Slow motion market crash and trading it...

Discussion in 'Trading' started by chaosclarity, Aug 19, 2011.

  1. I fully realize that “crash” is a very strong word full of all kinds of very definite connotations, but I really can’t think of any other way to articulate what is happening in the mighty flagship US equity index other than calling it a “slow-motion crash.” The S&P 500 reached its all-time closing high and since then the might S&P has plunged!

    Whenever the wizards at the Fed run the proverbial printing presses to create more fiat dollars out of thin air, those inflationary dollars have to seek out a new home and a great deal of them begin bidding competitively on the already overvalued US equity markets. It is no coincidence that the S&P 500 bubble really ignited after the Fed began aggressively goosing US money supplies last year!!!

    It will astound future historians to no end that the Ben Bernank, a famous and brilliant student of economic history, told the world that the markets were dangerously overvalued in 2007, and then proceeded to not only do nothing about it, but throw the credit taps wide open in response to various global “crises” and in effect create what is probably one of the greatest and most destructive equity bubbles in history!

    Pretty much every market technician on the planet is marveling and sweating over the gargantuan multi-month “head and shoulders” formation the S&P 500 broke out of.

    Any way you slice it though, the fundamental and technical case for the S&P 500 is certainly for another serious downleg approaching, probably not carrying us to the ultimate bottom, but definitely obliterating another significant percentage of already bleeding investors’ scarce capital. Once the mighty index trades below 1000 or so for a few weeks, the selling pressure will probably intensify immensely as fear increases and investors and traders decide discretion is the better part of valor for now.

    While us private investors can’t save the world, we can zealously try to transcend the real-world of popular opinion on the markets. Rather than living in the confusing world of Obama's and Bernanke's lies and perpetual promises of “jobs" or the profit recovery will roar forth “next quarter,” investors can seek to understand the markets as they really are.

    The markets could not care less about you or me, they just exist. Only by understanding the markets in their actual strategic historical context, with mighty cyclical overvaluations giving way to gaping cyclical undervaluations over decades, can investors successfully beat the market year after year.

    The few investors who do not believe Obama or Bernanke are the contrarians, who fervently strive to understand greed, fear, valuation, and history and do not buy into all the hype and obnoxious lies that mainstream investors eagerly lap up like famished kittens.

    Only a relatively small number of contrarian investors truly seek to understand the markets while the rest of the investors are trapped inside, by their own choice, and have no hope of escape, blinded by their own delusions.
  2. Are you one of them?What do you suggest?
  3. say what you want about Obama, but he's one hell of a good oil trader.

    Sold 30m brls short in the high 90's.

    Not sure if he's covered yet.

    That could be an indication of things to come.
  4. The circuit breakers slow things down...

  5. Huh? What cha talkin about Willis?

    Are you suggesting that we start a bonfire, roast marshmallows, make s'mores, and sing kumbaya?

    Or sit under the tarp and drink vodka and scotch?
  6. I love the 400 pt days up and down. I wish it was like that everyday. Forever!
  7. it's the 400 pt days down everyday and no up days that cause the problems. Especially if you buy on dips. Even if you're short, at some point there won't be anybody to take the other side when you try to cover.

    But I agree, it's getting to where a 100 pt day is kind of boring. Anything less than that and you can't even get stopped out let alone take a profit.
  8. Being a guy, I have to admit I love action movies. While television generally annoys the heck out of me, it is such a wonderful diversion to go catch a movie on the giant silver screen and be transported to a different world for a couple exciting hours. Although a good heroic story is crucially important to make a stellar action flick, the real star is truly the actual action sequences themselves.

    One of my all-time favorite action movies is 1999’s amazing “The Matrix.” If you are one of the few people left in the First World who haven’t seen it yet, it is a surprisingly deep tale about a dark future where humanity is trying to escape from a virtual-reality simulation created by artificial intelligence to enslave them. I liked the movie so much I saw it multiple times in the theaters!

    While “The Matrix” was graced with several phenomenal action scenes, the now famous over-the-top lobby scene takes the cake. Our hero Neo and his gorgeous sidekick Trinity embark upon a daring mission to infiltrate a building where the bad guys are holding the good guys’ leader, Morpheus, hostage. Neo and Trinity calmly walk into the lobby of the bad guys’ skyscraper, security stops them, and some resulting magnificent movie mayhem explodes onto the screen.

    Neo and Trinity proceed to whip out more firepower than the Canadian Army could deploy and an amazing symphony of destruction ensues. Legions of bad guys swarm into the lobby to try to stop our heroes, but they deftly dodge bullets and shoot back with inhuman precision to cap the bad guys. One of the coolest parts about the whole lobby scene is the breathtaking slow motion!

    Time dilated, a relentless hail of bullets spews forth from various weapons, staccato muzzle flashes like strobe lights, carving explosive holes all over the granite walls. Spent brass cascades out of the breeches of automatic weapons and bounces on the hard shiny marble floor. Our heroes nimbly avoid the blizzards of lead from return fire with acrobatic flair and don’t even break a sweat.

    The signature Matrix lobby scene, in glorious slow motion, is truly an awesome masterpiece of adrenaline and testosterone, dramatically raising the bar by which all future action movies will be judged. The phenomenal slow-motion effects in “The Matrix” remind me a lot of the S&P 500 over the last couple years, which appears to be struggling through a slow-motion crash
  9. 1. Volatility is the trader's friend.

    2. This is a trading forum.