Discussion in 'Technical Analysis' started by ess1096, Aug 9, 2009.
The two aren't remotely comparable if you actually did some research on the 1930 bounce.
There was a very sharp initial selloff from highs in 1929, the 1930 bounce your referring to was the initial dead-cat bounce.
This bear markets dead cat bounce was either in April of 08 or November of 08, you can decide, but after those powerful rallies we made new lows, but this March low, as I've said since March (I will link to the threads if this turns into a flamefest) are as Doug Kass says, "Generational Lows" -- We'll be at 14,000 in a few years.
I think that after the Clunkers program is over, people will find that the economy is still shrinking with no end in sight. What stocks will do at that point is anybody's guess but eventually you'd think they would take a nice long slow ride into near oblivion..
There are alot of people looking at the similarities between these two ... to me theres just one problem .... from 20-3-2000 to 9-3-2009 the SPX went down 86%, if you quote it in gold terms, a sign of the tremendous monetary inflation we had ...
This and only this makes me a little knee jerk about shortin the crap out of this "reduced drop speed" rally with some features to it that remind me of the good ol days of 2000 and 2007 when crap could actually fly
In any case, i guess that sting of 86% drop in real terms marks the bottom and if the indexes , along with other markets, revisit their lows, a rise in the value of fiat paper will probably offset it, because alot of high level people know bailout fatigue and a certain sensation that money is limitless will destroy the currency in a fairly short amount of time.
ps: short stock indexes and carrying "catastrophic usd and fiat paper devaluations" hedge
No flame fest from me Bro.
It makes absolutely no difference to me which way the market goes.
I just wanted to post that chart because so many people think that we MUST be in a new bull market simply because the S&P is in a strong rally. I'm also very interested in all the similarities between the events surrounding 1929 and recent years. When you read "The Great Crash 1929", written in 1955 it seems like you are reading a current newspaper.
A strong rally does not in itself mean that the bear is gone. Bear markets are more violent than bull markets, and so are their retracements. I wonder how many people were screaming "new bull market" in May of 2001 thinking the bottom was in March 2001?? Then the bottom was supposed to be in September 2001??
I too called for a rally on March 6th saying;
"IF there is going to be a technical bounce or bear market rally, this seems like a good level for it to occur. If so, first target is 800. Second target is 1000 (or 200 day MA)."
from this thread http://www.elitetrader.com/vb/showthread.php?s=&threadid=155433&perpage=6&pagenumber=3
I don't try to pick tops and bottoms, I try to look for significant areas on a chart and watch and see how the market reacts to those areas. I don't listen to talking heads on TV like Doug Kass, even when they are as smart as I think Kass is. For every talking head with an opinion there is another talking head with an opposite one. Kass says the low is in, Paul Tudor Jones says it's not. Roubinni says the worst is behind us, Marc Faber says the worst is in front of us.
And as for the initial dead cat bounce, I suppose it depends on your perspective. I like to watch monthly charts and trade the weekly. I think the big money does the same. I don't think guys like Gartman are watching 60 minute and 5 minute charts and probably not making trade decisions off a daily. I'll post the monthly chart and see if you can point out the initial bounce. I think you'll notice that we are IN it. A rising bear market rally on decreasing volume.
Not short yet. I did short the 950 level at the end of June but Merideth Whitney ended that position .
I'll short again when a support level fails.
14,000 in a few years? Very possible. But I think a test of the March lows needs to come first.
Thank you very much
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