I thought we'd make a push towards 3400 this week and it's very well that would have happened if Trump didn't catch Covid-19. We'll never know. Haven't looked at it in depth yet, but I'd be slightly surprised if we don't make a new leg lower this time around going into the elections. So, I'm voting for 1 or 2. But you never know, do you...
You had better warn all those hedge funds making millions of dollars trading news algos that it is a fool's errand. Right now, it is all about the stimulus. Get a deal, new highs. Once the market determines less than 50% chance of getting done before election day, market declines. Why Trump hasn't pressed the GOP for this is beyond me. He somehow has decided to kowtow to the likes of Kudlow, Meadows, and Moore.
There are some strong forces attempting to push the market up artificially, gawd only knows who it is and how they do it, but lets call it the PPT. They know they are facing a cliff and are doing their damnest to prevent a cascade fall. Whether they prevail is another story. I might be bearish but fighting the PPT/Fed is not going to come easy. My bet is on this tug of war maintaining in the short term, so a type of zigzag sideways market rather than directly up or down.
Optimism is the best long term bet. In my mind, long term potential of an economy or even a global system is the availability of energy and other resources. With plentiful energy, we can purify oceans worth of water and extract minerals from plentiful low density ores. We can obtain food security, especially when we start building infrastructure for ocean farms in earnest. We have enough land to easily support a quadrupling of the world’s population, in my opinion. We have so much energy potential, we are purposely not fully utilizing various energy sources such as coal, nuclear energy including uranium and thorium based power plants, and crude. We have epic amounts of shale based oil and methane clatherates in the oceans. As far as ballooning debt levels, it ultimately comes down to accounting and adjustments. In other words, as a world, we owe the money to ourselves. The key is management. We need our leaders to have vision and cooperate with one another. They also need to consider human nature and avoid the moral hazard of making things too easy or predictable or risk counterproductive misallocation of resources. For me, it come down to whether a company has above average prospects and whether it’s current price is above an simple average of 65, 30 minutes bars, among other things.
Ya optimism and honesty required from leaders but cynicism required to trade because blatant dishonesty, incompetence and trickery is the norm.
I don't think many people here own hedge funds or are making millions of dollars. You can take almost any statement someone makes and take it to an extreme just to make a counter point, but that isn't always practical or helpful. So, my intent was to discuss practical things people do or see how someone trades on news in a consistent, measurable manner that offers an advantage. Someone being defined as more of the typical trader here, not someone that has access to a hedge fund, with millions of dollars and algo's. That was my question. I look to take advantage of imbalances in the market after the move happens as do other people as well as hedge funds. There's setups I look for that our measurable and defined that allow for some type of consistency. Just trading on a news headline there's no way for me personally to ascertain any type of measurable consistent advantage and that's why I asked my question to see how others handle it or do get an advantage because it seems incredibly difficult to find a way to make it a consistent, repeatable and measurable advantage.
It pays to look at the different perspectives of various trader types. Take large hedge or pension funds, for example. Visualize trying to maximinize the return on investment of billions of dollars in assets. Some investment ideas go well, some don’t. Go through the intellectual process of liquidating a large position and establishing a new position as a large fund. Now consider that based on news, whether an earnings report, tradeshow news, or a Government policy change, several institutions get a similar idea on the outlook of a stock or industry might have on the magnitude and durability of a new trend. By the way, when I say “Earnings report”, company earnings of in themselves do not create trends. Longer term trends in particular stocks are created by something more durable. I believe it can be an edge for short term traders to be aware of the various drivers behind stock moves. For example, two stocks had a big up day yesterday. Stock A has solid fundamentals. Stock B does not. Which stock would you feel more comfortable in using a “Dip and rip” strategy early in the next session if the other necessary conditions where there? News has value. Whether one fades it, guages current sentiment with it, or finds an opportunity with it. The key to utilizing news well is to read beyond the headlines. News can be the difference between a trend day and a trading range day. Traders make money in both situations, but for a little more effort, why not maximize?