Why We Think The Market Should Go Down Next Week

Discussion in 'Trading' started by ShadowTrader_08, Apr 16, 2009.

  1. It's funny that you posted that chart- because I had drawn out that exact same ascending wedge early in the week and have been staring it for days.

    The bottom of that thing never broke until the last 10 minutes of trading on Friday.

    The S&P just kept getting crammed smaller and smaller into the tip of that thing- it was really reacting to the top and bottom of it, which was telling me there must be something to it.

    When it broke to the downside I jumped into SDS and got a huge blazing fast run up.

    With seconds to go before the close I was trying to decide whether to take the profits or play for a bigger move.

    During my indescision, it corrected a bit and I ended up holding it into the close. Its since been green and red, closed AH in the red, but thats afterhours.

    Who knows. I find this wedge interesting though. I might make out on a nice gap down on Monday or it could be yet another screwed trade for me.. this one, though seems kinda fun. I too, had figured we'd bump into 875 and pull back somewhat at least.

    I wouldnt be suprised to see it fall out of the wedge and then pull a superman later and climb above it.

    Not really sure on this one.. I definitely see the logic on both sides.. guess I'm hanging on from the short side..


    But you turn on Fast Money and its all bull talk there
     
    #21     Apr 17, 2009
  2. LOL.
     
    #22     Apr 17, 2009
  3. Hi, Shadow. I'll give my own take. We are near an overbought level, and, to put it to the S&P might be in that 875 range, but it really depends if we hit that earlier in the week rather than later. More strength can come in in the later part of the week if we do not advance a couple more percent from here. I'm eyeing QID after another couple percent rise in the NDX in the next couple days.

    The way I read your analysis was as a best guess, and could not see any real quantitative method in it. I do agree, though, just a little bit more, and we'll be due for a pullback.
     
    #23     Apr 17, 2009
  4. The VIX (fear indicator) has traded DOWN from its opening level for 13 straight days. I'll bet it's been a while since we've seen a streak that long on the VIX...

    seems excessive to me.
     
    #24     Apr 17, 2009
  5. Logic... what goes up, must come down.
    Hedgies understand this. Fund managers understand this. If there is no big guvmnt news this weekend to prop markets... I might even say the guvmnt knows this. Sectors will be dumped to allow a nice retrace. If nothing else, it will take the edge off long term investors and technical traders alike, since we all expect it. I know the market does what we don't expect at times, so it may be odd timing or even after seemingly very good news. But odds are it will happen over a few days within next couple weeks.

    Certain commodities or cash will hold big money perfectly safe (better than Oct and Nov) while market slips a bit. Then they can jump back in for even more percentage increases at cheaper pricing, or leave it for the ride because it is not expected to be a big correction.

    More reasons... Forget options week since more important is... 1Q is done, big earnings week is done. Important increases to instill consumer confidence etc... is done, great 1Q. 2008 is dead and gone we can forget it. Trust the guvmnt. All that crap will likely raise this bloated market pig from a small retrace (820's-840's) to the 920's-940's. After that, who knows. Likely GM bankruptcy will be explained. It'll be good for a million reasons but later it will be dissected and OMG it wasn't so good after all. Also 2Q zombie financials will bring new and even less certain numbers to the table. Israel nukes Iran causing WW3. Again who knows.

    I'm a noob, so don't listen to me, please. :p :cool:

    Edit: For weekend, mostly cash, 20%L, 10%sh, sh added at EOD today. (illustrates confidence level in my crystal ball, lol)
     
    #25     Apr 17, 2009
  6. The market "should" go down?

    THE MARKET CAN REMAIN IRRATIONAL LONGER THAN YOU CAN REMAIN SOLVENT :(
     
    #26     Apr 17, 2009
  7. ammo

    ammo

     
    #27     Apr 17, 2009
  8. ZeightS

    ZeightS

    picture of the day from slopeofhope.com
     
    #28     Apr 17, 2009
  9. As a quick lesson this is referred to as mean reversion, which is a bit more complex than the concept of gravity as you described.
     
    #29     Apr 17, 2009
  10. I guess it depends how long you "think" it's irrational before "you" change your mind.
     
    #30     Apr 17, 2009