I agree with you, Autodidact. So many people going short now. Their panic covering can fuel a great rally.
Yeah, yeah, whatever. I'm sure this ain't the first time you've said that, nor will it be the last. Even this noob, yes, ET's most famous noob, said earlier this week that we would go down to 1900 and then reverse. So what does that make you?
You made a good call last week, but you have no idea if sided with you for the time being, I did not specify, maybe I did, maybe I did not. All I said was 2015 lows would hold, 2016 highs will be taken and that on Thursday I initiated a long term DIA position trade based on call options; plus what I said today regarding NQ. In fact, in one of your posts you suggested I was holding a bag from the past, nice assumption, considering you know nothing about my positions and that I'm not in the business of holding losers for too long. I'm happy you did well last week, good for you.
I like long at an extreme but a green day could easily be followed by a red day, even an outside red ...even all the way down to new lows. Where are the majority of the stops along the way? Intraday levels, certainly not daily levels. Breakouts, even of intraday levels, fail more often than they succeed. Thus I fail to see any benefit in ignoring the intraday swings or holding expectations beyond what's happening in the immediate moment, bar by bar intraday. I hope we get your intraday long. Beyond that I'm with you or against you as to your expectations for what will happen after the 1st green daily bar. I simply don't know what will happen next. I'm lucky to be able to know what's happening now, in the present. oh yeahhhh, Bry! breakout above green 2 hour candle off the bottom is excellent field position for a short ...depending on everything else happening that moment, and how traders are responding to it.
Don't see upside potential at all, market failed to take out the highs (for whatever reasons) and sold off on higher volume compared to August. IMO you are banking on yet another dead cat bounce.
The main thing with what will happen in 2016 contrary to what happened in 2008, we haven't heard of any significant institutional risks. So far appears insulated on the surface from Asian contagion. If you look at what happened in 2008, financial bombs were created and lit. Apart from the PE ratio that seems inflated, we have not been as speculative in marketplace. The FED started a tightening cycle, there is too much at stake in terms of perceptions. The FED cannot appear or perceived to have miscalculated. Its very easy for the bank proxies to run marketplace stops to the downside on a temporal basis, using China, "oh no the whole world is ending scenario". Look at the FOMC calendar, the stops above will be hit before the Jan meeting. The Jan meeting will appear dovish. They may raise rates again in March. The market does and will find a way to go up with rising rates. The highs will be taken out and then we may have an '87 style collapse. The destruction in oil sector has been factored into the market already. Yeah Oil can go lower and hit 2008 stops, but equities shouldn't.
The whole thing about Black Swans is that we don't know about them until they happen as nobody is ringing bells. Technicals is all we have.
I will take dcb's here under the right conditions. LT technicals down doesn't mean no new highs in our future. It's means some traders mistakenly take their eyes off their position based on the false assumption LT technicals matter. Just because we might have begun a daily downtrend (I don't know nor do I desire to think about it) ...LT trends can reverse at any moment.
We run everyone's stops. Anyone with a stop beyond a reasonable loss is begging to be run next but the expectation it must happen is flawed. All expectations beyond statistically predictable events will similarly be overrun more times than not. With one exception allowed where random cases of expectations are permitted to be various degrees of up to perfectly correct no matter how logical or illogical the expectations are.
I am generally not a bear or a bull just trade what I see, but...I see grim for 2016. I see a market crush like 2007 if not worse. time will tell...