry insiders, including Odey Asset Management and Greenlight Capital. Being big and diversified is no longer a defence as correlations increase between markets that were expected to move in opposite directions. Funds, notably multi-strategy funds, which touted the virtues of having many different fingers in different pies, found that diversification was not such a benefit this year. They say correlations between markets that have historically moved in opposite directions are now moving in tandem. Declines in one market have spread rapidly into others as managers have deleveraged. “No market has been immune,” says a London-based manager of a multi-strategy fund. Like many in the industry, having sold his most liquid assets he is now selling his less liquid investments. Longer-term, he says, he has to come up with a way of addressing clients’ desire for access to their investments at short notice with the longer-dated investment horizon needed to invest in illiquid assets – whether it is emerging market equities or long-term bank loans. His dilemma is the same as for other hedge fund managers. Many have announced measures to restrict redemptions or ringfence illiquid assets to prevent cash calls forcing them into fire sales. Last week Deephaven announced it was suspending withdrawals from its $1.6bn Global Multi-Strategy fund and working on “a plan for its continuation”. GLG has closed its Market Neutral fund to redemptions while it is locking illquid investments in its Emerging Market fund, previously managed by Mr Coffey, into a separate vehicle. Nevertheless, for all the doomsaying, the actual number of funds going into liquidation – about 350 in the first half, according to HFR – is not yet substantially different from previous years. In the meantime, Moore Capital seems a rare example of a hedge fund feeling strong enough to take the opposite view, expanding its workforce with some opportunistic hires.</i> <hr> With Hedge Funds being in a lessened position for the forseeable future, the upsides in many markets might not be as high as some might think. Technical Indicators... I look at moving averages for different time intervals and watch for crossovers. The trend and support lines that <i>JeopardE</i> mentioned are also worth monitoring. However, when the markets looked oversold about 4 weeks ago, I bought without relying on anything technical. I try to be open minded and look at many things. I found this link Price Time Volume Investing on one of the blogs that I regularly read. I had been watching UNG for a while and when he wrote this: Natural Gas Approaching Long Term Trendline, I bought that day.
I agree on a correction. You do realize that for the past 4 years the only reason the GDP increased was because people were pulling out equity from their homes to buy consumer goods. Otherwise, we would have been in a recession then. Wait until the alt-a loans get downgraded look out. This run up has been because of oversold stocks and an overall feel good psychology from the election. But if you are holding longterm, just buy some short etfs or puts to hedge.
Who are you asking? The recent posters in this thread (<i>crossover, benchmoochie, JeopardE, Dr of Dunk</i> and myself) have made our POV clear. <i>robbie380</i> doesn't divulge as much. To get a different POV, another person will need to join in. <hr> It looks like some profits are being captured in LDK, STP and FSLR
