Is this sell off only the beginning ?

[Handle123]

I don't trade based on emotions or thoughts of what economy is doing, I have developed good back tested chart patterns of extremes. Most are based on slope, cycles and monthly pivots. Are they right always? Of course not and why I hedge, but overall, they are profitable. I been long stocks since 2009 and exited 95% within last 60 days, dividends are way down, moving funds to much better returning instruments like stock options and long term commodities.

And 100 points down move in ES is very profitable.

 

[deaddog]

I look at my individual positions. Have they stopped trending? If so I kick them out of the portfolio. I still have stocks making new highs. In 2020 I was 100% in cash. Today 20%

 

[Nine_Ender]

I get what you're saying but to me it just isn't that deep or complicated. You also have people who think every dip will always get bought up. Sure it often does and it's a much better generally probability than to be a perma bear, no doubt. But at the same doesn't mean you discount every setup that actually has a higher potential to move lower, just because you always have people calling for a crash. The two things really have nothing to do with each other. Maybe you're in the camp that swears there's no way to distinguish pull backs that have a higher probability to go lower than others, than that's fair. Have no interest in trying to prove that to you.

My observation from many years is that it's a lot easier to identify buying opportunities after a correction then it is to guess a correction is coming and short it ( or go to cash ). The guys who are guessing likely aren't doing very well.

 

[notagain]

Another month of sideways super chop. Think of inflation as a fiscal stimulus for big cap stocks. Monopolies can pass on all the costs of a failed policy and the Fed is complicit.

 

[deaddog]

My observation from many years is that it's a lot easier to identify buying opportunities after a correction then it is to guess a correction is coming and short it ( or go to cash ). The guys who are guessing likely aren't doing very well.

Very true but you have to have cash to take advantage of those opportunities. I often wonder where the buy and hold crowd gets its cash to buy when the price drops.

As a speculator without any other income, I only have cash after I sell something.

 

[Bugsy]

I get what you're saying but to me it just isn't that deep or complicated. You also have people who think every dip will always get bought up. Sure it often does and it's a much better generally probability than to be a perma bear, no doubt. But at the same doesn't mean you discount every setup that actually has a higher potential to move lower, just because you always have people calling for a crash. The two things really have nothing to do with each other. Maybe you're in the camp that swears there's no way to distinguish pull backs that have a higher probability to go lower than others, than that's fair. Have no interest in trying to prove that to you.

The only signs that signal pullbacks going lower with higher probability are violated trendline and supports, none of which have happened yet to be having this conversation. And even a violation of those lines isnt a guarantee.

 

[Bugsy]

Very true but you have to have cash to take advantage of those opportunities. I often wonder where the buy and hold crowd gets its cash to buy when the price drops.

As a speculator without any other income, I only have cash after I sell something.

Many people pull from stocks that are largely, or to a less degree, unaffected by recessions. Look at Walmart during Covid and 2008. It gets touched to a small degree initially before quickly rebounding. I have a friend who is upper management at Walmart with a shitload of Walmart stock. When Covid hit and the market bottomed out he sold a lot and bought Chevron and Disney and made a killing.

Other people simply leave their money as the market has a 100% historical rate of return. Of course this is all dependent on what stage of life you are in. The older you are your investments are structured more conservatively. My parents have had theirs in cash for a year now and missed out on a HUGE move. Doubt any correction will make up for the amount they have lost, but at the same time, they are in their 60s. They cannot afford to chance it.

 

[unconventional wisdom]

I look at my individual positions. Have they stopped trending? If so I kick them out of the portfolio. I still have stocks making new highs. In 2020 I was 100% in cash. Today 20%

i had a similar strategy in 2020 and 2021 and it worked incredibly until around June 2021. I was beginning to think i was a genius like that limitless dude. and then, i have to admit i really started struggling. a lot of "momentum stocks" have basically tanked since June/July 2021. It's actually been well covered on most investing sites (eg., 50% of stocks in whatever index are now over 20/50% lower than blah blah). imho, it's bullish for the overall market as these stocks that have been in a bear market for 6+ months have a chance to start to recover.

 

[Concinnity]

The only signs that signal pullbacks going lower with higher probability are violated trendline and supports, none of which have happened yet to be having this conversation. And even a violation of those lines isnt a guarantee.

If you believe the only way to take a profitable short that has a component of probability to it, is to wait for a support and/or trend line to broken, that's just amazing to hear. I mean I guess it depends on what you quantify as support, if you're speaking of actually losing structure than I could more agree with your statement (although still that is not the only way to gain an edge).

If you simply mean I need to wait for the markets to drop and break weekly support levels, before gaining a probability edge on a short or taking profits, yeah we're too far apart to even have a conversation or debate on that.

Just think about how you're viewing the market for a minute. You're viewing it through a lens of being long at a lower position and from a longer term perspective. So, you're all calm just waiting to see if major support holds. Excellent, nice job no issues with that.

Here's where I have the issue. You don't look at the market from the perspective of other investors / traders. Not everyone has the means, intelligence and/or discipline to be patient or make intelligent decisions when it comes to the market, I think we can agree on that right?

The point is you have buyers coming in at either all time highs and/or current relative highs on just about every product and every chart tradable at some point in time. Sometimes this setups up a long trap, which can be identifiable and tradable. where they will squeeze out the weak buyers. This opens up a temporary imbalance where you can trade short and trade against them with a probability. No of course it isn't 100%, nor is the setup always there. But there's tons of players in the market from short term, mid term and long term. There's probabilities besides just averaging down and waiting for weekly, monthly or whatever support to break.

 

[Bugsy]

If you believe the only way to take a profitable short that has a component of probability to it, is to wait for a support and/or trend line to broken, that's just amazing to hear. I mean I guess it depends on what you quantify as support, if you're speaking of actually losing structure than I could more agree with your statement (although still that is not the only way to gain an edge).

If you simply mean I need to wait for the markets to drop and break weekly support levels, before gaining a probability edge on a short or taking profits, yeah we're too far apart to even have a conversation or debate on that.

Just think about how you're viewing the market for a minute. You're viewing it through a lens of being long at a lower position and from a longer term perspective. So, you're all calm just waiting to see if major support holds. Excellent, nice job no issues with that.

Here's where I have the issue. You don't look at the market from the perspective of other investors / traders. Not everyone has the means, intelligence and/or discipline to be patient or make intelligent decisions when it comes to the market, I think we can agree on that right?

The point is you have buyers coming in at either all time highs and/or current relative highs on just about every product and every chart tradable at some point in time. Sometimes this setups up a long trap, which can be identifiable and tradable. where they will squeeze out the weak buyers. This opens up a temporary imbalance where you can trade short and trade against them with a probability. No of course it isn't 100%, nor is the setup always there. But there's tons of players in the market from short term, mid term and long term. There's probabilities besides just averaging down and waiting for weekly, monthly or whatever support to break.

I understand what you're saying, but shorting in general is a different conversation then what we are discussing, and that is recession. Shorting at a top before a dip as price action displays certain signs of a higher probability the market will drop in the short term is miles different than a 25 to 50 percent crash/ recession, and you cannot see that until certain thresholds have been violated, and certainly not from price action at a top.