3 Black Swans

Quote from AMT4SWA:

Keep in mind....if S&P trades down to sub 1270's and tests the March lows there will NOT be any bounce this time imo. From a pure AMT (Auction Market Theory) standpoint, I think we will ACCELERATE through the March lows to a new lower trading range. LONG positions held from the March lows will dump out fast which will punch us through to new yearly lows.....plus there just wont be enough buying on a third trip down without a major news event imo (something major like a big sell-off in commodities, etc).

I have longer term Short ES positions that I will not start scaling out until 1270's....I am looking for a new LOWER trading range before the end of summer.
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Your plan doesn't seem to make sense - if you think we blow right through, you shouldn't be scaling out at 1270 or even 1250.

Personally I expect a decent bounce on the first test of 1250. Either off 1250, or a dip 20-30 points below and then bounce. I'm happy to leave the last 1-30 points of a 200 point move to someone else.

Now if the VIX stays at 22-23 when we hit 1250, I'm gonna use discretion and stay partially short until fear gets higher. But if we are VIX >25 then I am going to cover my shorts and if we get VIX 28-30 I am going to start buying calls and possibly get long some too. IMO 1250-60 is a cover, anything below is a buy, and the rally will at least retrace to 1300.

Longer-term I agree we are heading lower. I'm gonna be keeping some Dec puts as a "short & hold" position for that purpose.
 
whats funny is everyone laughs at all this "doomsday talk". guess what? its actually coming to fruition.if this ai'nt doomsday,i'd hate to see what it really is...
 
Quote from Cutten:

Your plan doesn't seem to make sense - if you think we blow right through, you shouldn't be scaling out at 1270 or even 1250.
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Actually it makes a ton of sense.....locking in profits is guaranteed by starting my scale out in the 1270's. If I am wrong and we do bounce off 1250's then I will have a smaller position to quick cover on a fast moving short covering rally back to plus 1300 levels. The position has already made very good profits, so I need to be properly prepared for any major support level touch reactions. I am not greedy going for a huge kill shot, if the market sells below 1250's I have plenty of inventory to take advantage of it in a measured way.
 
Quote from Cutten:

These are off the radar for most of Wall Street, but I think they are more likely than people expect:

1) Oil approaching $200. It might not hit it, but I think there's a higher than expected chance it gets to $180-200.

2) S&P collapsing to 1000 or close to it, as the economy performs even worse than expected.

3) A major blue-chip financial going bankrupt.

These might not happen, but I would say they're worth a punt, because the payoff will be huge if they happen and they aren't as unlikely as the market is currently pricing in.
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These three are going to happen.

Furthermore, there will be several other major happenings along the Black Swan lines.

From about JUN 06, as many debt factors decelerated into illiquidity and reporting requirements were not fulfilled, there began a domino effect. It is now far ranging and many many items are approaching critical points of measurement where there are tipping points.

My compliments to you for contributing another thread on these important business planning topics and trading plan adjustment flags. This is going to be a very important year for taking care of being sure to have a neutral bias (which affords one the chance to captialize on every oppotunity).

I feel that since 2008 is not going to have a "traditional summer and the financial industry will be dissolving a lot of corporate sub divisions, there is gong to by a very large wake up call across the spectrum.

Things will never be the same again and as the third Q begins, we will be seeing a lot of desperation with the recognition that 2008 will have no chance for posting a good year even with 2 Q's remaining.

Traders usually do not have anything but a short term trading strategy; as these strategies fold and they have no comprehensive views (actually as they sit and read posts today) it is going to be a very tough sequence seeing the "units" traders leave then the "tens' traders leave and finally the hedgies facing the shut down music later in this year.

No one, at this point can be "running six months late" as we see in most ET threads.

I posted a chart (graphic) at the beginning of the year that depicts this. There is one flat leg and at its end the fit hits the shan as they say.
 
A plausible black swan is the total collapse of paper currencies as a medium of exchange for global commodities. The Dollar gets all the focus but in truth we're no worse than anyone else in terms of debt to GDP and future non-discretionary commitments.

Even with the dollar flat commodities are on fire. I laugh when I hear folks say"we're leaving our grankids in a fix." WTF! We left ourselves in a fix! For all we know the markets may wake up and stop extending credit to government securities a week from now.

We may soon see the day when food becomes unaffordable at anything resembling the pay from our current units of labor.

Intuitively I still see assets as WAY overpriced compared to necessities. Food riots. You can't think Black Swan enough.....
 
My scale out zone is 1275.00 down to 1255.00 ....at 1255.00 I will have 1/2 of my position left for any breakdown of the 1250's. ES 1270 magnet has sucked us down to a key support zone so we will see what takes place in the next few trade days. :)
 
Quote from Pa(b)st Prime:

A plausible black swan is the total collapse of paper currencies as a medium of exchange for global commodities. The Dollar gets all the focus but in truth we're no worse than anyone else in terms of debt to GDP and future non-discretionary commitments.

Even with the dollar flat commodities are on fire. I laugh when I hear folks say"we're leaving our grankids in a fix." WTF! We left ourselves in a fix! For all we know the markets may wake up and stop extending credit to government securities a week from now.

We may soon see the day when food becomes unaffordable at anything resembling the pay from our current units of labor.

Intuitively I still see assets as WAY overpriced compared to necessities. Food riots. You can't think Black Swan enough.....
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Exactly.

The dilemma of food riots will be an everyday event in the next 12 months in SE Asia...energy costs are going to create tremendous pressure in those countries ,including China, as the economy wittles under the pressure of lower exports to US and Europe and their own inherited inflation.

A major problem being that they are now used having 2 meals a day and are not going to want to reverse their standard of living.

As for Europe, I feel that the Euro will come under severe pressure .Some of the weaker (Italy, Spain) member countries renege on their loans as they are socially bankrupt and the crater will get bigger and the current baby boomers "retire".

We are in for one hell of a ride over the next couple of years.
 
Quote from jack hershey:

These three are going to happen.

Furthermore, there will be several other major happenings along the Black Swan lines.

I posted a chart (graphic) at the beginning of the year that depicts this. There is one flat leg and at its end the fit hits the shan as they say.
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Man I do love to read your posts...yes the tipping points, once they occur things happen very quickly as with Bear Stearns... the surprise comes from the fact that we do not expect big things to collapse suddenly but to decline gradually ....do you still have that chart somewhere or a link?
 
Quote from Cutten:

If they aren't even close to being black swans, why are the premiums for CL $200 calls not huge, why are S&P 1000 puts selling so cheap, and why are C and LEH not in single digits?

Are you trying to claim that S&P 1000, oil $200, and Citigroup/Lehman or someone similar going broke are small impact, easy to predict, common events that are expected by most normal market participants?

That would imply that if you bet on them and they happen, you won't make much money. Is that what you think? S&P hits 1000 by late October and shorting or buying loads of Dec OTM puts would not make much? Ditto with oil $200?
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"this is the definition of black swan event:"a black swan is a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations.

the wife says u don't like the soup hot. u want it cold.? logic 101 is a course offered at every college.
read carefully the definition of black swan.
 
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