Does anyone else have a foreboding sense.....

As far as recessions go, this one ain't much. Really.

My son and I were speculating on the direction of the economy and it was a perfect opportunity to discuss the business cycle. IMO, if the cycle spends too little time at the bottom (recession) not enough of the fat in our economy will be removed. And guys, this "bottom" hasn't been deep enough nor has it been long enough in duration for a recession to do its stuff.

Think back a bit. Remember when businesses couldn't find enough labor?...Any moron could get a reasonably decent gig back then. Wages started to rise as well. "Help Wanted" signs were posted all over the place. When I saw **those** signs, man I knew trouble was coming.

From my perspective, having been a long term investor and now a trader, this "recession" hasn't hurt enough to be a bonified recession. The pundits tell us that all the switches have been flipped...what is it?, three quarters of negative growth that defines a recession?

You can buy that definition if you want to but imo, there haven't been enough firings, layoffs, consolidations and the like...there hasn't been enough "hurt" in the economy for this to be the actual, true bottom of the cycle.

I'm old enough to have lived through a few memorable recessions and this isn't one of them...yet. I just don't think we're there yet.

About trading, I've been going short a lot. YMMV.

Best regards,
Jim B.
 
Not really concerned myself. I have no fear of a Recession or even a Depression. Trust me Im not making any wild unhedged bets or plunging. Im just concerned for the people who are not like us, people who buy and hold. Namely most of the people I know who are invested in the market and think that their value stocks are a bargain at these levels. If you had bought stock in 1929 and were a buy and holder you would have waited over a decade to get even. That cant be pleasant.

I could care less really, Im not staking anything on the forecast. As far as fundamental versus technical, the premise Im basing my thoughts on the future of the market are based on technicals. Namely cycle and wave theory. Tricky subjects to trade on but cant hurt to have an idea which way the highest probability dictates for the market and if waves and cycles are aligning what the potential force or strength of the move will be. And if they are wrong, thats what stop and reverse was made for.

Trav
 
Thanks for the pointer to that article. I'm not totally convinced that the rate of return on stox is as gloomy as the author claimed. But it is Sunday morning where I live and I haven't even had my second cup of coffee.

But let's say he IS correct...that's just more evidence of two things: We have more downside risk in the market than we're told by the financial commentators and daytrading is a damn good business to be in right now.

There was an interesting point raised earlier in this thread...about liquidity drying up. If we daytraders don't lose our shirts and can stay in as players, the economy and the markets will be better off for it, from a liquidity perspective. The 25k daytrading rule sure doesn't help matters and I think that we'll see that proved out in the coming year or two.

I seem to remember reading an article a few weeks back about the SEC and the possibility of changing the uptick rule for shorting (a limited group) of stocks. Man, this is the perfect time for that!!

As far as my trading goes, just go with the flow, up or down, and end the day with no overnight positions.

Have a good Sunday! :)

Jim B.
 
I agree with liitder and magna.....if volume dries up thats a killer for short-term traders.I remember a non-summer trading period years back where you absolutely got hammered because the volume even in highly liquid stocks were only a few thousand shares after a 1/2 hour of trading.If the stock immediately went against you on the opening(I'm an overnite trader)and any type of selling came in you would either get killed adhereing to your stops or have to suffer trader pain and wait it out for a possible better price. With regards to volatility.... the kind I like is the one with follow thru. I could care less if several days up alot and than several days down alot ,as long as we get follow thru intra-day or overnite in the same direction. What might hurt most traders is volatile moves that last only minutes and catch traders in a whipsaw trading range.
 
ADCtrader:
Please tell us when this period was and how you dealt with it.
And what are our options if volume and liquidity dry up?
 
I thought of a worst case scenario: the market does not bottom and people become sick of a crappy bear market. Volume goes down in equities and liquidity dries up as investors and large funds switch to cash. But people still need to invest somewhere. What's the safest investment in the world? U.S. Bonds! The bond market might be a great trading opportunity if everything else goes to hell. Bond funds will still buy and sell as well as institutions. Foreign buyers (Japanese, europeans) will provide liquidity and volume. Where else can the money go? Retirees don't really have many options. Bank rates are really low. Stocks suck. Just my .02.
 
I'm with Gordon Gekko and Magna on this one.

Livermore:

There is no bull or bear side. There is only the right side.

More to this point, Cory Johnson from Yahoo Finance tried to put me on the defensive when I was at the Nasdaq last doing a spot with them.

I said, we've seen one of the better bottoms in the last 19 months.

He says: You just call the bottom?

Whatever Cory...my point was I saw a great "low" and it's been proven to be one. But where we go in the next 6 -12 months is up for speculation by the people that run millions for others. Some will be right and try to ride the wave. Others will be wrong and blame it on something else.

Most of us trade our own account or maybe a families money, but we are more short term oriented, and therefore, where the market goes isn't as important as being able to read where it's going "now" and try to participate profitability given the probabilities our trading system offers us.

Chris




 
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