LONG or SHORT here?
- Thread starter Mvic
- Start date
My question to you all who made serious money last year. . .
Why do you still insist on trading through a questionable market if you dont understand what is making things move? Why not take off some time for a few months, travel the world and then come back when there is another trend...
Why do you still insist on trading through a questionable market if you dont understand what is making things move? Why not take off some time for a few months, travel the world and then come back when there is another trend...
My question is not addressed to all, but a certain sub-set. . .its addressed to those who made a large amount of cash last year and are unsure of what is making the market move.
Good suggestion, but a week is all I need, thanks. Maybe there is nothing to understand and there is no sound basis for what is occuring other than money is easy and greed is rampant to hell with the risks when it is OPM being played with. Do you know why risk is seemingly being ignored? I would love to get an explanation that I could buy in to.
What makes it move....Wasn't it funny when one of the richest guys in the world (who also is the CEO of the USA) walked through the NYSE yesterday and it moved
Sorry to hear you got squeezed out. It always seems that as soon as the pain gets to be too much and you exit, the market turns and vindicates your original position. As Keynes eloquently pointed out, "markets can stay irrational longer than you can stay solvent". I'm a big fan of solvency (ha ha).
I'm certainly not into "calling tops" but I am leaning bearish at this time. I'm holding cash at this point and have limited my trades to intraday only.
The current period is certainly reminiscent of 1988 when the takeover binge was pushing equities to elevated levels as a takeover premium was being worked into many stocks. The crap hit the fan when the UAL takeover fell apart ($168 a share if I remember correctly) because they couldn't finance the deal. Will the same scenario play out again? Most likely yes. Today, you can't turn on the business news without hearing the words "private equity". Same game, different players. It's quite foolish to think there will always be a 'greater fool' to take you out of your position.
Anyways, I'm looking to put on some index shorts at this point but will probably wait till Monday afternoon. Can't get in front of non farm payrolls and then there is always takeover Monday to contend with. I'll put on a small position and add accordingly. As with any trade though, when it moves against me, it gets the boot. There's always tomorrow.
All we need now is the Time magazine cover "The Great Bull Market". Then at last, we'll know the last fool has indeed bought.
Good luck Mvic.
MVIC said..
This week is going to make or break for me. If we close above certain levels on Friday I will exit all my puts friday afternoon. Market internals are much stronger than I anticipated. I didn't start putting on a short position until late Dec but it looks like I was still too early. Biggest concern i have is that even though subprime seems to be having a meltdown that has spread out of the subprime area in to better quality bonds it has had relatively little effect and the homebuilders are just surging.
Today there was another effort of the Russell an S&P to break out of a consolidation channel that is at the top of the move up that began about July 19th.
I'm not one to give advice, but it seems to me that it is never a good idea to try and guess what the market will do in the near term, though we can be fairly certain that a correction is coming. Problem is it could be quite a few months off and in the meantime the markets seem to want to go higher.
I well recall that at least a year before the internet bubble burst it was clear to all rational persons that P/E ratios had reached ridculous values and many were saying how absurd it was to go long in that market, yet it continued to truck higher for another year before collapsing. If you want to go short in the present market, i would think the wise course is to give up a few points and not try to pick a top. Rather wait for the correction to get under way. That's going to require a breakdown below the conslidation channel. Perhaps around 1400 for the S&P and 769 for the Russell, or thereabouts. Also it is well to observe that the Nasdaq is not really participating in the move up. If we are going to have a genuine next leg up, or a genuine leg down, all major indices should participate. Right now we have some divergence. So, i think it's best to be patient. If I was short i wouldn't panic just yet. And if wasn't, i wouldn't go short yet. On the otherhand i'd be cautious about going whole-hog long here as well, we are at a market top for the Russell, S&P and Dow, after all. Let the market show us what it want's to do from here. It doesn't hurt to put a little hedge on if you are long. You can always take it off. One other thing bears watching. The interest rate on the ten-year has been rising and it appears that the rate of increase in the S&P is falling in concordance. If the ten-year interest continues its rise it is very unlikely that a rally can be sustained. The rally in homebuilders is unlikely to be sustained as earning will continue to suck for several more years. But remember homebuilders dropped like a rock throughout 2006, so apparently they are being seen as somewhat of a bargain, but it's way to early to start buying them, because worse earnings still are likely on the way.
Finally, i'd like to paraphrase some very wise person on these forums ,but i don't recall who it was that said "trading according to what you think the market should do is a quick way to the poorhouse." Very wise words indeed.
"All we need now is the Time magazine cover "The Great Bull Market". Then at last, we'll know the last fool has indeed bought.
Good luck Mvic.
Wetton, my i join you in that sentiment.
This week is going to make or break for me. If we close above certain levels on Friday I will exit all my puts friday afternoon. Market internals are much stronger than I anticipated. I didn't start putting on a short position until late Dec but it looks like I was still too early. Biggest concern i have is that even though subprime seems to be having a meltdown that has spread out of the subprime area in to better quality bonds it has had relatively little effect and the homebuilders are just surging.
Today there was another effort of the Russell an S&P to break out of a consolidation channel that is at the top of the move up that began about July 19th.
I'm not one to give advice, but it seems to me that it is never a good idea to try and guess what the market will do in the near term, though we can be fairly certain that a correction is coming. Problem is it could be quite a few months off and in the meantime the markets seem to want to go higher.
I well recall that at least a year before the internet bubble burst it was clear to all rational persons that P/E ratios had reached ridculous values and many were saying how absurd it was to go long in that market, yet it continued to truck higher for another year before collapsing. If you want to go short in the present market, i would think the wise course is to give up a few points and not try to pick a top. Rather wait for the correction to get under way. That's going to require a breakdown below the conslidation channel. Perhaps around 1400 for the S&P and 769 for the Russell, or thereabouts. Also it is well to observe that the Nasdaq is not really participating in the move up. If we are going to have a genuine next leg up, or a genuine leg down, all major indices should participate. Right now we have some divergence. So, i think it's best to be patient. If I was short i wouldn't panic just yet. And if wasn't, i wouldn't go short yet. On the otherhand i'd be cautious about going whole-hog long here as well, we are at a market top for the Russell, S&P and Dow, after all. Let the market show us what it want's to do from here. It doesn't hurt to put a little hedge on if you are long. You can always take it off. One other thing bears watching. The interest rate on the ten-year has been rising and it appears that the rate of increase in the S&P is falling in concordance. If the ten-year interest continues its rise it is very unlikely that a rally can be sustained. The rally in homebuilders is unlikely to be sustained as earning will continue to suck for several more years. But remember homebuilders dropped like a rock throughout 2006, so apparently they are being seen as somewhat of a bargain, but it's way to early to start buying them, because worse earnings still are likely on the way.
Finally, i'd like to paraphrase some very wise person on these forums ,but i don't recall who it was that said "trading according to what you think the market should do is a quick way to the poorhouse." Very wise words indeed.
"All we need now is the Time magazine cover "The Great Bull Market". Then at last, we'll know the last fool has indeed bought.
Good luck Mvic.
Wetton, my i join you in that sentiment.
Thanks Wetton, I too am a big fan of solvency 
and have been doing this a while so was fairly well hedged and ended Jan. up 6% due to selective (and lucky) buying some dips and a couple of other big trades (OIL, IBM, AAPL) but it was an intense month and ex all the puts that I ploughed profits back in to I would have been up well over 200% for the month which in real $ is over $200K so you can see why I am in need of a break (also my trading strategy would have me buy ES calls here but I am not in the frame of mind to do so which tells me I need a break). I am still holding a fairly substantial number of June QQQQ 41-44 puts on the expectation that Vista is going to flop so will participate if anything starts while I am away for the next week. I shall be back in the fray rested and with a cool head in no more than 10 days so while I didn't fare too well in the recent battle, the war, as they say, is not over and I have 11 months left to improve upon January.
Good luck to you too and as far as shorting goes I would suggest waiting for it to break back below the new support levels before you do. Either that or wait for it to go higher and establish some resistance that you can use to define your risk. Right here the RR doesn't favor a short at least in the ES and YM. If we break back below 1435 on any decent volume there will be plenty of profit to be made so no need to try and catch an extra 10-15 points by trying to put on a short just above support imo. Market internals have strengthened too and this did not seem characteristic of a low off top to me. It looks to me like we are heading for a test of 1500 and that would be a nice short entry with defined risk.
and have been doing this a while so was fairly well hedged and ended Jan. up 6% due to selective (and lucky) buying some dips and a couple of other big trades (OIL, IBM, AAPL) but it was an intense month and ex all the puts that I ploughed profits back in to I would have been up well over 200% for the month which in real $ is over $200K so you can see why I am in need of a break (also my trading strategy would have me buy ES calls here but I am not in the frame of mind to do so which tells me I need a break). I am still holding a fairly substantial number of June QQQQ 41-44 puts on the expectation that Vista is going to flop so will participate if anything starts while I am away for the next week. I shall be back in the fray rested and with a cool head in no more than 10 days so while I didn't fare too well in the recent battle, the war, as they say, is not over and I have 11 months left to improve upon January. Good luck to you too and as far as shorting goes I would suggest waiting for it to break back below the new support levels before you do. Either that or wait for it to go higher and establish some resistance that you can use to define your risk. Right here the RR doesn't favor a short at least in the ES and YM. If we break back below 1435 on any decent volume there will be plenty of profit to be made so no need to try and catch an extra 10-15 points by trying to put on a short just above support imo. Market internals have strengthened too and this did not seem characteristic of a low off top to me. It looks to me like we are heading for a test of 1500 and that would be a nice short entry with defined risk.