Is this market invincible?
- Thread starter The Kin
- Start date
I trade primarily from the short side. That being said I suggest the perma-bears look at daily Dow charts covering 1929-1937.
1929 was 2000. We are now around 1935. Was the news bearish during the huge rally off the 1932 lows? How about bank failures, A U.S. President who was a closet Marxist, Unemployment for years at about 20%, the rise of Nazism in Germany, natural disasters like Katrina on a regular basis, dust bowl, and a generation of American's so scarred by 29-32 that they never came back into the market. Yet equities had a massive 4+ year rally.
1929 was 2000. We are now around 1935. Was the news bearish during the huge rally off the 1932 lows? How about bank failures, A U.S. President who was a closet Marxist, Unemployment for years at about 20%, the rise of Nazism in Germany, natural disasters like Katrina on a regular basis, dust bowl, and a generation of American's so scarred by 29-32 that they never came back into the market. Yet equities had a massive 4+ year rally.
Until it does. There have been scores of Barron's covers which have been not only right (in terms of direction) but also timing.
If you want a cover to fade, look at BusinessWeek, Fortune, Newsweek, Times, etc..
btw check this out (pdf):
http://www.sprott.com/pdf/pressrelease/TheVisibleHand.pdf
the only thing that is not taken into account here is the "liquidity" committed on a daily bases {by hedge funds} as a "hammer" shorting the index futures --- this liquidity is off the table at the end of each day and ready for action the next day. this hammer has been getting bigger over the last three weeks from the profits generated --- this is something to pay attention too going forward. the hedge funds have some very large core short equities positions that they have a vested interest in keeping the market down from the highs --- that hammer will keep coming out when they feel the need.
the institutions have been climbing a cliff with the market on their backs {and doing a very good job over the past 4 months} recently, but the hedge funds are starting to whack their fingers on the way up at these levels with their hammer. someone is going to win this liquidity fight and the signs may be witnessed very soon.
hang on!
Great. The hedge funds can get short. Pabst can get short. Macro Event can get short. Then after we press the market lower, i.e. the last three years of failed breaks, who do we cover off of? Look, the problem for shorts has been even more pronounced in Treasuries. Rising short term rates has made the carry trade unattractive, semi-inflation, defecits, strong stocks, all the ingredients typically needed for a selloff in the long end of the curve. Fine, so short 'em. But the LONGS AREN"T COOPERATING! The shorts are pissed at Bill Gross. LOL. The world's awash in liquidity and the Treasury could auction a zillion ten years without breaking the market. For a short selling campaign to work, YOU MUST DISLODGE LONGS! It'll happen. In a big way. Just not today.
correct --- the shift in sentiment i have mentioned in other threads will be the point at which the longs will start the rush to the exits, and this has not happened yet. we have not seen real selling yet -- just the selling of one group against the other.
the initial signs of a potential sell off will be to watch how the sectors are traded here. Are the defensive type market sectors gaining strength during the week as the cyclical/financials/etc are showing weakness --- well this is already starting to happen from the rotational moves by bigger players. Tech is still doing well and this is one of the sectors that is helping to hold the market here, but we need more then tech for a new high rally from here.
the initial signs of a potential sell off will be to watch how the sectors are traded here. Are the defensive type market sectors gaining strength during the week as the cyclical/financials/etc are showing weakness --- well this is already starting to happen from the rotational moves by bigger players. Tech is still doing well and this is one of the sectors that is helping to hold the market here, but we need more then tech for a new high rally from here.
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mp;
Good points except many tek stocks dont pay dividends,
& while the 4th quarter tek tends to be strong upside;
actually tek stocks tend to do a polar bear, in OCT.
Maybe it may not mean much, or maybe means much;
William O'Neil released his short selling book this year.
OCT also is still hurricane season .
And reason why tek stocks are generally such a good buy in OCT,cause they tend to drop/recover sharply in OCT , even in bull markets;
even though OCT tek was up last 4 out of 5 Octobers
"Not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish." Jesse Livermore
Ofcourse that statement was made before
nuclear weapons were invented :eek:
Ofcourse that statement was made before
nuclear weapons were invented :eek: