Does anyone else have a foreboding sense.....

I don't know about anyone else on the board, but I for one have a real foreboding sense about this rally we are experiencing. I know that most on this board are short term players but I have friends and family that are looking at this market and the "V-shaped bottom that CNBC and the media is trying to promote and it all seems smoke and mirrors to me. I think what bothers me is how do they get away with all the B.S.

I mean you have economists and professors coming onto the scene and saying they expect earnings and other indicators to show that we will be coming out of this slump sometime mid 2002, which of course is like three quarters later than they were saying umm... three quarters ago. Just look at the paper for gods sake....the lay offs are unreal, you have all these people who are refinancing their homes and taking out second mortgages to take advantage of lower rates, on homes whose prices are falling. My grandmother tells me that just in the past few months the she has noticed the home prices in her fairly nice neighborhood starting to fall off the map. Our banking institutions have all our money tied up in derivative products that probably make pairs trading looks like tic tac toe.

What happens if people not only get scared for their safety but get scared in a place that "really" freaks Americans out. (No offense intended, but the fact is that as far as terrorism and the like goes almost everyone still thinks it cant happen to them) But if you get wide spread bank failures, you can bet people will get nervous as hell.

So why the rant? Well I guess its to see if I'm the only one.

I think what the market is showing us now in the Dow is the "last breath" before it gives out, and collapses way past normal long term valuations. And the Naz....biggest bull trap ever....maybe not for the Elitetrader crowd but what about all your families and relatives stuck in those mutual funds with snail paced managers trying to get back in? I think the Naz has just showed us the biggest percentage bounce after the first leg down to be followed by the second leg that will last 9 to 12 months of 2002. If I had to guess I think the money trying to still get in may sustain the market for another 4 to 6 weeks max. All that mutual fund money that CNBC says is pouring back into the market, guess where it is going to end up, thats right at the top of the biggest bull trap in history.....ouch.

Is it just me?

Trav

"...and so Castles made of Sand fall into the Sea Eventually." - Hendrix

"pay attention or pay the offer"

 

If any other traders care to pull out the old crystal ball and prognosticate (big word of the day , Id be more than than happy to hear your long term thoughts. I mean if its true that a large percentage of daily price move is correlated to market direction having an idea of trend for the coming months could well put more money in pockets.

Trav

"Go Short young man, go short"

 

They have no idea where it's going. Not today, not tomorrow and certainly not a week or month from now. Every day, they must attribute the rise or fall of the market to some event.

"The Dow lost 67 points today after consumer confidence numbers fell .3%". If it went up...find something positive to blame when in all likelihood, neither event had much to do with the movement. CNBC is telling you where they want it to go. They don't forecast, they report.

Honestly, as a trader - I'm not concerned with where it goes either...as long as it goes somewhere.

Just my .02.

 

don t try to guess the market with what you know.
it is what you don t know which will kill you.

Forget CNBC, people loosing on the other side of my long term trades watch this channel too much.

If your decision are still too much fundamentally based, you may have a problem trading. Technicals are the only way because they prone FOLLOWING, not FORECASTING. There is a big difference. Although I remember always confusing the two. After all, when you enter a trade, don t you forecast the trade going in your direction ?
hell, no ! or you're doomed in the long run. I confused that with probabilities of either the current move continuing or the current move stopping. Emphasis on PROBABILITES. And to calculate probabilities on fundamentals, I refer you to my introduction : it is what you don't know which kills you.
So odds should be based on technicals statistically confirmed. Then, it becomes following and not forecasting. You can be wrong (it is part of the odds).
Some use patterns (and scan for them) others use momentum, others read the tape, all that makes sense as long as you compute to stats and know your odds.

Forecasting the weather saying it won't rain tomorrow because there is no cloud in the sky today does not make sense. If Maria, the weather reporter tells you, she hopes it will be a sunny day since it did not rain today. and even, maybe, hopefully, gee I would like that, it won't rain for the next six months because rain drops were V shaped 2 weeks ago, that's not serious. Real weather reporting is akin to trading. You have facts (pressure, temperature, wind etc..) you have models you tested, you have at the end probabilities. And.. guess what.. sometimes they are wrong

tntneo

 

If your afraid, get out.

 

i actually like that analogy!

 

As others here have pointed out, as traders we have to take what the market gives us. From a macro-economic big picture point of view, it is very unlikely the bottom is in, as most people have never seen bear markets or the bear market rallies that can occur, which can be powerful and fool people into thinking a new bull market has begun. From a TA point of view, take a look at a 10 year chart for the Dow. From a long term perspective the Dow is overextended, and a healthy (or not so healthy depending on your point of view) retracement would put the Dow back in the 6000-7000 range. Also looking from mid Y2K until now you'll see the Dow is in a descending channel with lower highs and lower lows. Overall it portends for a long term move lower for the Dow unless it breaks out of its downtrend. However, unless you're going to buy put LEAPS on the Dow and/or S&P, it doesn't make a lot of difference in day to day trades.

 

My greatest fear is not a huge drop but a dry up in volume.
If a lot of players stop playing, then traders will be in trouble.
So far, I don't think that's the case.
Volume has been good so far. But my back up plan is to trade currencies if volume does dry up in equities.
Currencies are supposed to be the biggest market in the world. Even with declining world trade they should still be active.
I just hope the volume and volatility remain.
That's all I hope for.
As for the V shape bottom:
1. Our banks are decent shape and so we may not experience a Japan style collapse.
2. The fed has room to ease more. All the way down to zero.
3. Maybe the job cuts were excessive
4. Governmental stimulus package hasn't hit yet.

But then again:
1. There is a lot of off balance sheet financing. Look at Enron
2. Tech is not coming back like in the boom years.


Who really knows?

 

Long time-frame economic trends like employment statistics, and housing prices have little or no effect on trading positions that last only minutes or a few days. Investors are more concerned with economic trends. Traders are more concerned with things like volume, volitility, support and resistance. To a good trader it doesn't matter what the economy is doing (as far as his trading goes), he can make money either way.