Ruined

[Skimbleshanks]

I would say that it's not necessarily because people trade with their eyes shut. It's more a case of them not being able to 'see' what the chart is showing. They're looking, but they're not seeing.

Also, if you know what a top looks like, then you'll know that we've not had one of those ... yet. There is a small one forming, and today's action will decide whether it is or not. But a small top will signify a pullback, not a bear market.

 

[neil]

I would say that it's not necessarily because people trade with their eyes shut. It's more a case of them not being able to 'see' what the chart is showing. They're looking, but they're not seeing.

Also, if you know what a top looks like, then you'll know that we've not had one of those ... yet. There is a small one forming, and today's action will decide whether it is or not. But a small top will signify a pullback, not a bear market.

Reminds me of art classes. The hard part was seeing the world as it is, not as we want to see it.

 

[RogerM]

Just like CKB I believe there are many reasons to be bearish this rally. Am I prepared to stand in front of it? No way! With low volume at the start of the holiday season the big players can move the market to where they needed it to be for options/futures expiry last Friday. That's why if I feel the need to play a potential market turn I use options. Used properly, these can give you room for error - the market can move against you at least a bit without you losing money provided you are prepared to give it some time!

 

[nobrainer]

Absolutely right , Neil.

 

[Grey1]

if you decide to trade US stocks then you have the chance of eliminating the market direction by hedging stronger sectors against more defensive sector..
No amount of analysis is going to tell you where market is going to do .. The question is "have you insured yourself if it goes against you " ..

Prof Doyne farmer is the rocket scientist of the financial world.. He is the man every one looks up to .. In 1989 he had his first commercial company called the "THE PREDICTION COMPANY ".. His aim was to be able to predict the Future "A BIT "... He is still working on it..

..

PS:-- do a Google search on Doyne Farmer and read about this chap .. You will learn a lot

 

[grubs50]

nice thread!! shows the importance of money management and discipline

 

[Rognvald]

Grey 1
What a mind that man Farmer has! He realised in time that theory was better and more time was needed

 

[Dr Mike]

Hi All

I've found this an extremely interesting thread. I'm an accountant by training and have considered the US market to be ridiculously overvalued for several years.
Consequently I have always found it very difficult to go long, except when system trading.

Looking at it in depth I deduced:-

1. What mattered was not what I thought but what the market thought. If I was losing money I wasn't "in tune" with the market.

2. Continual reading of US "bear" web sites was only confirming my opinion. I still read them (the're well written by very intelligent people) but have accepted that their viewpoint is more of a long term view and no use for short term trading. Reinforcing ones prejudices may not be a good idea!

3. I was often going short purely because I felt the DOW was too high although there was no indication on the charts that the uptrend had been broken.


Currently I now trade less often ( I still have to overide my subconsious desire to short) and only in line with the current (non intraday) chart trend ( as per Chartman's comment above). A look at daily and weekly charts shows how strong and long the uptrend has been.

I try to bear in mind the market attitude on a broad basis by the reaction to good or bad news. At the moment the market seems unaffected by bad news whereas several months back a small, seemingly insignificant, drop in the michigan consumer figure would cause a sharp fall in the DOW.

So where am I going with all this?

1. It's easier to make money by going with the market rather than against it.

2. I do not find it easy to go with the market when logic tells me the market is wrong.

3. I wish I'd realised 2 and 3 sooner. Waiting for the market to align itself with me rather than the other way round has not been profitable.

I wish you all a happy and prosperous new year.

Dr Mike

 

[smileypete]

GeckoTime,

It sounds like the size and state your trading position is affecting your judgement of the market.

Put it this way, if you were heavily long and so had doubled the size of your account, would you still be hoping for a crash'? Wouldn't you be over the moon instead?

Try to get hold of and read Mark Douglas 'The Disciplined Trader'/'Trading In the Zone'. Also Edwin Lefevre 'Reminisces Of A Stock Operator' is worth a read.

Hope this helps,
Pete.

 

[MCGF]

On the correct score thing

The odds are too much in the bookies favour to realistically make money-there play with a 200%+ over-round in there favour

 

[MCGF]

Jair du cochet-oops!

 

[DaveJB]

Hi,
FWIW (very little probably) I'd say Dr Mike is spot on, he's neatly encapsulated a few points from earlier posts along the way.
'trade what you see' wasn't sarcasm, it was sound advice - I've been a bear for years, and these rallies are stunningly annoying - don't the yanks know they're up the creek sans paddle? Sadly, until they realise this the markets will keep bouncing, there's no good reason to be bullish as far as I can see - but it isn't what I see that counts.
By all means predict a downturn, but wait until it appears before jumping in - that cuts down the move you can trade rather, but them's the breaks.
I'd also vote for the pub.
Dave

 

[cj12]

To Gecko Time

If you want a signal of when the bull run is over on the Dow. You will have to wait until the market drives out everybody the wrong way. So if you are looking for a bull market Top, be ensured the market will skyrocket first. This is what is happening at present

This will drive out every short seller who ever dreamed of selling the market Tremendous short covering will drive the market much higher than anyone ever dreamed. Only then will the market declin.This is a classic signal Get ready

if you are looking to go short let the market show signs of weakness first maybe a 1% decline on all the major indices then wait for a pull back lets say between 50% and 75% and then jump abode Use swing charts on 15 min chart to get you short. And don't risk no more than 1.5 to 3% of you account on any one trade.


CJ

 

[Alien]

cj12 - How high do you estimate the Dow would rise on short covering alone with no other buying if all shorts were covered?

I'm a bit confused by your advice to wait for a 1% decline and then a 50-75% pullback. 50-75% of what?

 

[leeshindig]

75% of the 1%

 

[spreadbet]

Markets defy logic for longer than you or I can remain solvent

Cheers

spreadbet

 

[joffliver]

anyone still shorting, then??!!

 

[tradesmart]

The time to short bigtime will come, but not just yet........the big bullish players can move the market up as they like on these light volumes.......

We've been in rising channels since November, and there is probably some upside to come.....

As/when we drop out of the current channel, it will likely produce an overdue retracement..... (before yet another leg-up?!? )

The fib lines on current levels give a clue as to where we might retrace to......

No one's gonna ring a bell at the top, that's for sure......

 

[Windlesham1]

trade the channel!