pickin a top is way riskier... its every novice traders fantasy to sell the absolute top of a move or catch the exact bottom... this nonsense fuels itself. for instance - the market this week. everyone and their brother shorted the double top on the s&p - when this trade went the wrong way - the smart ones stopped out - creating new buying momentum. new momentum traders started buying the breeak out through resistance. shorts that are still hanging on will soon be taking more pain than they can handle and will panic and sell out and we are off to the races on a new uptrend.this will happen until we are put of buyers... then a reversal will form and sellers will pile on... this is the cycle over and over again that is called the market....
Picking Tops.
- Thread starter Dackster
- Start date
pickin a top is way riskier... its every novice traders fantasy to sell the absolute top of a move or catch the exact bottom... this nonsense fuels itself. for instance - the market this week. everyone and their brother shorted the double top on the s&p - when this trade went the wrong way - the smart ones stopped out - creating new buying momentum. new momentum traders started buying the breeak out through resistance. shorts that are still hanging on will soon be taking more pain than they can handle and will panic and sell out and we are off to the races on a new uptrend.this will happen until we are put of buyers... then a reversal will form and sellers will pile on... this is the cycle over and over again that is called the market....
YO-MAMMA!!! (Time to sign up!!!)
http://www.mtv.com/#/ontv/dyn/yo_momma/series.jhtml
Picking tops is fun.....picking bottoms can get stinky! :eek:
I am sticking my neck out and predicting a decline starting Monday as well. Why do this with no economic news on tap and no other catalyst that I can think of to set this decline off? Big Picture/ Small Picture... Big Picture: Well It's The Productivity Stupid! In the 1990's big gains in corporate efficiency brought on by high tech spending & global trade was THE key factor in holding down inflation. You don't hear much about worker productivity lately from the Fed whereas Greenspan used to talk about it all the time. Why no mention from Big Ben? Well because the news is not very good.
In 2003 we reached a PEAK rate of 4% productivity growth As of the third quarter we were down to 1.9%. This takes a little time to work it's way through the economy but it's the slowest rate in 9 years! The newest reports I have read suggest a rate of 1.3% and that rate WILL be revised even lower early next year when the Labor Dept. incorporates recent hours worked info from 2005 and 2006 (a lot of overtime- not new hires). Productivity slow down means the economy has less room to grow without generating inflation, this is showing up in the labor market that continues to TIGHTEN even as economic growth SLOWS. The result: labor costs are spiking. And just at a time when most companies productivity gains are too weak to offset a pay raise to the workforce. October hourly pay was up a whopping 4% from the year before.
The Fed then is in a bind. As economic activity re- accelerates as I think it will, after the midyear cycle slowdown, the labor markets will tighten further-- Quite simply running at absolute employment is BAD for inflation. So whereas commodity-based inflation and oil has retreated and that has caused inflation to appear to have peaked - the end result may be quite a bit more inflation than the Fed can be comfortable with. Big Ben will have to continue his rate raising cycle and that will put us in a risk of recession in mid to late 2007.
The next GDP report is huge! If the recently released one is revised UP and we come in above that number it's off to the races- fast economy and eventually interest rates hikes. If the already low number is reduced LOWER and we come in beneath that> 0.9% anyone? We'll be back in that place we were long ago when the talking heads start to tell you not to worry- because we will need three consecutive reports under 1% to announce recession!
Small Picture:
Why correction now then? Well things don't go straight up. The VIX is popping under 11, complacency is everywhere-- oil is hovering at $55 not $50 despite the warm weather on the East coast. It's really just a GUT feeling one gets from studying the markets for 20 years but the Bears are getting rolled day after day, liquidity is so low ONE $500 million dollar futures buy the other day set off a stampede on the upside in the S&P 500. I have never seen that before. The buybacks by corporations have helped this rally and corporate earnings so much! However, the recent round of mega IPO's has me worried that some of the excess liquidity is now being mopped up.
The Fed is expecting an economic slowdown sufficient enough to generate enough slack in the labor market to allow price pressure to ease.
StonedInvesting is not so sure. And even if we do slow down inventories are so high right now , 7.5% higher than last year-- that won't be good either.
So the call is for two weeks of pain ~ maybe 5%....
but of course in the risky stocks we all love you could lose 20% in a heartbeat. BH for SI
In 2003 we reached a PEAK rate of 4% productivity growth As of the third quarter we were down to 1.9%. This takes a little time to work it's way through the economy but it's the slowest rate in 9 years! The newest reports I have read suggest a rate of 1.3% and that rate WILL be revised even lower early next year when the Labor Dept. incorporates recent hours worked info from 2005 and 2006 (a lot of overtime- not new hires). Productivity slow down means the economy has less room to grow without generating inflation, this is showing up in the labor market that continues to TIGHTEN even as economic growth SLOWS. The result: labor costs are spiking. And just at a time when most companies productivity gains are too weak to offset a pay raise to the workforce. October hourly pay was up a whopping 4% from the year before.
The Fed then is in a bind. As economic activity re- accelerates as I think it will, after the midyear cycle slowdown, the labor markets will tighten further-- Quite simply running at absolute employment is BAD for inflation. So whereas commodity-based inflation and oil has retreated and that has caused inflation to appear to have peaked - the end result may be quite a bit more inflation than the Fed can be comfortable with. Big Ben will have to continue his rate raising cycle and that will put us in a risk of recession in mid to late 2007.
The next GDP report is huge! If the recently released one is revised UP and we come in above that number it's off to the races- fast economy and eventually interest rates hikes. If the already low number is reduced LOWER and we come in beneath that> 0.9% anyone? We'll be back in that place we were long ago when the talking heads start to tell you not to worry- because we will need three consecutive reports under 1% to announce recession!
Small Picture:
Why correction now then? Well things don't go straight up. The VIX is popping under 11, complacency is everywhere-- oil is hovering at $55 not $50 despite the warm weather on the East coast. It's really just a GUT feeling one gets from studying the markets for 20 years but the Bears are getting rolled day after day, liquidity is so low ONE $500 million dollar futures buy the other day set off a stampede on the upside in the S&P 500. I have never seen that before. The buybacks by corporations have helped this rally and corporate earnings so much! However, the recent round of mega IPO's has me worried that some of the excess liquidity is now being mopped up.
The Fed is expecting an economic slowdown sufficient enough to generate enough slack in the labor market to allow price pressure to ease.
StonedInvesting is not so sure. And even if we do slow down inventories are so high right now , 7.5% higher than last year-- that won't be good either.
So the call is for two weeks of pain ~ maybe 5%....
but of course in the risky stocks we all love you could lose 20% in a heartbeat. BH for SI
There is really no top and really no bottom. Everything is, ambivalently, an illusion.
I think so but sometimes common sense just overwhelms everything. Signs of speculation often leads to a ST top. Think about the big IPO friday Nymex do you really think underwriters priced that one 100% undervalued? You probably saw that Hand Held Entertainment fiasco the sad thing is I had actually pulled that stock into my research@ $1.70 which just goes to show how silly this has become. And Yes I want to kill myself. $10,000 could have become $80,000! Take a peek at DKS Dick's Sporting Good Chart, I don't think it's a very good retail stock- how can it be straight up like that? Every Bull move has 10% corrections! But since so many people missed this move and money is itching to get in at the first pullback I think the initial move down will only be 5% followed by a strong rally followed by me taking my toys and going home.
From what I've read so far on ET B1S2 is one of very few (if not the only one that reveals his methods) that has the right approach to identifying tops/bottoms through divergences. If one looks at various charts he/she will realise that this is perhaps the only analyses based on technicals that links the majority of tops/bottoms in indexes. Another method he uses, which is also fantastic intraday (personally tested and used by me 80% of the time now) is a failure swing. So, if one looks at all 3 charts (d/w/m) of the S&P500 there is no sign of a divergence or failure swing happening. I was tracking a 3 day chart of S&P500 which showed a possible bearish failure swing, but it simply was not "allowed" to happen by the bulls, as these chart formations do carry a lot of meaning, firstly fundamental and secondly when TA traders (and there are a lot of them classed as 'Smart Money') identify patterns like these they start shifting their bias from one to another and that is why we get tops and bottoms. Smart Money are the only people that have sufficient levels of capitalisation and experience to know when it's over and act upon it. I haven't "been" through many tops/bottoms, but so far I tend to think that this has more chances of happening when everybody thinks otherwise.