The only reason why the market is this strong is because of intervention, they have provided trillions and trillions of dollars in liquidity, they have created programs to stop foreclosures, they have created credits worth thousands of dollars to home buyers, you honestly believe that without this stimulus the market would be trading as high as it is today. This is all a damn gimmick, they created a fake recovery by pumping trillions into the economy, this is just creating more asset bubbles as we speak but of course they will be ignored like the last dozen or so and create yet another crisis. This is not a real market place, this is a market being fed liquidity to create what they believe to be a recovery. The creation of asset bubbles is the only way they know how to create growth in our economy.
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How are you positioning for the eventual Market top?
- Thread starter Sean McLaughlin
- Start date
The only reason why the market is this strong is because of intervention, they have provided trillions and trillions of dollars in liquidity, they have created programs to stop foreclosures, they have created credits worth thousands of dollars to home buyers, you honestly believe that without this stimulus the market would be trading as high as it is today. This is all a damn gimmick, they created a fake recovery by pumping trillions into the economy, this is just creating more asset bubbles as we speak but of course they will be ignored like the last dozen or so and create yet another crisis. This is not a real market place, this is a market being fed liquidity to create what they believe to be a recovery. The creation of asset bubbles is the only way they know how to create growth in our economy.
Quote from Sean McLaughlin:
You very well may be right. But you've got to admit that *statistically*, the odds have got to be in your favor if you start leaning to the short side now.
I certainly don't suggest betting the farm here. I'm simply looking to wade in slowly, and wait for further confirmation before committing more capital...
Why, this is a bull market!
I think you risk repeating the mistakes of those who have gone before you. How many traders started looking for shorts late 2003, saying the market had gone too far, too fast, and was ripe for a pullback? How many persisted calling the top in equities in the ranging conditions the following two years, until the bull market became "obvious" again in 2006?
You keep referring to statistics - please show us some. I could say "statistically, asset prices inflate over time, so the odds are in my favour if I lean to the long side". I would be foolish to employ this strategy in a bear market. What these oft quoted market statistics (and this goes for both sides) overlook is the location we are in the bigger cycle, and the underlying conditions behind each move. If you are not using the statistics or analysis relevant to the current condition, your conclusions may be misleading.
What I notice about many traders who post on bulletin boards is a tendancy to get married to recent price action. Late bulls at the beginning of a bear market get sucked in on pullbacks and listen to the media telling them it is just a correction. Equally, when a bear market has run its course the media reports and the recent memory of panic in the financial markets leads many to keep calling tops or pullbacks for the first year after a bottom is in, at least.
This goes for day traders getting married to recent trends also, but seems to be more difficult to shift when it comes to long term views on a stock index, for reasons which I can only put down to the influence of the media.
Your second paragraph shows uncertainty in the trade decision. Losing at small size is still losing, and equally there is little to be gained being right but on a timid position size as you do not believe in either your call, or the timing, or both. It sounds very much like trying to force a trade. You have a belief that the market is toppy, and therefore you believe you must trade the short side. So far so good. However, why plunge before you are sure? What if the market keeps contradicting you by moving higher? When is it correct to reassess your opinion? Equally, if your analysis suggests a top is near, but not imminent, is it wiser to continue playing the long side until you have clear indications to take a short? If you start taking small shorts, you run the risk of several small losses until you get the top, or the market continues to move higher and you stop shorting. What some traders do is add additional positions as the market goes higher, thinking we are "one day closer to the top". Of course this is true - each day is closer to a top in all markets, but if the top is years away the day scarcely helps.
Your thread is based on the premise that a top is near. You are looking to start small and pyramid. At the beginning of a bull market, the few pullbacks you get are violent, but short lived. The function is to scare out the investing public who may be looking to get back into stocks. Having missed the initial rally, they buy late and are stimulated to dump the new longs at a loss in a quick sharp correction which brings back memories of the old bear market. Once they are out, the market turns on a dime and continues north. You will not usually get a decent pullback for a very long time after this. The market tends to enter a low range, low volatility period with gradually higher prices, stabilising into a range where new highs and lows are not set for some time. This may be one of the worst times to wait for confirmation and then pyramid, as you risk adding at the bottom of a move. The correct time to pyramid is when you believe you have been right in calling a major market top and the market later fails to rally, confirming weakness and giving you the demand to put out the rest of your short line.
Just some food for thought. My analysis is clearly based on my view that we are not in a location where it is appropriate to call tops. You must work on your own analysis of course, but perhaps go through the process again and look at different angles before deciding.
Quote from Trader666:
You and others trying to call a top are too fixated on the rear-view mirror and/or imposing your opinions on the market instead of simply accepting what is. I remember a crash mentality carrying well into the 1990s from 1987.
Succinctly put. Exactly what I was trying to say in my other post. It is this "crash mentality" which always brings early shorts to a new bull market.
Quote from S2007S:
The only reason why the market is this strong is because of intervention, they have provided trillions and trillions of dollars in liquidity, they have created programs to stop foreclosures, they have created credits worth thousands of dollars to home buyers, you honestly believe that without this stimulus the market would be trading as high as it is today. This is all a damn gimmick, they created a fake recovery by pumping trillions into the economy, this is just creating more asset bubbles as we speak but of course they will be ignored like the last dozen or so and create yet another crisis. This is not a real market place, this is a market being fed liquidity to create what they believe to be a recovery. The creation of asset bubbles is the only way they know how to create growth in our economy.
of course stimulus kick started the economy and the market, as was intended, with the idea being that eventually the economy would be self sustaining. it looks to be working just fine.
Right now Money is tied up in money markets, CD's and gold. Once the gold bubble deflates and thee's no more fear we'll see even higher S&P 1500 region by 2011. WHo can deny the driving force behind this rally is actually the low volume? Low participation can only give rise to higher participation, and a subsequent greed fueled rally.
but you said the same thing since September 09.......I have heard "it's a top" for the past 7 months.....how did that do for you?
It never stops does it? I remember the same thing in September 1999....we then had the most amazing 6 month bull run i have ever seen. I wonder how many "its top, it can't possibly go higher" believers missed those profits?
I'll simply go with the flow....and make money thanks. When it ends...I'll exit. Simple.
It never stops does it? I remember the same thing in September 1999....we then had the most amazing 6 month bull run i have ever seen. I wonder how many "its top, it can't possibly go higher" believers missed those profits?
I'll simply go with the flow....and make money thanks. When it ends...I'll exit. Simple.
Quote from Free Thinker:
of course stimulus kick started the economy and the market, as was intended, with the idea being that eventually the economy would be self sustaining. it looks to be working just fine.
Not really. All the activity is still stimulus and Fed induced, it just took a long time for the full force of it to show up in economic indicators. Meanwhile, bank failures and foreclosures continue at a record pace, real unemployment as measured by U6 continues to climb, credit continues to contract, state governments are bankrupt and looking at raising taxes, state pension funds are facing a massive crisis, and interest rates are once again moving up just in time for the largest number of residential and commercial mortgage resets this year and next year that are even larger than the number of resets from 2007/2008. And all of this despite nearly $14 trillion in government and Fed printing, borrowing, spending, stimulus, guarantees and backstops. But of course that much money shoved into the system was going to result in some sort of uptick in economic activity, how could it not??
But just like Japan, it is a temporary uptick, and none of it is self sustaining (here's the part where you tell me how "this time is different"). If you believe it is anything other than that, you might as well believe in the tooth fairy.
Quote from failed_trad3r:
Right now Money is tied up in money markets, CD's and gold. Once the gold bubble deflates and thee's no more fear we'll see even higher S&P 1500 region by 2011. WHo can deny the driving force behind this rally is actually the low volume? Low participation can only give rise to higher participation, and a subsequent greed fueled rally.
There is so much fail in this post I don't even know where to begin, so I won't.
When the SPY starts seeing 500 million to 2.5 billion volume red days, that will be a good signal something is up.