Discussion in 'Trading' started by waggie945, Aug 29, 2003.
So much for August being a seasonally WEAK MONTH!!!
I'm a big believer in seasonality and all things equal, am generally short in Sept. - Oct. ...
This year, however, I think we are poised to buck the trend. My suspicion is that tech and other firms are understating how well things are going as absolutely no firm or organization wants to sound too optimistic ( so 90's!)
Remaining moderately long & jumping on the Inflation bandwagon, that is until SARS comes back this fall.
The bottomline is that the ENTIRE WORLD is pumping-up their monetary bases like crazy!
The Japaneses are actually using monetary policy for a change, instead of building news roads or bridges. The Euros are also pumping the Euro up, and Alan is.... well Alan has his foot on the accelerator about as hard as you can floor it.
As a result, anytime that you have a monetary base growing leaps and bounds beyond what the economy is growing, you will have the excess liquidity spill into the financial markets.
The next big issue will be as Robert Arnott ( of $23 billion dollar asset-allocator First Quadrant of Pasadena, CA ) stated earlier on CNBC today is when people will come around to realizing that annual S&P earnings are inflated by 40% due to corporate stock options not being expensed.
I dont listen to CNBC people - and quite frankly I dont think the real players in the market do either. Most of the "talk" is people attempting to influence their position holdings. I ignore 99% of it.
What I see in fundamentals is that there is a slight to moderate recovery underway across several sectors of the economy. Tech however is still at overcapacity in many areas and gains in many of the largest players over the next several quarters will be modest at best and we will still see productivity - read layoffs, asset divestitures etc - driven numbers stated.
However all of the fundamentals dont necessarily drive the markets short term and I dont try to call short/long positions based on historical market performance within the calendar year.
I would not be so quick as to dismiss the opinion of someone such as Robert Arnott of First Quadrant. True, there are a lot of talking heads on CNBC, but Arnott is a pretty savvy guy.
You don't get to preside over a company that manages $23 Billion in tactical-asset allocation by being a chump.
Feel free to check out some of his articles on the First Quadrant website:
I agree with you. August has been very firm, and there is still a lot of money ready to come in. Big buyers are picking up anything on weakness. While there is always the possibility of a few dips (I hope!), I sure don't see any significant weakness on the horizon. Too much support. And the minute that reports surface about new levels of corporate spending for the fourth quarter - which they will - the S&P will move sharply higher. I don't think we're going to see any meaningful correction until January. Not a good time to short, but a great time to be buying any good stocks on weakness.
Over the last 3.5 years, the frequency of a monthly move in which there was OVER a 10% move (from low to high, vice-versa) was 41%, or roughly 5 out of 12 months.
On a historical basis, over the past 54 years the market has averaged a "monthly" move > than 10% just 9% of the time, or about one month per year.
The last time that we saw some very high frequency of monthly moves > than 10% was 1973, 1974, 1975.
VOLATILITY IS A FUNCTION OF RISK PERCEPTION.
As a very shot-term intraday trader I make it my business never to even hear any economic/business related news as it may influence me and effect my adherence to my technique.
I leave all concerns about the economic "future" to those who have not discovered the simple fact that the current price action is all the information to you need to make money at the current moment.
I believe that people's lives would improve a great deal asa well if they spent more time in the current moment. There is certainly too much energy expended on might should or could have been, and on what may or may not be!
We do trade, nor live in yesterday or tomorrow - it's always right NOW!
the market is simply sideways and quiet
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