Dow 2006

[dc2000]

Market went up too soon and way too much without 5-10% correction as in a "normal"
market.

forget all the spin about no correction by the pundits

 

[LION63]

Mega fall because...

--> Market went up too soon and way too much without 5-10% correction as in a "normal"
market.
--> US economy is not really in a "good" shape
--> US trade deficit is at all time high
--> US housing market has crashed pretty much
--> US inflationary pressures are still on the top of the critical watch list by Fed.
--> Institutions need to pull out money to make profit - no profit, no big fat Xmas bonus!!
--> Elections bring in uncertainty
--> Iran doesn't care about US - nor does N.Korea - but the oil cartel does.

Do you need more reasons?

On the other hand, I can't see any strong bull points in the short-mid term on the DOW.

Down down all the way to 11600 before any pullback....

Karmit,

Since you asked for the bull points, here they are -

1. Institutions are flush with cash that they have to put to work.
2. End of the financial year for lots of funds and they must take positions in order to
massage performance figures.
3. Oil has fallen about 25% from its peak this has the same effect as a tax reduction.
4. Geopolitical worries have turned out to be a damp Squibb.
5. Bonuses are at record highs.
6. Corporate profits are at record levels.
7. Balance sheets are stronger than they have ever been.

The list goes on and on and even for the avowed bears like myself, there comes a time to accept that the conditions are not right to pick a fight with the bulls. Having said that, there are lots of individual stocks that are ripe for the picking and I guess we will just try and shoot them down.

Will the last bear turn off the lights once the towel is thrown.

 

[mark twain uk]

One chart for the bears, this comes from Bill Adlard. Before you get too excited have a look at the time frames.

 

[mark twain uk]

forget all the spin about no correction by the pundits

The pundits are just that, pundits, they seldom have a clue about what they are discussing, these are the same people who at the top of the dot.com mania were advising to buy QXL at £100 a share, not to mention mango, moni, egs, etc. etc. A correction will happen, it always does, but it requires patience and good risk and money management.

As a long suffering bear, I took some losses on the chin, but I survived. I learnt the hard way to not overtrade, this is the most dangerous of all the mistakes one could make. If you are £1 short on the dow you can leave it open without a stop loss, but if you have a £20 short then an unexpected 200 point rally followed by an even less expected 300 points rally will set you back £10k. This is OK if £10k is 1% of your trading pot, but few people realise that you would really need to have £1M trading funds to afford a naked £20 short on the dow. So for those bears with short positions, check to see what happens in the worst case scenario, look at a point where you would give up, say if it goes 100 points over the highest high, that'll be 12,282 cash, that's roughly 200 points up from the current levels. Check the loss you'd make and if it is more than 10% of your trading pot then you are overtrading and maybe you should halve your position, the risk is simply too high.

 

[Pat494]

The pundits are just that, pundits, they seldom have a clue about what they are discussing, these are the same people who at the top of the dot.com mania were advising to buy QXL at £100 a share, not to mention mango, moni, egs, etc. etc. A correction will happen, it always does, but it requires patience and good risk and money management.

As a long suffering bear, I took some losses on the chin, but I survived. I learnt the hard way to not overtrade, this is the most dangerous of all the mistakes one could make. If you are £1 short on the dow you can leave it open without a stop loss, but if you have a £20 short than an unexpected 200 point rally followed by an even less expected 300 points rally will set you back £10k. This is OK is £10k is 1% of your trading pot, but few people realise that you would really need to have £1M trading funds to afford a naked £20 short on the dow. So for those bears with short positions, check to see what happens in the worst case scenario, look at a point where you would give up, say if it goes 100 points over the highest high, that'll be 12,282 cash, that's roughly 200 points up from the current levels. Check the loss you'd make and if it is more than 10% of your trading pot than you are overtrading and maybe you should halve your position, the risk is simply too high.

Good points Mark
Of the 7 deadly sins thats probably 2
greed - trying too hard for the big deal
pride - cant admit to being wrong and taking a loss
Just been reading Naked Trader !!

 

[ajaskey]

Karmit,
6. Corporate profits are at record levels.
7. Balance sheets are stronger than they have ever been.

One of the reasons the US equities markets are moving higher is that corporations have been buying back incredible amounts of their stock with a portion of corporate profits (cash levels are not decreasing while debt levels continue to decrease). This buying has changed the supply side of the equation. Any interest at all in equities will drive the prices higher because it is difficult for the big boyz to find stock to buy without paying up.

A floor under the market is a record level of short interest as float is drying up. Since the market began moving higher in July, the number of shares short has made a new all-time high each month. The short covering blow-off portion of a rally that usually gets the market started as wave 1 has not occurred yet. The sell-and-hold bears are even adding to their bets even though mechanically it is a dumb trade. I expect a massive short covering (plus long buying) rally to start near the end of November or early December. It should last 90 days. It could go 45 days more into a blow-off phase after which will be the perfect time to short almost anything.

 

[Racer]

Companies are indeed buying back their own shares but not the same goes for dividends. September 2006 dividend increases declined 17.6% to 89 from the 108 recorded for September 2005

 

[FetteredChinos]

first post for a while, as i thought i would take this opportunity to scare some bears..

reckon we might hit 13,500 before mid january,

and i refer the knowledgable crowd to this post back in January...

http://www.trade2win.com/boards/showpost.php?p=228526&postcount=14

notice the 2nd chart which is a seasonal chart of the 6th year of each decade..

also notice that it managed to pick the relatively flat summer period which we had, plus the unusually resilient september (bearing in mind it has a strong tendency to sell off)

hope you are all well, and long

FC

 

[kriesau]

Where have you been over the past 6 months FC ?

Very interesting chart but the timing was not quite accurate since the big early summer drop started about 30 days earlier and caught out quite a few longs. Don't know if we will see the Dow above 13000 by mid Jan but I believe that we are on the cusp of a downturn that could take the Dow well below 12000 first !

 

[catracho]

seems like mkt needs a correction - but will it happen before elections? Any targets for down move? I'm thinking DOW correction to 11600 ish, then resume rally to 13k +?? Any other ideas out there?

 

[mark twain uk]

I was out most of the day, returned twenty minutes ago and decided to close my shorts at 12,028 and 1371.9, both cash, it seems I got lucky.

If only I can get myself to the stage where not only do I sell tops but I also buy bottoms, I just cannot do it, I cannot go long at these levels, and as a result I am leaving money on the table

 

[catracho]

yes know how you feel!! Long at these levels?? That will be the catalyst for the biggest one day fall in 4-5 years..prefer to watch the craziness from the sidelines and short when it feels like rallies are weakening..maybe lucky one day to catch the fall? Like everyone says the day it comes only the lucky will profit from the move;

 

[karmit]

all these reasons were in place 6 months ago,the only reason to short here is dying momentum,and if it it resumes to the upside cover,isee congestion at 11900-950 and 1360 on spx

wrong!

ALL these reasons were not in place 6 months ago.

--> Markets started this uncorrected bull run only in July.
--> Iran and N.Korea had not tested any weapons - or defied anything seriously back then.
--> Oil was at top levels.. money was too much in the oil itself... only after oil came down
the big boys needed someplace to stash it back again.. DOW?
--> Housing market collapse was not definitive
--> DOW was not hyperextended!!

 

[JillyB]

first post for a while, as i thought i would take this opportunity to scare some bears..

reckon we might hit 13,500 before mid january,

and i refer the knowledgable crowd to this post back in January...

http://www.trade2win.com/boards/showpost.php?p=228526&postcount=14

notice the 2nd chart which is a seasonal chart of the 6th year of each decade..

also notice that it managed to pick the relatively flat summer period which we had, plus the unusually resilient september (bearing in mind it has a strong tendency to sell off)

hope you are all well, and long

FC

Good to see you back on the site and posting again.

Hope it's not just a one off and will continue.

 

[FetteredChinos]

well i never really went away , per se. just chose not to post really, as the bunfights were getting out of hand.

hope you all managed to treat yesterday as a buying opportunity? we're still in the month-end markup period, so any bias is upwards, plus its also the end of year markup.. in other words, this baby is going up for some time, at least until the big boys finally pull the plug and start cashing in..

 

[Gap Man]

I know everyone hangs on the elections right now before any move but just a thought....

Assumption - Residing government wants it all to look great and props the market up (PPT) going into the elections - everyone thinks the economy is great hence they win more votes...

How about the fact that poles suggest a massive democat win yet the market is still rising - wouldn't the residing govmnt like to allow the market to slide in the days leading up as the poles suggest this is a reality...??

Just a thought....

 

[Bez]

I have the 6th as a delta low on the SPX.....

So I would be looking for a pop on the 7th maybe the dem's will only gain the house.....hmmm

 

[kriesau]

well i never really went away , per se. just chose not to post really, as the bunfights were getting out of hand. hope you all managed to treat yesterday as a buying opportunity? we're still in the month-end markup period, so any bias is upwards, plus its also the end of year markup.. in other words, this baby is going up for some time, at least until the big boys finally pull the plug and start cashing in..

Good to see you back.

Don't know about the buying opportunity - hope you're wrong since I'm still short the NDX from 1742 :cheesy:

 

[mark twain uk]

had a quick short around lunch time before the figures were released and closed it shortly after for 50-ish pips on both dow and spx, this is one of my luckiest weeks, although the harder you work the luckier you get

 

[dc2000]

Yall keep buying an I'll keep sellin only for another 100 though