I've been scalping from the long side all week. I agree it's a crowded trade. To many bottom pickers. I rarely protect profits with stops-I'm not into tick fucking, I want home runs-but I won't let longs get away from me. This stuff certainly could flush more. OTOH: I lost hundreds of thousands in the early-mid 90's shorting the Index off of economic weakness. We're not trading Economy futures we're trading a basket of stocks. Home prices were bearish for YEARS during the 90's (Los Angeles home prices broke 42%) and stocks rallied with a vengeance. Granted I don't think this is a particularly similar era but I'm not extrapolating that at these levels stocks necessarily need to erode further because of bad news. The end of the world is pretty discounted. I've said this repeatedly. We ALREADY had the depression era meltdown. It was 2000-2003. This is pure 70's. Mega inflation, currency woes, insolvencies, big whippy ranges. One of the best traders I know is buying stocks this week with the notion that someday rather than paying for dinner with a worthless dollar, pound or Euro you may be compelled to lay a stock certificate down on the table. Coca-Cola will still be in business long after the United States Treasury shuts it's doors......
Reality check. Anyone that thinks that the Treasury may shut its doors should be stocking up on ammo, canned food and water...not stock certificates.
<cite> Why is anyone irrational enough to be bullish here?</cite><p>I think they are DISCOUNTING the election. A lot of people worked hard getting to cash. There is cash on the sidelines. But if you got to a place of all cash, why not wait and see, how the election plays out. So called Gubmint leadership or lack thereof, got us to where we are at. It might be instructive to see what their plans are, when they are looking at a major major change of economic landscape.
To Pabst's and some others' point: If you're a triple sharp trader, you should be in heaven in this environment. I'm not a sharp trader. The closest I can get to consistent success is using swing trading. With these insane whips, what one hand giveth, the other taketh away x2 within days, or even hours. The more I learn, the more I realize I don't have a clue, and the more I am in awe of people like Livermore - how he did what he did, without broadband instant information, despite the fact that he blew it all and his brains out at the end, well, that's just amazing. p.s. - I used to laugh at notions of another depression. Not anymore. I'm not saying it's likely, but I wouldn't call someone making a 10% statistical call of a chance of a depression (whatever the methodology they're using) clinically insane or anything, especially given the linkage damage the deleveraging process from exotic financial instruments is doing to global capital and financial markets. Decoupling was a massive myth.
people are bullish because they expect earnings to remain strong and that would mean we are extremely under-priced. People are bearish because they believe earnings will continue to fall meanings stock prices have even further to drop.
buylo, you need to short a few insolvent and soon bankrupt name to see how nuts the market is. after shorting fnm fre and getting squeezed day after for weeks I won't understimate peoples willings to buy ever again. we could see ES at 1250 again for BS reasons
I'm starting to put out low ball offers on REO properties. Banks are bending over for a quality high FICO bidder. But I'm willing sit on them for awhile too.
Reality check: The sun rose before there was Big Central Government. It'll rise after. Having a few million in cash if Dollars go Weimar Republic isn't the kind unless you own a very big wheel barrel......