1998 all over again?

[Matt]

Just a quick statement from a newbie who's been lurking...I will be shorting this week as well, BUT, I seem to recall Spike put on his bear suit two weeks before the market started correcting. Now his Bull suit is on. His chart reading and timing has been pretty good in my short time watching!

[IIC]

I will pick CRNT long...IIC


Oop's...wrong thread

[spikefader]

Spike...IMO...News trumps technicals...I don't know what the news will be...But my gut tells me that Bear Stearns is just the tip of the iceberg.

Yes, I too have concerns about market consequences to bad news. And I guess it's completely human to be fearful of potential future bad news that will shock and rock the market. But as a trader where can one appropriately use this emotion? How does one effectively time it? In my personal experience fear has a distinct and powerful consequence of freezing th' trigger finger and stressing th' heart and undermining the will to hold a green course, taking profits early. And 100% of the time there's regret for letting emotion influence at all.

You say news trumps technicals, and I could safely say, with conditions, that I agree with you. If the right kind of news hits, yes, price action will surely and quickly invalidate and beat a chart pattern. I've seen it many times. Who hasn't? But I've also seen, many times, that technicals can correctly whisper price direction prior to news, and thus the technicals beat the news. And I've also often seen news that sees price action move in a completely illogical manner but still in favor of technicals. It's not as simple as saying in blanket fashion, "news trumps technicals". For it doesn't always.

I have come to the arguably pessimistic and cynical conclusion that, on occasion, corrupt deep pockets control not only the content of news but also the timing. And those same deep pockets are always going to attempt to be on the right side of the trading that follows that news. Yes, it's about worthless, lying, cheating deep pockets trumping the weaker, poorer, less powerful, honest Joe Six-Pack. And the sooner Joe Six-Pack wakes up to the truth, and tries to see the reality that exists regardless of news and manipulation and deceit, the sooner Joe Six-Pack will start investing or trading smarter.

I'll be the first to shout I nay know it all, and really do respect those who understand the deep fungamentals than can influence an economy and market issues. But there always seems to be conflicting arguments about such issues. Who is the expert in these matters? And can't those experts be trumped by corrupt deep pockets? Yes, I think they can.

So I think I'd rather continue to trade, for the most part, in a newsless bubble, and focus on the reality that's in front of me, in the form of technicals, rather than some future reality that I do not yet know .... and cannot time.

If news causes a certain price action, so be it. I'll nay cry in me rum that the technicals whispered wrongly....I'll just react like I always do when a setup fails......I'll take my small loss and trade the next valid great risk/reward setup in a fashion that assures me of a positive equity curve. Disciplined execution and limiting losses are big edges for me, and I think I'll stick with what I know works rather than worrying about a future I cannot predict or control.

[skiracer]

this forum misses you Spike and your grasp on trading reality, control of your emotions, and knowing you have a plan in place to limit your losses when you must and maximize your gains when you can. After all this time and dialogue I think it is still falling on deaf ears.

[IIC]

Yes, I too have concerns about market consequences to bad news. And I guess it's completely human to be fearful of potential future bad news that will shock and rock the market. But as a trader where can one appropriately use this emotion? How does one effectively time it? In my personal experience fear has a distinct and powerful consequence of freezing th' trigger finger and stressing th' heart and undermining the will to hold a green course, taking profits early. And 100% of the time there's regret for letting emotion influence at all.

You say news trumps technicals, and I could safely say, with conditions, that I agree with you. If the right kind of news hits, yes, price action will surely and quickly invalidate and beat a chart pattern. I've seen it many times. Who hasn't? But I've also seen, many times, that technicals can correctly whisper price direction prior to news, and thus the technicals beat the news. And I've also often seen news that sees price action move in a completely illogical manner but still in favor of technicals. It's not as simple as saying in blanket fashion, "news trumps technicals". For it doesn't always.

I have come to the arguably pessimistic and cynical conclusion that, on occasion, corrupt deep pockets control not only the content of news but also the timing. And those same deep pockets are always going to attempt to be on the right side of the trading that follows that news. Yes, it's about worthless, lying, cheating deep pockets trumping the weaker, poorer, less powerful, honest Joe Six-Pack. And the sooner Joe Six-Pack wakes up to the truth, and tries to see the reality that exists regardless of news and manipulation and deceit, the sooner Joe Six-Pack will start investing or trading smarter.

I'll be the first to shout I nay know it all, and really do respect those who understand the deep fungamentals than can influence an economy and market issues. But there always seems to be conflicting arguments about such issues. Who is the expert in these matters? And can't those experts be trumped by corrupt deep pockets? Yes, I think they can.

So I think I'd rather continue to trade, for the most part, in a newsless bubble, and focus on the reality that's in front of me, in the form of technicals, rather than some future reality that I do not yet know .... and cannot time.

If news causes a certain price action, so be it. I'll nay cry in me rum that the technicals whispered wrongly....I'll just react like I always do when a setup fails......I'll take my small loss and trade the next valid great risk/reward setup in a fashion that assures me of a positive equity curve. Disciplined execution and limiting losses are big edges for me, and I think I'll stick with what I know works rather than worrying about a future I cannot predict or control.

Spike...I appreciate your detailed response...But it makes me wonder again...Do technicals PREDICT? Supposing that these corrupt deep pockets do know the news before we do...they can start doing things which may be reflected in the technicals.

Take this Bear Stearns announcement on Friday...I'm cynical by nature but I find it hard to believe that certain big money didn't know it was coming. Why was this announcement made late Friday afternoon? I don't know and maybe it really wouldn't have mattered when the announcement was made. If they waited till after hours maybe we'd tank on Monday morning...But then again, maybe investors would have had 2 days to think about it and there would not be such a knee jerk reaction...I don't know but I do believe that this credit fiasco is in the infancy stages.

Also, the Government has the upper hand on the timing of a lot of important announcements and there could certainly be leaks prior... But there are also horrific events like 911 that I don't think could be reflected in technicals.

On a side note...I was reading on Friday that the worst one day drop in the DJIA was on December 12, 1914...dropped about 25%. But what I didn't know was that the markets had been closed since July of that year due to WWI...That sure had to be a scary time.

[Jim Smith]

Next source of problems

in keeping with the 1998 theme, I was wondering what would cause the late August swoon like we experienced in August 1998.....Then lo and behold I read that the bank of japan will be having a two-day conference interest rates August 21-22 and it is expected they will raise interest rates......This will pressure the Yen carry trade.....And just because the rate hike is expected doesn't mean it won't affect our markets....I was never a fan of the efficient market theorey.

[Jim Smith]

head and shoulders top building

on the Dow....if the symmetry contintues, we'll be at dow 12200 around thanksgiving.

[stenzrob]

on the Dow....if the symmetry contintues, we'll be at dow 12200 around thanksgiving.

Jim,
I see this, too, also looks this way with other indices. Am keeping close eye to preserve profits. On the other hand, did it not look like head and shoulders forming in May-June 2006? It dropped from 11250 to 10750 (about 5%), double bottomed, and then headed straight up for about 7 months.
Another thing perhaps worth noting is that the volume has been very high for the last few weeks on all indices (indu, compq, spx, nya)

[spikefader]

this forum misses you Spike and your grasp on trading reality, control of your emotions, and knowing you have a plan in place to limit your losses when you must and maximize your gains when you can. After all this time and dialogue I think it is still falling on deaf ears.

Thanks much, Ski. Yes, it may be falling on some deaf ears; but I'm sure there's a bunch who do listen and learn. I hope Jim's trades posted in this thread embraces the concept of limiting losses (and all gloom an' doomin' bears at this point).....cuz I stronly suspect they're all in fer a shock. It ain't rocket science.....I've mentioned it many times before on this site and Scuttlebutt. This rally has gonads and by SDS has more chance of seeing $47.00 than $75.00 by Labor Day. QID is headed to 39.00 imo. $INDU 14400, $SPX 1580, $RUT 875.00, $COMPQ 2750.....the list goes on.

Ski, green waters and wind at yer back!

[ParkTwain]

GS is below its 50 & 200 day, with a PnF target of $144. And it just fell through support Friday. So I expect it to retest the new resistance, and fall further.

GS has traded below its 200 DMA for only about 4.5 calendar months in the last 3 years. Its PE is about 9.0 and its forward PEG ratio is below 1.0. Buying this issue when trading below its 200 DMA has been good work for several years running. You must have a crystal ball that is taking in additional contextual information. Or, what is it about the technical setup for GS today that makes it different from previous moves below the 200 for you to make this call?

I see a region of support at about 185/sh from Nov 2006, which is where the stock stabilized in the last few sessions. The last 10 sessions have shown the highest 10-day volume in this issue for at least the last 3 years. Today GS fell sharply in the afternoon on a rumor, but bounced at 190 on high volume.

[ParkTwain]

on the Dow....if the symmetry contintues, we'll be at dow 12200 around thanksgiving.

I have found that H&S formations are very hard to predict correctly for an uptrending issue. When the fall off the apparent right shoulder never comes to pass, I can often see IN HINDSIGHT that the dip down from the "head" could also have been interpreted as a dip to some implied MA trend line that also turned out to act as support. So what I'm saying is that at this point in my life my experience tells me that a H&S call at any time prior to the actual fall off the right shoulder is objectively not very reliable.

[Jim Smith]

the H&S formations are often obvious

leading to their probable cause of failure.....I thought it was interesting how the rally in the dow halted just about exactly at the height of the "left shoulder".

[Jim Smith]

short with impunity

LEH is going to $22, imo....I know that sounds crazy but I am sticking to it......Also, UNH might go to $28 by the time Hillary Clinton is sworn into office.....The drilling sector couldn't get help from GS, but it was a horrible day.....I like drillers short....

[riverbabe]

Also, UNH might go to $28 by the time Hillary Clinton is sworn into office.....

Over my dead body. River

[New-born baby]

Over my dead body. River

Hillary, or UNH? If you are talking Hillary, I would be available to do your funeral.