A few reasons why I am shorting this bounce

The only problem with expecting an interest rate increase is that in this part of the cycle, interest rates aren't increased until the economy gets strong enough to press on manufacturing capacity and at that time it is humming along well enough to push the market even higher. Normally, we don't see the cycle top in the market for several months after interest rates start to climb.

Otherwise, I think only even higher oil prices or a shock of some sort would be required to make the short side a logical bet.

Quote from Trend Fader:

I agree the market will not breakdown all of the sudden and slice through 2000. But I do believe we are setting up for another lower low on the Nasdaq. I hate to break it to you but interest rates are gonna be raised very soon. You dont have to actually wait until the Fed raises them.. sometimes you can anticipate things just like the markets tend to do.
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Quote from pspr:

The only problem with expecting an interest rate increase is that in this part of the cycle, interest rates aren't increased until the economy gets strong enough to press on manufacturing capacity and at that time it is humming along well enough to push the market even higher. Normally, we don't see the cycle top in the market for several months after interest rates start to climb.
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Exactly.. thats what the FED is trying to do. He wants to be sure that when he does raise rates it wont hurt the economy because he is assuming the economy will be picking up which will offset the increase in rates. Major problem is lack of employment which is the dominant theme.

But like u said the key word is "normaly."
 
So "this time it is different"? Also, employment is a very lagging indicator. Job creation doesn't occur until we get further into the recovery. It is the last indicator to rise, usually signaling that we are close to the end of the expansion.

But, it's your money. Good luck.

Quote from Trend Fader:

Exactly.. that's what the FED is trying to do. He wants to be sure that when he does raise rates it wont hurt the economy because he is assuming the economy will be picking up which will offset the increase in rates. Major problem is lack of employment which is the dominant theme.

But like u said the key word is "normally."
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Quote from pspr:

So "this time it is different"? Also, employment is a very lagging indicator. Job creation doesn't occur until we get further into the recovery. It is the last indicator to rise, usually signaling that we are close to the end of the expansion.

But, it's your money. Good luck.
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I am not an economist nor do I trade the market based soley on econometrics.. the most important thing to me is price and volume.

If i tried to trade the market soley based on economic theory I would of gave up a long time ago.

The only points I made was that rates are gonna rise soon and employment stinks.
 
Quote from pspr:

The only problem with expecting an interest rate increase is that in this part of the cycle, interest rates aren't increased until the economy gets strong enough to press on manufacturing capacity and at that time it is humming along well enough to push the market even higher. Normally, we don't see the cycle top in the market for several months after interest rates start to climb.
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Marty Zweig did a thorough study of rate hikes - he concluded that the market didn't stumble until after the 3rd discount rate hike.
 
I think your analysis makes a lot of sense. Whether the trades will be profitable or not, who knows.


Quote from Trend Fader:

I disagree... Nasdaq is not sideways.. we put in lower low and right now we are in bounce mode. There is a ton of support at the 2000 level. We very well might trade between 2100 and 2000 for quite some time.. but I think its prudent to either dump longs near 2100 or begin scaling short near these levels.


--MIKE
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Quote from Trend Fader:

I disagree... Nasdaq is not sideways.. we put in lower low and right now we are in bounce mode. There is a ton of support at the 2000 level. We very well might trade between 2100 and 2000 for quite some time.. but I think its prudent to either dump longs near 2100 or begin scaling short near these levels.


--MIKE
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Oh I didnt really consider Naz. Yeah I guess you're right, I think Naz is honestly a joke in regards to valuation and I can totally see it plunging or at least selling off just because it's kinda full of crap. Seems like money is leaving Nazdaq toward more solid companies in this rotation.

Shorting 2100 level is a good play.
 
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