Crash of 2005

S

SkinnyV

Ok. ...ok already. This thread is simply to get the conversation started. I have never seen such a confusing market in my career. I have been a professional trader with Carlin (Generic) since 1999. I have made a great sum of money using technical analysis over the years; however, lately; it has been a struggle.

My synopsis of current market conditions is rather Bearish. I enjoy seeing Bob P. (CNBC) telling everyone that the hedge fund community is "praying," and "hoping" for a fourth quarter rally. I LOVE seeing Cramer declaring that the fourth Q rally has begun. We currently have an unprecedented number of hedgefunds "praying" for a fourth Q rally. Many of which, if not all, are selling volatility in order to "make" a number (i.e. selling naked S&P puts and calls .. as a generalization). Is a fourth Q rally a God given right? According to all the "talking heads" it appears to be so. "This is not my beautiful house......This is not my beautiful wife..." Sorry, couldn't resist.

I conclude with the following statement: I wish for a trend. Not a two or ten day trend, but a rather longer term trend. To me, it seems as if there is a hint of speculation in the air from hedge funds to make some numbers before year end...If the can't make money; they will liquidate (why be in business if you can't make your 20%). If the market turns over from here (11/7); we could have a crash. However, I do realize that we are now in the "quite" period of the market. However, given the fact that there is a great deal of "hope," as-well-as, underperforming hedge funds; a rather hefty sell-off before year end could be in the cards. Food for thought.

p.s. Please.....only well thought-out comments welcome.

G. Vance Gray (ve-ri-tas)
 
We're not going to have a 'crash'.

GDP is very good.
Unemployment is very low
Corporate earnings are up, many with double digit gains.
Oil prices appear to be receding.

It's true Energy prices have had a negative affect recently, but it most likely will only be temporary.

And have you checked the US Dollar? apparently, the rest of the world thinks our economy is doing fine.
 
Quote from reno4nook:

We're not going to have a 'crash'.

GDP is very good.
Unemployment is very low
Corporate earnings are up, many with double digit gains.
Oil prices appear to be receding.

It's true Energy prices have had a negative affect recently, but it most likely will only be temporary.

And have you checked the US Dollar? apparently, the rest of the world thinks our economy is doing fine.
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I disagree.. GDP, earnings and unemployment are lagging indicators at best.

The whole recovery and future growth is coming off the back of the US consumer.

The key indicators to watch are the interest rates, housing markets, and consumer spending..

Everything else is lagging.

Yes oil is receding a bit.. and prices are coming down.. but they are still much higher than last year.

Short term interest rates have doubled and longer term rates should be on the upmove after breaking out of key basing pattern.
 
Quote from SkinnyV:

I conclude with the following statement: I wish for a trend. Not a two or ten day trend, but a rather longer term trend. To me, it seems as if there is a hint of speculation in the air from hedge funds to make some numbers before year end...If the can't make money; they will liquidate (why be in business if you can't make your 20%). If the market turns over from here (11/7); we could have a crash.
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What's wrong with the current market's trading range?
It apprears to be plenty tradeable and has a pretty defined range as well.
Lots of sectors to play . . . The financials, oils, semis, defense, etc.
Me tink that you protest a bit much.

And why a crash?
Care to substantiate your claim with some sort of foundation?
 
I wouldn’t call this market confusing. Sometimes markets move in straight lines; sometimes they rally then pullback, rally again, pullback, etc. Since we the Apr05 lows we’ve had a number of tradable rallies and pullbacks.

Yesterday the QQQQ tried to break out of the August highs on low volume. We are up to overhead resistance: not only the August highs but also within spiting distance of the Dec04 top. A correction (within the trading range) from this point is definitely a possible scenario. But a stampede breakout on large volume is also possible.

A crash scenario is always a worst case possibility, but in my opinion requires panic triggered by some external event or maybe herding hedge funds trying to get to the exit.

I'm too dumb to estimate the odds for a correction, stampede breakout or a crash in the immediate future. But crashes are relatively rare, breakouts are more common, and corrections occur all the time (in different magnitudes but typically 50% +/- 25% of the last move).
 
Apex,

I guess the word "crash" may be a little strong for this post.

My gut feeling is this: there are more "fast money" hedge funds trading now than at any time in history. If we do start down from this point on; there would probably be a rush to the exit. Why? First off, there would probably be a great deal of member liquidations (which start in November). I would imagine a great number of funds would sell to "save" what's left of their year (performance). And to add fuel on the fire, a great number of funds are short S&P puts. What would start a move down? I have absolutely no idea.

I'll continue later......
 
Earnings next year look like they will be pretty poor with little or no growth. The question is can the players manage a year end rally so they can get out of their positions at a decent price or are they all going to have to liquidate on mass once the rally doesn't materialize. So far it looks like some of the liquidation has begun in the more interest rate sensitive areas. If a rally doesn't materialize soon the penchant to sell positions will increase.
 
Quote from Mvic:

Earnings next year look like they will be pretty poor with little or no growth. The question is can the players manage a year end rally so they can get out of their positions at a decent price or are they all going to have to liquidate on mass once the rally doesn't materialize. So far it looks like some of the liquidation has begun in the more interest rate sensitive areas. If a rally doesn't materialize soon the penchant to sell positions will increase.
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Agreed.. everyone is still betting on a year end rally to bail them out.

What happens if the rally doesnt matterialize.. my bet is that we go sideways the next 2 months and when 2006 hits.. we will begin to make new lows in every broader index.. starting with the small cap ER2.
 
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