Fear of a catastrophe - a permabear's complex

Discussion in 'Index Futures' started by Neet, Jan 6, 2007.

  1. Hey guys nobody is debating whether the market was bullish or bearish then. There was a large selloff on news so I bought what I thought was the low of a panic selloff as we thought it was an accident. But that is not the point. The market could have been bullish at the time. The market is bullish right now. What would happen if we had a massive terrorist attack? The market would tank big time and there would be NO warning. The point of this thread is that there is the possiblity of the market tanking big at any time.
    #21     Jan 7, 2007
  2. Neet


    Is there a a possibility of the market spiking to the upside with massive aggression ?

    Say, you wake up one day and the DOW is +2000.

    I don't think it's possible but who knows, maybe there is a slight possibility :)
    #22     Jan 7, 2007
  3. Bearbelly, you say the markets are bullish right now but in my opinion there has been technical weakness for some time. See NASDAQ and S&P500.

    Neet, it is rare something like that happens because the two emotions in play in the market are fear and greed. Fear, in my experience, is a stronger emotion than greed and explains why markets fall quicker than they rise. Occasionally you will see spikes like that, for example.. the outbreak of war in a bull market.
    #23     Jan 7, 2007
  4. I don't want this to come across as an argument, and I apologize if it sounds that way. In fact, we are all entitled to our own opinion and good traders need to be able to be confident and stick with their own convictions instead of giving in to other people's opinions. Difference of opinions is the beauty of the markets. That said, I have thoroughly enjoyed this discussion and would like to clarify my viewpoints.

    From my point of view, the bull market is pretty much over. Leaders in the bull-run such as GROW, AAPL, NVDA, have all been checked. The Dow, Nasdaq, and S&P500 has been showing bearish MACD divergences for a while and signal a breakdown ahead. The Nasdaq and S&P500 have broken their trendlines.

    If a crash is to happen, its reason will manifest itself soon because there has been signs of heavy selling. A crash in this instance, would not be a crash in a bull market because technicals have already tipped me off to weakness and a bear market. I would not be long in this market.

    I'm also not a quack touting consipiracy theories, I'm just offering some insight on market crashes.

    I also don't believe in trading the news because news is interpreted differently depending on conditions. A war in a bullish market will be seen as good because that means wartime production. A war in a bearish market could cause a crash because people will focus on the human lives that will be lost in the war, etc.
    #24     Jan 7, 2007
  5. Neet



    A lot are expecting a correction but until I see it I can't play it that way.

    There are signs that this might happen but it's definitely not happening right now.

    It is still a bullish market until otherwise...
    #25     Jan 7, 2007
  6. if you are worried about a market event taking you out, then you are simply overleveraged

    set a frigging stop. yes, you will get slippage. big deal

    you are gonna miss months and months (or years and years) of upside because of the fear of a correction?

    what a ridiculous way to live, and to trade

    if yer so fearful buy some cheap OTM puts.
    #26     Jan 7, 2007
  7. Neet



    You know what, you are absolutely correct.

    Time to readjust.
    #27     Jan 7, 2007
  8. I completely disagree. I think you miss the whole point.

    You're right...there is no debate over whether the market was bullish or bearish on 9/11. By any definition it was bearish. And therefore, any news will typically accentuate the downside. If a surpisingly bullish news announcement had happened, my belief is that it would have simply been sold.

    Here's an example. We were in a bull trend on July 7, 2005...the date on the London bombings. The moment of the announcement we had a severe sell off. We recovered somewhat by the time of the opening in the US markets. But we still had a sharply lower opening. We promptly rallied the rest of the day...and in fact, rallied the rest of July!

    The point is that when news either accentuates the trend....as it did on 9/11. Or the market opens against trend, and then recovers and continues to move in the direction of trend. In fact, that's how trends take place...the market continually overcomes news unsupportive of trend.

    So the point here is that it is not true that "there is the possiblity of the market tanking big at any time." Worst case scenario is an uptrend where a piece of negative news hits and causes a lower open, which we then recover.

    I can't think of any case where a bull trend has ended on negative news, or vice versa. Usually bear markets end on very negative news...and bull markets end on very positive news.

    The 1987 crash did not occur from the peak. It occured AFTER the market was below the 50 day average.

    The traders who should be very worried are those who bottom pick severe down trends. Because that overnight news may well be something that could cause a collapse. That's the position you found yourself in on 9/10 bearbelly. Trying to pick the bottom of a market which had traded at new multiweek lows, new multi month lows, and new multiyear lows....THAT DAY.

    #28     Jan 7, 2007
  9. volente_00


    I take it you were not trading during the surprise FED rate changes.
    #29     Jan 8, 2007
  10. the analogy between 9/11 and 7/7 vis a vis market fundamentals is weak

    here's why

    they were TOTALLY different.

    9/11 was a complete seachange and totally unexpected. the market HATES uncertainty. we have never had any significant terrorist attack like this on our native soil. as the news reports, etc. clearly show, the idea that the first one was a terrorist attack was far removed from people's minds, whereas in many countries that would have been the first assumption

    we also lost thousands of lives, etc.

    the subway bombing was a MUCH smaller incident, it happened well after we were already in a "war state" (thus expecting further attacks), it turned out to be a lot LESS serious than first imagined (exact opposite of 9/11 which just got worse and worse. one plane, then two, then more planes, then towers falling, etc.)

    i'm all about TA, when scalping the dow. but if you honestly think it makes a difference whether the macd is trending upwards or we are above a trendline, or other such technical gobbledygook if a frigging missile hits a major US city, for example, you are completely nuts

    there are very good reasons for the markedly different market reaction(s) to 7/7 vs. 9/11 and they have little to do with the technical state of the market
    #30     Jan 8, 2007