Is a Bearish Correction Coming to Wall Street?

[tomorton]

They are high-wire walkers without a net. The survivors are heros.

 

[TheBramble]

OK forget Wall Street for a second.

Government elections and change of government party after 55 years in Japan.

Strong Yen / Weak Yen?

Perceived wisdom suggests markets dislike change (so weak Yen?).

Focus of new (labour-ish) Japan government is on domestic sales rather than export. So where will they get the funds to develop their domestic market? Government bonds with attractive yield. Who will buy them? Everyone. What currency will you need to acquire to buy them? Yen, or course (Strong Yen?).

And to have an attractive Bond yield, what will than mean for the Japanese interest rate? And what will that mean to the mainstay trade of the hedges and institutional traders - their carry trade strategies?

It’s OK to say ‘wait until the price moves’, (and under everyday circumstances, I’ll agree with you) but there are times when if you don’t have an expectation of what’s going to float and in which direction, you’ll miss the tide completely.

 

[chilltrader]

i think i agree with TD here, this rally is gonna go on till no-one is thinking of going short, it will just keep pushing up...i've been looking for signs everywhere that is gonna drop but i think when people give up trying to go short it will happen.
At the moment i think there are too many bears, last week proved that with people piling in then getting squeezed out...it will happen when you least expect it...but i think it will happen...and think when does people will be seriously wrongfooted...i think this rally has a lot of retail involvement and people buying cos stocks can't go lower...

a question to ask though is if you were long, what would you be doing now?

I'm following a simple strategy.

Buy and Hold stocks, short indices on SB on the pullbacks.

 

[counter_violent]

I'm following a simple strategy.

Buy and Hold stocks, short indices on SB on the pullbacks.

Is this a medium or long term strategy ?

As a medium term strategy it sounds workable to me.

 

[chilltrader]

Is this a medium or long term strategy ?

As a medium term strategy it sounds workable to me.

For the SB part - yes.. assuming medium term means less than ~2 years

For the stocks part.. its longer term. I'll be cashing out a year after the 2012 Olympics
and put the proceeds to - hopefully - finish off my mortgage

So.. all I need is by 2013 the FTSE is higher (min. ~15%) than it is now and meanwhile the dividends should help me beat the cr@ppy bank interest rates

 

[tomorton]

OK forget Wall Street for a second.

Government elections and change of government party after 55 years in Japan.

Strong Yen / Weak Yen?

Perceived wisdom suggests markets dislike change (so weak Yen?).

Focus of new (labour-ish) Japan government is on domestic sales rather than export. So where will they get the funds to develop their domestic market? Government bonds with attractive yield. Who will buy them? Everyone. What currency will you need to acquire to buy them? Yen, or course (Strong Yen?).

And to have an attractive Bond yield, what will than mean for the Japanese interest rate? And what will that mean to the mainstay trade of the hedges and institutional traders - their carry trade strategies?

It’s OK to say ‘wait until the price moves’, (and under everyday circumstances, I’ll agree with you) but there are times when if you don’t have an expectation of what’s going to float and in which direction, you’ll miss the tide completely.

The situation analysis reads well to me, but price won't start to move until a body of market players with big funds believe the same thing sufficiently strongly to act on it. If the move we're talking about is big enough to bother talking about in the first place, it will be impossible to miss the boat, there will be adequate entry points with good return more than once after the start of the move. Fear suggests taking the position before the signal. Caution suggests wait for direction to identify itself and go in then. The contrarian position has arithmetic behind it in the form of maximum potential gain, but I can't see the rationale behind buying something nobody else yet wants to buy.

 

[poborsky]

Shanghai composite had another nice fall. Could be an interesting day on Wall St.