Chances we are going into a full-blown bear market?

[Saltynuts]

"If this bottom/reversal happens around 1pm EST, I just might make another 5K today"


Hahaha, I think you kinda-sorta called it lawrence!

 

[Saltynuts]

Well, I don't have much of a prediction, but I've been bearish since last Thursday. Hanging on to my winning puts and shorts with a target of their MA200 (which actually lines up nicely with SPX MA200). Looking for another 5-6% decline before next Friday. Will cry uncle if we breach the dead cat highs.

Longer term, I'm still bullish, and next week will hopefully present some buying opportunities. Will bail quick if we breach MA200 with conviction. But I'll be buying as we round (what I think is) the bottom.

Thanks beerntrading. I suspect you are right that more downside to come. Hope you are wrong! But that doesn't sound illogical!!!

 

[beerntrading]

Thanks beerntrading. I suspect you are right that more downside to come. Hope you are wrong! But that doesn't sound illogical!!!

I should say, I'm really bad at reading indexes or ETFs. Though usually pretty good when individual stock patterns are mirrored in the index itself.

 

[luisHK]

All the ETers bitching about lack of volatility those last few years must be happy at last.
Do you actually manage to make money in those conditions ?

 

[beerntrading]

All the ETers bitching about lack of volatility those last few years must be happy at last.
Do you actually manage to make money in those conditions ?

IKR....and they all blowout on XIV because they thought it was never coming back.

....and then they have no money left to play the volatility.

 

[ElCubano]

Nobody knows. But of greater interest, what would be your game-plan if this is the start of a years-long bear?

Wait until 3 or 4 funds blow up and everyone on CNBC is tapping out then back up the truck . 2-3 years from now. That's a Hail Mary prediction lol.

 

[SteveM]

But what are the chances we are going into a really long (months, years) bear market?

In my opinion, the good news for bulls is that the market is probably going to be excited to see what next quarter's earnings look like with all the new corporate tax rates, and stocks could drift higher as those earnings approach.

The bad news is that stocks seem to be in a no-win situation - good economic data that would normally drive stocks higher, will now also be driving US-debt yields higher. This will be seen as a net-negative for equities, and stocks will be sold down until the market gets a feel for how well corporate America can handle 3-4% rates rather than 2-3% rates. The "bad news is good news because lower rates for longer" low-volatility narrative that we have gorged on since 2008 is dying a quick death here.

The problem is the paradigm shift - Central Banks that have been loosening for the last 10 years have now shifted into tightening. There is no way around it. The market needs to find out if stocks like Amazon are really worth 300X earnings in a 5% cost of capital vs. the 2% cost-of-capital world, that they have enjoyed for the last decade - I suspect we will find that these high-flying stocks aren't worth that much. If so, many of them have a long way to fall.

 

[lovethetrade]

I've been thinking of this as a (rather large) correction in an over-extended rally. But what are the chances we are going into a really long (months, years) bear market?

Thanks.

It's possible the US stock market is turning bearish for the next 3-9 months. I doubt it's turning bearish for the next 12 months, you just can't make that assertion based on current technicals. We'll have a better idea at the end of this month.

 

[Saltynuts]

SteveM, thanks very insightful. lovethetrade, thanks as well, please do update us one way or another what you think when we have a better idea at the end of the month.

Dang, down over 4% on the DOW. Brutal.

 

[lawrence-lugar]

"If this bottom/reversal happens around 1pm EST, I just might make another 5K today"

Hahaha, I think you kinda-sorta called it lawrence!

I spoke too soon, and broke my own trading rule...of thinking/Assuming...I'm smarter and know more than the market.
That I know the future.
Today, like alot of days, is basically...The Trend is your Friend.

I should have waited, and whethered out the temporary upwards mini-storms.
Those were relatively meaningless, small, vibrations/gyrations/tremors...and not the real thing trend.

It's kind of amazing, how in hindsight, how crystal clear...and evident things are.
If only you would have held your nerve, and remained calm. And stop overthinking and assuming.

This is basically the same chart as yesterday. A fakeout recovery/finish upwards trend...then boom, it stayed and remained downwards.

I'm not complaining either way, that my crystal ball is semi-broken...I still finished the day with a pocket full of cash.
It's ok to be wrong on your initial judgement calls...so long as you're open-minded enough...to realize it, and still bank profits.

The key...is to realize the key inflection points....from the meaningless gyrations.
Change your perspective from a human on the ground...to a bird,...to a plane....to a spaceship...,to an extraterrestrial, -- and things will become very clear,
2018