Quote from bwolinsky:
I don't know what to say to this. It appears you superimposed, wait for it, <b>STRAIGHT LINES</b> onto someone elses' chart. Jack, if you want to say the market will go up, just say it. Multi-Decade old history has no bearing on the current market. I think the most you'd want to go out is 15 years, because that's when the age of technology starts, and when we have a more complete historical record of current events. The causes are not the same, even as it states at dshort.com, but about the only thing I agree with is that there is a fundamental, psychological tipping point from the depths of a depression to the most grandiose optimism. It is only on that point that I would agree with the site you pulled this image from. Paying $400 per share for AT&T (Old firm called Bell Telephone) back then (1929 split adjusted price approximately from what I recollect of historical documents at the time) is still just as stupid as paying $400 per share for AT&T today.
Elewhere I commented on the chart scale chosen. The chart was posted on ET.
As is known, I work from a paradigm. The hypothesis set uses four key words: Increasing, decreasing, continue and change. Hence the straight lines which represent the four words. To be clear, increasing and decreasing are shown as slopes. Continue is the extension of a straight line. Change is where one line segment is replaced with another segment.
What is nice about this is that V and then P are annotated with line segments that are "tells" from the market and all "tells" are 100% certain.
Using sets of binary vectors on nested fractals creates certainty at the smallest observable level. Then level by level, where level means fractal by fractal, the building blocks are put together. The ratio of movements, fractal to fractal, is 3 to 1. Think through why it has to be an odd number, for example.
Wonderfully, trends, (profit segments) are repetitive so a person is not reacting to the market but instead anticipating What Must Come Next (WMCN).
There is a major choice in trading. You chose to deal with the contemporary scene and its context. (many others took advantage of the AT&T breakup by doing their homework on a vastly different level than you)
I did not entertain your approach. I chose to use science and logic theory. Everything I use was dictated by the markets. Over the short period of 53 years, the application of science and logic theory has not changed. Papers continue to be written on the advances of science and logic theory; fortunately, they continue to confirm my approach.
The repetition of market crashes and depressions is part of the global culture. Settings and causes change; that is a priori. What does not change is how the mind works. Any mind is capable of learning and creating a long term memory resource that solves, rationally and logically, the opportunities presented.
In the case of markets, which is not rocket science, the rough equivalent of trading is driving a car. Read my document entitled Dr Hu, where you will find the over 20 illustrations of how the mind performs in a parallel way to driving a car.
This depression has the standard turning points of all depressions. Depressions are slower fractals than market crashes which are on relatively faster fractals.
The beginning point of a depression is in the prior Bull economic market. A period of overlap ensues. At some point the overlap ends (and it was measurable) and the envelope of the depression can be provisionally established. (Meaning you always know the right side of the market) Later the envelope is made most certain by mechanical processes.
For a hypothesis based system with parametric measures, this phase of establishing the depression is happening. Therefore, those involved in critcal thinking generally choose to make their analysis results available.
In the past, it was my custon to suggest the next annual set of legs (legs are observable price/volume movements that have definable slopes and velocities). My most recent was for 2008 and done in December 2007.
This period we are in now has several very negative connotations and any detailed commentary would be considered incendiary. During two stints at EOP, I was restrained from connecting A to B because of the panic aspect involved. During one of those it fell to me to dismantle WIN, since it ws an inappropriate non solution. The steering committee involved 500 leading CEO's in the US.
In terms of establishing the envelope of a depression, that point has now been reached with the advent of the end of the Bull retrace of the Bear Depression. This is the scientific process using applied logic theory at work on a serious contemporary concern.
I posted the '87 example and the media posted the turns based on the method used then. There are abundant references on the sequence of that process unfolding and the calls though the period.
What is very important, for a trader, is to have the foundation and building blocks in hand and operational for this period of market behavior. The reason I say this is that there will be times when mistakes cannot be corrected easily. To be more specific, there will be cascading and during cascading stops will be hit and passed and no related fills will be occurring even with consideration to FIFO. Various locations, like dark pools, and invitation only networks will be stepping into "outside" markets to prey and get advantages.
One of the myths of money and risk management is using stops. Unfortunately, someone of opposite orientation has to fill your stop or if absent the stop is not filled at that value. Client preferential treatment is a common and undetected convention during these times.
To avoid the negative aspects of cascading, it is a good idea to get used to always being on the right side of the market. Look at the "closing rally" thread yesterday. Don't expect a moderator in ET to step in and make an editorial warning to readers.
Do a survey of the man in the street who has a financial advisor. For some reason a lot of people have not done well over the last couple of years. It may be because the advisors are not competent. Go to the MTA site and listen to the video for test preparation; is there any way in the world a CMT could be competent? Probably not.
So the scenario comes down to the majority having the same view and very few people facing them to facilitate their exits from being on the wrong side and then getting really upside down. If a lot of people get upsidedown in given IB's, the IB's will not be performing properly either.
In the near past, several people I work with had the experience of holding through about a 90 point move during one day (26th or27th of FEB). What they saw from the right side of the market was others really taking a beating that those people had no recourse to stp out of the market. After their stops were passed, these losers had to wait in line for the market to find a price where someone would face their exit long after their desired exit. They were way upsidedown and their IB's could not get them out.
Today traders have to have a substitute for money management and risk control that is not the conventional since the conventional doesn't work during cascading. The maintenance of orderly markets lies with Reagan's committee at the end of the passing the buck line. Recently, these people and their organizations have been doing several unprecedented things and not enforcing reporting requirements. There is an almost daily rehersal of "hopefulness" being broadcast by the media whenever the media is granted an interview. The questions are like yours and you opinions. So unfortunate.
Upsidedownness in many venues is now on the table. It is a good idea to have an immunity to this. By being on the right side of the market when your IB has to deal with a disorderly market, you have the greatest advantage to survive. Either you keep your positions or you settle with the IB on a prorata basis when the IB is teminated. Obviously a lot of people will not have to handle their mistakes or be called to task because of the mess that makes them small fish. Looks like a multi IB situation to me.
