End of All Bear Markets?
- Thread starter trader99
- Start date
Big lesson learned. I should have played QQQ puts instead of SQQQ calls. QQQ puts moved a LOT more and have plenty more liquidity.
I sold my SQQQ calls too soon. I had a massive position and since it moved only slightly I sold most of it yesterday. Now this morning SQQQ went above $12! I'm more of a swing trader so I should not let intraday chart influences me on my swing trades.
On my daytrades, yes, intraday charts are super important and my entries and exits are quick and based on different parameters and patterns.
On my daytrades, yes, intraday charts are super important and my entries and exits are quick and based on different parameters and patterns.
China is NOT done. Oil is NOT collapsing. Both these statements are gross overstatements.
Traders who make money jumping in and out of the market, particularly day trading, are not trading the economy, they are trading against other traders based on the mechanics and psychology of trading . Superior timing and knowledge of psychology and mechanics (including order handling) allows them to make numerous small profits. Or sometimes they are trading on inside information, which is like placing a bet on a horse after the race is over. The ones who are making money because of good luck will soon enough lose the money they made, and more.
Investors on the other hand are not doing much trading at all. They are selecting equities or bonds based on fundamentals and macro economic trends. The ones, in aggregate, that make money above the inflation rate recognize that ultimately, in a mature economy, the overall market can grow only at rates almost insignificantly above the inflation rate whereas individual issues can grow more or less rapidly. Aggregate market price, however, can, and does, rise above the rational rate for long periods. The rational rates can be estimated from the GDP or the inflation rate -- i prefer to use the long term, mean inflation rate which incorporates the relationship of money (credit), demand, and productivity (GDP). It is to be noted that the market is nearly always irrational, but every now and then it corrects and becomes rational, or at least more rational. The most recent correction took us almost exactly to where prices would be if the nominal market (S&P) had grown at a steady 3% compounded over the time between the March 2009 devils bottom and the market low of 2018. This may be said to have been a "perfect" correction, but such perfection is rare. If you missed the previous correction, however, there will be another. You can trade that one.
The problem is you will generally not know when a correction is coming, and you may not know it has arrived until fairly late. Therefore if you keep track of how irrational the market has become before each historical correction you will have a somewhat reliable guide. If you add to that your personal observation -- for example, an exponential (i.e., parabolic*) rise of the overall market above its long-term trading channel after a long period of irrationality**, the odds that a correction is due are greatly increased. Both traders and investors can make use of these observations. Always one has to make these broad market observations against the macroeconomic backdrop (what the central bank and administration are doing, i.e., monetary and fiscal policy). Thus study of economics is quite useful to some traders and all investors. So is reading Soros. There is one guiding principle universally applicable, however, and that is that markets are hardly ever right, they are nearly always irrational. If you recognize that simple truth you will be less inclined to think a correction is coming just because you think prices are too high. Prices are nearly always too high!
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*Whenever this happens in the broader market it is an infallible sign that the rate can not be sustained, as real productivity in large, mature, reasonably stable economies never rises parabolically, and parabolic inflation is almost as rare. But it does not mean, necessarily that a correction is coming immediately. The market can continue to rise for some time, but at a much lower rate .
**meaning a long period with the market trending (slope!) at a rate significantly higher than the inflation rate (slope!).
I don't watch charts or that resistance mumbo jumbo crap they try to convince you with... In bear market, You look at Macro Data across the world, and it's all very ugly. Europe biggest economy Germany, there current Manufacturing PMI is at the same level as when Bear Stearns collapsed, 10 years in the business cycle and you mean to tell me everything is good ? Australia is gonna get obliterated back to 1980s financially with massive subprimes on the banks books, UK knee deep in Subprimes, Italy entered Recession while ECB was buying there bonds, Spain recession, Germany recession, Japan/South Korea entering Recession, Canada entering recession, US has over 3 Trillion in BBB bonds, with over 1 Trillion of those BBB already supposed to be in Junk!!! Moody's and SP rigged the system again like in 05-07, when there bosses on Wall Street give them the order to downgrade them to there right place, it's destruction in Bond Markets... Entire South America deep recession, China deeeep recession corporate defaults left right and center, China's SOE's started defaulting in 2019, Price to Income ratio average is 31 in China, that's fucking insane... You really believe China's bullshit consumer debt to GDP ratio of 51 % ? When the average Mortgage to Income ratio is 280 % ( including the piss poor ). If it takes 280 % of your Income to pay your housing, how the fuck do you have a consumer debt ratio of 51 % of GDP ? Fiction that's how... Look at Asia's imports PMI, it's in the toilet, same levels as in 2009, every PMI is at mid 2008-early 2009 levels, you are bullish on what, Hope ? China kept world economy up by going super saiyan pedal to the metal printing press since 2009, they are past tapped out, they were at the default party in 2018, there consumers are indebted to the tits, they can't buy shit anymore, companies are closing fast, constant CB printing created Hyper Inflation, Chinese Consumers are finito, get it ? You'll find out in few months, without China sugar daddy being able to kick the can a little longer on current cycle, it collapses. Earnings recession for export based economies is gonna be ugly in April-May
https://www.asiatimes.com/2019/03/article/housing-giants-see-sharp-drop-in-home-sales/
Biggest Chinese developer Evergrande has 106 Billion US of Debt with 133,000 employees... There are paying 11 +% interest on debt ( they have been selling bonds just to make payments on old debt since early 2018 ), and started slashing prices by 10 % on existing homes just to sell anything, creating even more panic, there has never ever been deflation in Chinese Housing due to Hyper Inflation caused by massive non stop QE's, so when your housing starts to deflate while everything around is Hyper Inflating, you have a very serious collapse at your door... RE accounts for 30 % of China's GDP, and Evergrande is offering 10 % discounts on condo's, 20 % discount for stores ( Commercial )... China printed 5 % of GDP in Jan alone, Cut Bank Reserves 3 times already and about to do it a 4th time as we speak, https://www.caixinglobal.com/2019-0...ratio-cut-but-less-than-before-101390233.html, Cut Taxes on everything they possibly can and there still fucked, what are you bullish about ? They have somewhere around 46-48 Trillion in Assets on there books ( with shadow lending could be around 55-60 Trillion US ), with less then 3 Trillion in Equities... That's about as big of a financial meltdown as it can get... China ENTIRE Economy is Central Bank Printing, there is absolutely 0 Organic growth, none
https://www.asiatimes.com/2019/03/article/housing-giants-see-sharp-drop-in-home-sales/
Biggest Chinese developer Evergrande has 106 Billion US of Debt with 133,000 employees... There are paying 11 +% interest on debt ( they have been selling bonds just to make payments on old debt since early 2018 ), and started slashing prices by 10 % on existing homes just to sell anything, creating even more panic, there has never ever been deflation in Chinese Housing due to Hyper Inflation caused by massive non stop QE's, so when your housing starts to deflate while everything around is Hyper Inflating, you have a very serious collapse at your door... RE accounts for 30 % of China's GDP, and Evergrande is offering 10 % discounts on condo's, 20 % discount for stores ( Commercial )... China printed 5 % of GDP in Jan alone, Cut Bank Reserves 3 times already and about to do it a 4th time as we speak, https://www.caixinglobal.com/2019-0...ratio-cut-but-less-than-before-101390233.html, Cut Taxes on everything they possibly can and there still fucked, what are you bullish about ? They have somewhere around 46-48 Trillion in Assets on there books ( with shadow lending could be around 55-60 Trillion US ), with less then 3 Trillion in Equities... That's about as big of a financial meltdown as it can get... China ENTIRE Economy is Central Bank Printing, there is absolutely 0 Organic growth, none
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