I guess what I'm saying is that before, lots of people just didn't sell at all. Now, all those people might have learned to sell if the price goes below a certain point. If there is a turn downward in the market, the down move might come a lot swifter and harsher this time. I have read that there are a huge number of people short and that not many people are short. I don't think anybody really knows.
Tops materialize slower because up markets move much slower than down markets, the nature of fear and greed (fear is much more powerful). Picking tops is usually more profitable and gives faster results after the top comes in.
Well mom & pop kept holding on and on and I'm sure that will happen again. Stop loss orders won't prevent the majority from losing money.
Excuse me? What in the world is wrong with all you non stop weirdos that keep calling shorts left and right? When someone points out that you are not making a correct call cause it's based on absolutely no reasonable criteria, you consider them bullish buy & holds that are trying to force you to convert to their camp. No, the whole point is that every top picker has been getting their ass handed to them because they keep forcing these shorts onto the market. There is at least 2 threads a week with these top callers and proclamations of a crash. Maybe all of you do not really trade and are desperately holding on to losing shorts. I mean why else, would anyone keep coming to ET and starting these "market going down" threads. Personally, I would not long or short the S&P at this moment. Do I think the market should be this high? Hell no, I've been amazed at this rally since June. Would I short it right now? Hell no. With this many people short and trying to short the market, it's not possible to make money doing the same. I figure we should all know this, but the large majority always has to lose so that the small minority can make money. Traders shorting the market and buying puts are definitely not the small minority right now. Neither are the traders staying bullish. That's my story and I'm sticking to it.
First, I'm not a "non-stop weirdo calling shorts left and right" ... I've been a full time trader for years and know what the hell I'm doing. And I've made good money on shorts in 2004 by selectively shorting stocks I saw as very overvalued. I posted some of those last week I think (KLAC, XLNX). And explain to me how "it's not a correct call" when I make money. That statement is laughable. You have no clue how I trade. Next, I've not started a "market going down" thread. Or maybe I should kindly ask you to point out to me where I started one. Firing off a post without any knowledge of my trading style and just generalizing about others posts (re: shorting and/or calling tops) shows you seemingly are lacking in reading comprehension. And if you read your above statement I suspect you'd understand what I mean. Anyway, it's always humorous to read your posts.
It's funny that you mention "absolutely no reasonable criteria" for being short -- that's exactly how I feel about being long, that most are long the market only because it keeps going higher, and will become sellers once the market loses momentum. That is why I am short. Is that reasonable enough?
Interesting, I think you have a good position on there. Stop placement shouldn't be a problem at any rate . Any feelings as to which months are the best to go short?
First of all, the amount of shorts is a pimple on the ass of this market. The vast majority of the market is long (and always will be). The short-term speculators (ie. Hedge funds, day-traders, swing traders, etc.) are just also rans when it comes to what really moves this market. The market moves based upon the activity of Mutual Funds, Pension Funds, 401K activity, etc. and de facto the investing public at large (mom & pop). If they start selling (or stop buying), the amount of shorts in the market will be totally insignificant. The short-term shorts are significant only to the extent that the moves do not elicit any real investor moves. Personally, I acknowledged from day 1 that I am fighting the intermediate trend (defined as the last 12 months or so). However, I believe that last year (and the beginning of this year) was a counter-trend move in a larger bear market which started in Spring 2000. As for reasons, anyone looking for 'legitimate reasons' is not a trader. Good trading is often an artistic endeavor and based upon experience and a mental connection with the pulse of the market. I felt that we experienced somewhat of a 'blow-off' top 3 days ago given the speed and pace of the move (intuition and gut feeling) and hence I felt a lot of shorts had capitulated. It was a gut reaction to my read of the market. Would I have covered quickly if I was wrong? Yes. Would I have tried again at some later date? Probably. Now that I got confirmation, I have added to my shorts. Am I married to it? No. But, as long as it is confirming my position, I add. If it goes against me leading me to believe that 'real money' is not going to sell, will I take profits/cut losses? In a heartbeat. The key question is how are real investors going to react. I don't think they will be as stupid as they were in 2000. However, someone once said that nobody ever went broke overestimating the stupidity of the public at large.
Cutten, I'm short March 2005 and March 2008. Obviously, the further you go out, the more risk you take (assuming that your mental stop is 100). However, obviously, you can get more bang for your buck further out. 1.45% 3-month interest rate imputed out to March 2008, ridiculous. .55% imputed out to March 2006, also ridiculous! .20% imputed to March 2005, unfathomable. The curve is WAY too flat. Warning, highly illiquid, especially Simex deferred months.