dazed and confused
- Thread starter tivthetrader
- Start date
people don't know when to buy, and people don't know when to sell. there aren't enough sellers. we'd have to drop 10% I bet to see any real selling going on.
Well, I mainly look at the European indices and they had no such squeeze at all. In fact the CAC40 seemed pretty depressed going into the close while the ES was still pretty much rippin' and rollin' and had three basically flat days now. Possibly a distribution. Tto get out of an uptrend you need at least two days that look like weakness or distribution unless there is a *huge* external shock that breaks some critical supports (by huge I don't mean some kids in the Middle East getting shot and arrested or some boat that wants to float thru Suez without any nukes on board).
The trend trade is just a lot stronger on US stocks from all the stocks in the world. Whatever though, this is merely attributable to career risk at this point (i.e. a fund manager should never be wrong on his own if he wants to keep his job, ergo they will keep buying a rising trend until there is a reason not to, in the same way that EMs were in a huge uptrend before 2011 until the inflation fever hit)
The trend trade is just a lot stronger on US stocks from all the stocks in the world. Whatever though, this is merely attributable to career risk at this point (i.e. a fund manager should never be wrong on his own if he wants to keep his job, ergo they will keep buying a rising trend until there is a reason not to, in the same way that EMs were in a huge uptrend before 2011 until the inflation fever hit)
Why WOULDN'T institutional traders/investors be buying? They're not in the business of day trading; they're investing large amounts of money for longer-term holds. Whether they continue accumulating in the middle of an upward leg of a bull run when ES is at 1330 or 1340 is irrelevant. Programmed trading is designed to buy pullbacks all the way through new highs. They buy on weakness that doesn't violate the trend and they buy on a demonstration of extreme strength (breakouts) because the breakout level in a true breakout (not a false breakout or stop run) becomes new support, so there's nothing for trend-followers to fear buying high and selling higher.
The last breakout of a previous high following a meaningful pullback in the bull run occurred on 12/3/10 and the ES ran nearly 80 points before the next meaningful pullback in the run.
The breakout prior to that after a meaningful pullback resulted in a 100 pt run.
The breakout through 1300 following the last meaningful pullback occurred on 2/1/11, so the question to ask if trading/investing longer term is "What reason is there to sell at this point an leave another possible 40 pts or more of move on the table?"
The last breakout of a previous high following a meaningful pullback in the bull run occurred on 12/3/10 and the ES ran nearly 80 points before the next meaningful pullback in the run.
The breakout prior to that after a meaningful pullback resulted in a 100 pt run.
The breakout through 1300 following the last meaningful pullback occurred on 2/1/11, so the question to ask if trading/investing longer term is "What reason is there to sell at this point an leave another possible 40 pts or more of move on the table?"
This forum is very strange. Great trend up and almost every post is people talking about shorting. I recommended some nice relatively safe potential breakout stocks ( TD, RY, RIM, INTC ). Pretty much no one is interested in this kind of call. What has occurred since ?
TD, RY are trending up in a very nice way
RIM looks like its breaking out on news
INTC seems to be waking up now ( safer, lower return play )
My new interest is ABX. Stock has been ignored somewhat because with its hedging program it burned traders many times with substandard earnings reports in the past. Hedging program is gone now and their starting to make huge profits. Stock seems cheap. I was slightly late on the initial move but wanted to see earnings before I jumped on board. To me I don't know where Gold may go but I think ABX will outperform Gold now after years of underperforming it. It costs them less then $500 an ounce to produce the stuff. Current stock around $51 Cdn I like it to go to $60 Cdn in a month and if Gold pops then a $70 Cdn target is quite reasonable in several months. Technicals since Thursday seem very strong.
All these stocks will be favorites of mutual fund managers. RRSP season here in Canada, a lot of new money needs to be put to work. So February-March seems destined to be perhaps the best Canadian bull phase this year. Mutual fund managers that stay in cash will drop 10-15% return to their fully invested peers the next couple of months. That kind of underperformance hurts their business prospects.
Hoping for a dividend increase from some Cdn banks. Easy money if it occurs the options market seems to be underpricing this possibility.
Its been in the news for weeks that a lot of emerging market funds were being transferred to US market investments. At some point soon your going to have to admit that calling for a 20% correction a few months ago was way off base.
All the "fools" etc that you keep referring to are making serious money because they read this market far better then you did. By a country mile. I'm just one of those "fools" who made several very accurate calls ( even posted some of them ) and took the plunge in leveraged positions. The risk/reward was excellent with 10:1 payoffs within two weeks. Some positions were 30:1 but involved extra risk I didn't feel was justified.
Once you truly understand where the big money is going you just have to piggyback on the trend until its over. Never bet more then you afford to lose but bank your profits and keep your sizing reasonable no matter how well you are doing.
Agree 100% that there is no point in trying to figure out the "why" of a short-term move. In fact, I think it's one of the most financially-ruinous things a trader can do because it makes the assumption that you are smarter than the market, whereas I think the proper assumption for a trader is that short-term movements will always go further than you think they will, so get aboard them as soon as you see them develop. From there, manage the trade appropriately, but don't forgo a set-up and trigger because you don't believe in it.
Haha you take yourself very seriously don't you? Big shot got a clue where the big money is going? Every rally has a guy like you going hallelujah over finding the big money.
Personally I just snigger at some of these opinion pieces I read, going "Well, we're in a bull market because the markets never go down very hard after such a sustained uptrend" and "Lots of people are still skeptic/scared so there is plenty of upside. Wait for the retail money to come in!". Then you have weirdos like Birinyi who only look at price and comparing price action to previous price action, claiming therefore that "this is a bona fide bull market which will take out the previous high".
I think a big reason a lot of equity managers are ploughing their cash back into the market and are thus at low extremes of cash levels (again) is the career anxiety that comes from the thought that "Well, in 2005-06 things looked super fucked up too but there were still two very good years of upside left. Why would it be different this time? I'll be able to tell when shit hits the fan". After all, judging from price action in 2005-2006 there was plenty of cash departing from the market as the economy seemed to be going down the crapper (and it really was) even though the markets continued to go up in defiance. Add to the above thought "and it won't crash because the FED won't let it" and the delusion is complete.