Become a New Crash Millionaire

[Hook Shot]

In post #38 most of you will have noticed that the proposal would make it EASIER to short stocks.

What some of you may not know is that the regulation was passed some time ago and came into force over two years ago............

That means there is little or no restiction to SHORTING a falling market ANYMORE !!!

This means that markets can now fall further and faster than they ever have before!

Why would SEC sanction something like this ???

 

[fibonelli]

I'm sure the PPT have been busy over the last two days.

 

[Hook Shot]

They may have been busy today .... but I think they announced their strategic agenda some years ago... in fact just one year after the bear market lows!

To my mind they said we must now plan for the Mother of all meltdowns... but first batman we must remove the obstruction to short selling.... so when it goes it won't even touch the sides......

We were so busy focusing on the new bull market as everything started going up that most did not have time to realise what the implications would be.... But for investigative market reporters I'd still be in the dark...

Time will tell.

 

[Hook Shot]

The Economist - hedge fund blow ups ?

Always interesting to hear what The Economist are saying..........

http://www.economist.com/finance/displaystory.cfm?story_id=8787486

 

[hungvir]

Always interesting to hear what The Economist are saying..........

http://www.economist.com/finance/displaystory.cfm?story_id=8787486

Interesting article and interesting topic at an interesting time I would not have been here if there hadn't been last week's sell-off.

Thanks for all the links,

Hung

 

[Hook Shot]

Gamplan ...... what gameplan

Lets have a go.........just over a week after the mini-crash and everything seems pretty calm.
We got a big rally in dow Tuesday ......... the first up day since last weeks mess.

If we are in a fast move south........ you would not expect to get a rally which last more than 4d. This means theoretically we could still fly into Friday and still be WEAK.... Real fast moves don't tend to exceed a two day rally.

Today is second day of rallies in Europe and we may get higher prices in US.

Anyway......... I'm reviewing big name UK and US stocks to find out which ones to consider for a potential move south. I'm looking at Financials (banks, fund managers, insurance) and also Technology.

I'm particularly interested in knowing where the recent swing highs are.... initially. But I'm also interested to find out what other factors may prevent them going down fast in the case of a slump.

There are a few bid stories swirling around many so I need to be careful and do some more due-diligence. Ideally I want to stick with those which are highly unlikely to be taken over ..... GE, Microsoft.. but strangely their prices are pretty low by comparison..

I have no idea whether this bounce has legs - but I'm preparing just in case.

More later perhaps.......

Ps. Officials are still churning out scary stories ........... Bernanke yesterday spoke about systemic risk of Freddie Mac and Fannie Mae .... not new stuff but in this climate it caught my eye.

And another thing - I find the relentless rise in OIL prices to be very interesting indeed

 

[catracho]

If the rally fails here - next move down could be severe...however feels like we will rally a couple of days more...then fall..then depending on whether it stops before recent lows, or breaks them we may get a more sizeable and tradeable rally...see charts...

of course that may have been "the correction"...and we rally to new highs...but for the mo I give that less probability mho

 

[Hook Shot]

As you probably know Catracho, Old Bill sees new highs once this thing is over....!
He also sees the pullback to form higher bottom...rather than new lows....
He's implying the washout has seen it's lows - at least he believes a higher bottom is more probable.

Clearly I don't know but it's interesting that when Fidelity's Guru took out a large put in Dec the Ftse was around 6260.... and it topped out near 6276 today..... if 6000(down 6%ish) was all he was expecting ....... we've (I've) probably made far too much of his comments..........

But if you believe he was really serious........and we're gonna get more than just a quickie then keep on your toes!

Dow within 50pts of rally highs so if we tip over today that fine by me....

 

[catracho]

yes read Old Bill...

in which case maybe we get a move like in June last year...see chart..I am sure that the mkt will give us better levels to get in long if the rally to new highs has not finished...


not an expert on EW theory..but maybe we are in wave b (up) of a-b-c correction of rally from June 06..so still have wave c down to come..which would fit in with test of lows..or slightly new lows before we head north again... (any expert wavers feel free to correct me!) DOW and DAX similar move to FTSE..

 

[Hook Shot]

This bounce back is cool but don't forget the issues mentioned in articles above do not evaporate after one reversal day. I want the markets to rally especially if I can get a decent entry... No, I want them to rally because I/we get better prices to take out bearish positions.

I'm long and so would love for the Dow to test or make new highs... but that is just a tactical consideration - strategically I'm still assembling The Plan ....... although the options component is hard to assemble since volatility is relatively high......... we really need that to settle down again so we can get properly positioned for the Big One. On the flip side the volatility in indices and fx particularly yen currency pairs is obviously very welcome - lol.

The Plan is a work in progress..... but hopefully the bounce back will last long enough to allow me to develop it further......... Yep I really want the markets to go up and steadily - cos I'm just not quite ready yet........... and anyway markets usually give us a second chance.... fingers crossed.

 

[Hook Shot]

Many More Shoes To Drop...

Just had a look at http://www.bloomberg.com and it was frightening...

the bloomberg link is live-news so if you see this too late the headlines will have changed and you will have to use the search function to find the relevant stories....

Hedge funds are now saying this Sub Prime Mortgage fiasco has legs...... and will get much worse .... :!: :!: :!:

 

[ammo]

hook im reading your thred 5 hrs later but i looked up yen its up 56 and us dollar down 35 should be another big down turn tommorrow,spus only down 4

 

[Hook Shot]

ammo - hopefully should be more interesting than Thursday....!
However, I've got to be careful not to get tooooooo bearish and stay light on my feet - float like a butterfly & sting like a bee.... at least that's the intention.

 

[Hook Shot]

Consensus seems to be swinging to the view that the shark is dead and it's now safe to go back into the water.........

Volatility is collapsing (as measured by vix index) so options can now come back into consideration for playing the biggie....

Some chart players are looking to take out the Feb highs ..............as a last hurragh ... before a bear market..takes shape. Providing more prep time.

If they're right lets hope the rise is steady -with sharp countertrends!
=================================================================================

Previously, I mentioned v. briefly the role options might play in strategy.....
This time I want to suggest that you become familiar with the dymamics of trading a big index - i.e a volatile one with plenty of points.... on offer. Depending on your account ...margin might be prohibitive worth investigating nonetheless.....

In Asia there are the Hang Seng and Nikkei but only Nikkei is usually available out of normal hours...
Nikkei recently lost 1800pts top to tail in the recent washout - that was almost 10%.... Dow was barely off 7% in the down move....( 860pts).

In Europe there is the Spanish Ibex at 14000+ and the Italian Mib at well over 36000. Trading hours are limited but Mib goes on a few hours after the regular italian sesh closes.

For practical purposes you can't beat the US indices which are quoted around the clock and looked at from a funny angle the Sp futures could be 14,200+ .....

Still a work in progress...........

 

[Chocolate]

interesting thread...the distance covered down is equal to that which has been covered on the way up but over a shorter time period, so to profit you must somehow make use of the speed of the move, I guess either by options, or volatility, or by doubling up as it goes down making sure to keep the stop just far enough away making use of the advantage that retracements on a down-leg are usually a smaller percentage (I think!). I don't know any broker that offers vix options, so for me the "doubling up" method would be the most obvious in theory though risky in practice.

So you need to find instruments for which that percentage retracement is least or that move very smoothly. My personal choice would be the Russell 2K. I'd be interested in alternative suggestions but I'm more treading water at the moment - I'm still trying to create that "space around me" of profits I'm prepared to lose and trying to stop doing silly things like over-leveraging (trading too big) usually as a result of placing intraday trades and letting them turn into position trades because they don't give me the price I'm looking for.

 

[Hook Shot]

interesting thread...the distance covered down is equal to that which has been covered on the way up but over a shorter time period, so to profit you must somehow make use of the speed of the move, I guess either by options, or volatility, or by doubling up as it goes down making sure to keep the stop just far enough away making use of the advantage that retracements on a down-leg are usually a smaller percentage (I think!). I don't know any broker that offers vix options, so for me the "doubling up" method would be the most obvious in theory though risky in practice.

So you need to find instruments for which that percentage retracement is least or that move very smoothly. My personal choice would be the Russell 2K. I'd be interested in alternative suggestions but I'm more treading water at the moment - I'm still trying to create that "space around me" of profits I'm prepared to lose and trying to stop doing silly things like over-leveraging (trading too big) usually as a result of placing intraday trades and letting them turn into position trades because they don't give me the price I'm looking for.

Thanks for your message Chocolate.
Many ways to skin this cat as you know ..you've given me food for thought.
It's particularly helpful to get into the practicalities of playing the big move as it will likely be a sustained affair - rather than a few days of crashing prices -when the time comes....

Regards

 

[Hook Shot]

Haven't forgotten...........

http://www.newswithviews.com/Devvy/kidd260.htm

 

[Hook Shot]

Respected technicians are calling for the rally to go into jun/july at the very least...............

Who knows ? But things do "look" pretty strong .......

However, I would advise that now is a good time for
(1) selecting laggard stox which might benefit from a rally into the summer
(2) preparing/finalising a strat which enables you to benefit IF the prolonged rally scenario goes pear-shaped.

I'm bargain hunting with amd/mot in us large caps but........ trying to do the same with uk large cap too...... tried Astrazeneca which worked well......... but many laggards out there !!!

 

[Hook Shot]

Respected technicians are calling for the rally to go into jun/july at the very least...............

Consensus is now gathering around a mid June top (90d from Mar lows, 12m anniversary of lows) and lower high in July...then we're off to the South Pole.

I'm long and its great fun..... but I know this can't go on for ever sadly :cheesy:

... And before you say it .....yep ...... I'm bound to be right one day !!!!

 

[Hook Shot]

Getting closer.........

Consensus is now gathering around a mid June top (90d from Mar lows, 12m anniversary of lows) and lower high in July...then we're off to the South Pole.

I'm long and its great fun..... but I know this can't go on for ever sadly :cheesy:

... And before you say it .....yep ...... I'm bound to be right one day !!!!

We've had a little 200+ pbk on dow to throw the hungry bears some scraps...
This is probably a counter trend pbk ........ and for now new highs are expected.

More importantly perhaps, the slide off highs is only 200 at time of typing (vs an upleg of 1700+ since march) we still have plenty of time to plan for the inevitable sharp down move...

TA's still looking for top by mid June.............
NB: Markets can move down as well as up - as we all know