I am certain that there will be a next leg down for many
reasons. One reason is that virtually every economist and
analyst who predicted this financial crisis in the first place,
predicts that it is not over, and there are many vaild reasons why
this is so. If you're really interested in this question and
not just arguing for the sake of arguing, you have to do some
reading. Second, for myself I see clearly that if this is the
worst financial crisis in a century -- as EVERYONE agrees it
is, even the people who say its almost over -- it cannot possibly
be over. There is still way too much optimism and not nearly
enough pain and fear.
I never read Money magazine but just picked up a current copy
yesterday, to see what mainstream America is thinking and doing --
and I am AMAZED. There are at least five articles in this one
issue telling people to be invested in stocks now. There is
one article about a guy with big financial problems and one part of
the advice to him is to get his money that is not in stocks,
into stocks NOW. Wow. This is just ridiculous optimism
and its coming from the most popular magazine about personal
finance. This is also how I know there will be another leg
down. When Money magazine is telling people to be cautious
about buying stocks right now -- then the bear market will be
over. Just like the Time cover story on the housing boom
marked the top of the housing market -- right to the month.
You are right to question day trading. Most people fail at
it. But that's not because it doesn't work -- its because its
difficult. And what is difficult about it is not that its
rocket science, but simply that it is a process of constantly
playing the odds and only playing when the odds are strongly in
your favor -- and this requires discipline, patience and
consistency, and control over one's emotions -- which are difficult
qualities for most people to cultivate in themselves, especially
around money. Try day trading and you will quickly learn
whether or not you possess those qualities, and to what
degree.
Posted by bullbull on 12th of Jul 2009 at 10:31 pm
"I am certain that there will be a next leg down for many
reasons. One reason is that virtually every economist and
analyst who predicted this financial crisis in the first place,
predicts that it is no over".
first, it is wrong to use "certain" in predicting market, it
is naive.
second, you can't trust any economist on predicting the market,
the economy and market is not in sync. the economy can still be
bad, but a bull market can be born way early than economy
recover.
third, let me just show you some example on several great "bear"
who turns bullish
March 9th is a "generation" low, in Kass' s words, it is a darn
good entry point. Of course, nobody knew for sure. But trying to be
a fake "contrarian" and thinking the panic is not yet over is just
what majority people is doing, as shown by the cash level on the
side line.
anyway, I would like to quit the discussion. Just pay a little
attention to the fundamental, not just draw lines on the chart and
trying to predict the market going, it is not going to pay off in a
big way.
you are arguing that there are no certainties in the market, and
I totally agree with you, but per your argument you need to follow
your own logic, you should instead be saying "well I think
this is a bull market because of A,B, and C and therefore I
disagree with you guys, but I could be wrong because there are no
certainties". But instead you seem to be arguing with
certainty that this is a bull market, even though you said there
are no certainties. You are contradicting your logic.
For me the charts say otherwise, I think to odds favor this as
being a bear market rally. Again that is not certain, there
are only probabilites in the market, but that's what I see as being
the most probable case based on my analysis. Just like in
quantum physics, i.e. a particle does not have a set postion or
velocity, there are only probabilties, not
certainties.
Posted by bullbull on 13th of Jul 2009 at 01:36 am
I'll just list the reasoning for bullish case:
(a). Oct/Nov VIX spike is hisotric spike in record, the March
low associated with lower VIX, it shows market volitilty abating.
Does anyone imagine another LEH failing give global financial
system a shoke? Very unlikely.
(b). This is not a "Great Depression"! The US economy was cut in
half during the 1929-1932, do you imagine this case happen again,
NO. Even the most bearish economist predict slow recovery in 2010.
Other than great depression, all the rest of the crash is %50. This
time is NOT different from other time. We've seen worst times.
(c). The P/E10 is ~12 in March low. However, there is enough
reasons that why it is not as long as 1930 and 1970~ bear market
low. For example, 1970 market has huge interest rate, and no
monteory policy being applied. So we can argue you won't see signal
digital P/E10 this time.
(d). don't underestimate government money printing and stimulus,
it buys time for economy recovery.
(e). this is global economy, even we have a sluggish 2009, the
world wide economy is back on its footing 2010.
Could we in a new bull market? maybe, but we also could be on a
choppy trending market, and you can expect normal return. It is
very unlikely we will hit a March low again. Just my opinion, based
on some fundamental reasoning.
People always try to be "contrarian", it is hard to be a "real
one". When you see most of people in blog is bearish.. you get to
be wondering: which side is actually the "true" contrarian.
I don't know how EW can forecast the future. Just try to unwind
the historic Dow and S&P chart to 1970 (if you use telechart),
and try to predict what will happen, you will find it is never easy
to predict what NEXT.
Posted by shamutooth on 13th of Jul 2009 at 09:24 am
Bullbull,Why not just make it simple? Ignore everyone's opinion
because that's all it is and use Matt's KISS 13/34 crossover
on the weekly chart.It's worked very well going way back to even
the Great Depression.So,if this is going to be a horrible time as
in past post credit bubble contractions,you're protected.If we go
up from here,buy the cross and then hold for possibly years.It's
that simple and you get best of both worlds without guessing
which camp to be in.
Posted by rgoodwin on 12th of Jul 2009 at 11:03 pm
bullbull, there were quite a few replies to your posts from the
other day and all you come up with is a pointing to some economists
and their call to the end of the crash. Then you say you want to
pay attention to the fundamentals and not just draw a few lines on
the charts. FWIW - BPT has made a lot of people a lot of money by
drawing a few lines on the charts. Personally, I have traded from
those lines and damn happy I did - they beat the hell out of any
fundamental I could have found anywhere. The fundamentals don't
work in this kind of market. That's what mutual fund money managers
always talk about and if you can show me one of those guys that has
made thier clients money in the past 18 months - equivalent to the
technically analyzed and determined trade recommendations of Matt
and Steve, then I will buy you dinner. Again, I think you are maybe
a trader in a mess and needing some help and guidance. Best to keep
arguments to a minimum and take a couple weeks to learn from some
of the best in the business.
"I think you are maybe a trader in a mess and needing some help
and guidance. Best to keep arguments to a minimum and take a couple
weeks to learn from some of the best in the business.
Best of luck to you."
i'm not sure how you came up with this conclusion. I've
reviewed the posted video link from last year to this year, and I
have to see it is like chicken little running scared day by day, do
you loss your sleep some times. if you are a day-trader and have
time to stare at your monitor (maybe multiple monitors) tick by
tick, you can trade (scalp) the market this way, maybe you can
trade a relative small size portfolio to make some money.but I'm
not intended to spend my life in front of the monitor and hear my
own a heart beating.
I personally have more captial than I can trade day by day,
(>500K), I have to allocate certain amount to invest, which I
did in Feb/March, and they definitely beat the day-trading profit I
can have. I made about 10~20% one year even after I tried my
best.
lots of people claim they made a boat load of money in the
past bear market by following chart, could you elaborate your
portofolio size, and % gain? If it is (<50K), please ignore
that. how much you gain YTD? Please show me the NUMBER!
I'm really curious to see majority of people here can make money
this way, if it is true, why you are not the gain who can manange
50B $ like Jeremy Grantham?
Posted by rgoodwin on 13th of Jul 2009 at 12:28 pm
It is not deleted - it was reformatted - simply click through
the toggles and you will find the reply. Sometimes on longer posts,
I think Matt tries to shorten them up by putting them on a toggle
or attachment. But on what you just posted - you can click the
toggles - it is there. FWIW - I do not intend to reply.
Posted by shamutooth on 12th of Jul 2009 at 11:08 am
With a few members of my family in the banking business,one
thing continues to jump out at us almost universally. That one
thing is that NOBODY has sold any of their stocks/mutual funds
unless they've been forced to sell to cover living expenses. This
is not how bear markets come to an end. We are not seeing any
public capitulation,just the recurring theme of holding long term
and the markets will come back. It's just amazing to me that most
are down 50% and have not sold,and are not even thinking of
selling! Another thing they're seeing is that everyone who can is
deleveraging/consolidating like crazy,and are vowing not to
get in the credit trap again. Everything is just so consistant
with past historical examples of post credit bubble
contractions that it's just frightening to me what the future will
bring.
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next leg down and day trading?
California vs Texas
Posted by Michael on 12th of Jul 2009 at 10:07 am
I am certain that there will be a next leg down for many reasons. One reason is that virtually every economist and analyst who predicted this financial crisis in the first place, predicts that it is not over, and there are many vaild reasons why this is so. If you're really interested in this question and not just arguing for the sake of arguing, you have to do some reading. Second, for myself I see clearly that if this is the worst financial crisis in a century -- as EVERYONE agrees it is, even the people who say its almost over -- it cannot possibly be over. There is still way too much optimism and not nearly enough pain and fear.
I never read Money magazine but just picked up a current copy yesterday, to see what mainstream America is thinking and doing -- and I am AMAZED. There are at least five articles in this one issue telling people to be invested in stocks now. There is one article about a guy with big financial problems and one part of the advice to him is to get his money that is not in stocks, into stocks NOW. Wow. This is just ridiculous optimism and its coming from the most popular magazine about personal finance. This is also how I know there will be another leg down. When Money magazine is telling people to be cautious about buying stocks right now -- then the bear market will be over. Just like the Time cover story on the housing boom marked the top of the housing market -- right to the month.
You are right to question day trading. Most people fail at it. But that's not because it doesn't work -- its because its difficult. And what is difficult about it is not that its rocket science, but simply that it is a process of constantly playing the odds and only playing when the odds are strongly in your favor -- and this requires discipline, patience and consistency, and control over one's emotions -- which are difficult qualities for most people to cultivate in themselves, especially around money. Try day trading and you will quickly learn whether or not you possess those qualities, and to what degree.
"I am certain that there
Posted by bullbull on 12th of Jul 2009 at 10:31 pm
"I am certain that there will be a next leg down for many reasons. One reason is that virtually every economist and analyst who predicted this financial crisis in the first place, predicts that it is no over".
first, it is wrong to use "certain" in predicting market, it is naive.
second, you can't trust any economist on predicting the market, the economy and market is not in sync. the economy can still be bad, but a bull market can be born way early than economy recover.
third, let me just show you some example on several great "bear" who turns bullish
(1). doug kass calls the bottom
(2). one of the best in business : Jeremy Grantham calls re-invest when terrified:
(3). Barry Ritholtz calls rally
March 9th is a "generation" low, in Kass' s words, it is a darn good entry point. Of course, nobody knew for sure. But trying to be a fake "contrarian" and thinking the panic is not yet over is just what majority people is doing, as shown by the cash level on the side line.
anyway, I would like to quit the discussion. Just pay a little attention to the fundamental, not just draw lines on the chart and trying to predict the market going, it is not going to pay off in a big way.
you are arguing that there
Posted by matt on 13th of Jul 2009 at 12:15 am
you are arguing that there are no certainties in the market, and I totally agree with you, but per your argument you need to follow your own logic, you should instead be saying "well I think this is a bull market because of A,B, and C and therefore I disagree with you guys, but I could be wrong because there are no certainties". But instead you seem to be arguing with certainty that this is a bull market, even though you said there are no certainties. You are contradicting your logic.
For me the charts say otherwise, I think to odds favor this as being a bear market rally. Again that is not certain, there are only probabilites in the market, but that's what I see as being the most probable case based on my analysis. Just like in quantum physics, i.e. a particle does not have a set postion or velocity, there are only probabilties, not certainties.
"Just like in quantum physics,
Posted by jtverr on 13th of Jul 2009 at 07:07 am
"Just like in quantum physics, i.e. a particle does not have a set postion or velocity, there are only probabilties, not certainties."
Matt,
Don't forget the 6-factor formula for neutrons!!!
lolol yeah I forgot about
Posted by matt on 13th of Jul 2009 at 07:27 am
lolol yeah I forgot about that one! It's been a while since I had those classes
Ok, my A, B, C on Bull market case
Posted by bullbull on 13th of Jul 2009 at 01:36 am
I'll just list the reasoning for bullish case:
(a). Oct/Nov VIX spike is hisotric spike in record, the March low associated with lower VIX, it shows market volitilty abating. Does anyone imagine another LEH failing give global financial system a shoke? Very unlikely.
(b). This is not a "Great Depression"! The US economy was cut in half during the 1929-1932, do you imagine this case happen again, NO. Even the most bearish economist predict slow recovery in 2010. Other than great depression, all the rest of the crash is %50. This time is NOT different from other time. We've seen worst times.
(c). The P/E10 is ~12 in March low. However, there is enough reasons that why it is not as long as 1930 and 1970~ bear market low. For example, 1970 market has huge interest rate, and no monteory policy being applied. So we can argue you won't see signal digital P/E10 this time.
(d). don't underestimate government money printing and stimulus, it buys time for economy recovery.
(e). this is global economy, even we have a sluggish 2009, the world wide economy is back on its footing 2010.
Could we in a new bull market? maybe, but we also could be on a choppy trending market, and you can expect normal return. It is very unlikely we will hit a March low again. Just my opinion, based on some fundamental reasoning.
People always try to be "contrarian", it is hard to be a "real one". When you see most of people in blog is bearish.. you get to be wondering: which side is actually the "true" contrarian.
I don't know how EW can forecast the future. Just try to unwind the historic Dow and S&P chart to 1970 (if you use telechart), and try to predict what will happen, you will find it is never easy to predict what NEXT.
Bullbull,Why not just make it
Posted by shamutooth on 13th of Jul 2009 at 09:24 am
Bullbull,Why not just make it simple? Ignore everyone's opinion because that's all it is and use Matt's KISS 13/34 crossover on the weekly chart.It's worked very well going way back to even the Great Depression.So,if this is going to be a horrible time as in past post credit bubble contractions,you're protected.If we go up from here,buy the cross and then hold for possibly years.It's that simple and you get best of both worlds without guessing which camp to be in.
discussion ended. the next time
Posted by Michael on 12th of Jul 2009 at 11:06 pm
discussion ended. the next time stock prices hit the March 9th lows -- which they will -- you load up. good luck with that.
bullbull, there were quite a
Posted by rgoodwin on 12th of Jul 2009 at 11:03 pm
bullbull, there were quite a few replies to your posts from the other day and all you come up with is a pointing to some economists and their call to the end of the crash. Then you say you want to pay attention to the fundamentals and not just draw a few lines on the charts. FWIW - BPT has made a lot of people a lot of money by drawing a few lines on the charts. Personally, I have traded from those lines and damn happy I did - they beat the hell out of any fundamental I could have found anywhere. The fundamentals don't work in this kind of market. That's what mutual fund money managers always talk about and if you can show me one of those guys that has made thier clients money in the past 18 months - equivalent to the technically analyzed and determined trade recommendations of Matt and Steve, then I will buy you dinner. Again, I think you are maybe a trader in a mess and needing some help and guidance. Best to keep arguments to a minimum and take a couple weeks to learn from some of the best in the business.
Best of luck to you.
Title: reply "I think you are
Posted by bullbull on 12th of Jul 2009 at 11:31 pm
"I think you are maybe a trader in a mess and needing some help and guidance. Best to keep arguments to a minimum and take a couple weeks to learn from some of the best in the business.
Best of luck to you."
i'm not sure how you came up with this conclusion. I've reviewed the posted video link from last year to this year, and I have to see it is like chicken little running scared day by day, do you loss your sleep some times. if you are a day-trader and have time to stare at your monitor (maybe multiple monitors) tick by tick, you can trade (scalp) the market this way, maybe you can trade a relative small size portfolio to make some money.but I'm not intended to spend my life in front of the monitor and hear my own a heart beating.
I personally have more captial than I can trade day by day, (>500K), I have to allocate certain amount to invest, which I did in Feb/March, and they definitely beat the day-trading profit I can have. I made about 10~20% one year even after I tried my best.
lots of people claim they made a boat load of money in the past bear market by following chart, could you elaborate your portofolio size, and % gain? If it is (<50K), please ignore that. how much you gain YTD? Please show me the NUMBER!
I'm really curious to see majority of people here can make money this way, if it is true, why you are not the gain who can manange 50B $ like Jeremy Grantham?
Guys let's keep the blog
Posted by matt on 12th of Jul 2009 at 11:39 pm
Guys let's keep the blog conducive to trading ideas, and analysis please! The Blog is a good place, let's not let it degrade into pissing matches.
Why my post is deleted?
Posted by bullbull on 13th of Jul 2009 at 12:14 pm
My reply to rgoodwin is delted, why? This is not free of speech forum?
http://www.fluctu8.com/media/24742/39506/
Here is what the chart telling you in the verge of the bear market... :)
Your post was not deleted,
Posted by matt on 13th of Jul 2009 at 12:30 pm
Your post was not deleted, look again, it was consensed to an expanding title
bullbull
Posted by rgoodwin on 13th of Jul 2009 at 12:28 pm
It is not deleted - it was reformatted - simply click through the toggles and you will find the reply. Sometimes on longer posts, I think Matt tries to shorten them up by putting them on a toggle or attachment. But on what you just posted - you can click the toggles - it is there. FWIW - I do not intend to reply.
With a few members of
Posted by shamutooth on 12th of Jul 2009 at 11:08 am
With a few members of my family in the banking business,one thing continues to jump out at us almost universally. That one thing is that NOBODY has sold any of their stocks/mutual funds unless they've been forced to sell to cover living expenses. This is not how bear markets come to an end. We are not seeing any public capitulation,just the recurring theme of holding long term and the markets will come back. It's just amazing to me that most are down 50% and have not sold,and are not even thinking of selling! Another thing they're seeing is that everyone who can is deleveraging/consolidating like crazy,and are vowing not to get in the credit trap again. Everything is just so consistant with past historical examples of post credit bubble contractions that it's just frightening to me what the future will bring.