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Report: Markets 'Are Like 1987 Crash'
- Thread starter capmac
- Start date
notice that when markets are going up the sell-offs can be near very steep
and when markets are going down the rallies can be very steep...like today's 10 handle rally in 20 minutes
if we're breaking the long-term downmove in the VIX then I think the market from here on will be more of a pleasure to trade
and when markets are going down the rallies can be very steep...like today's 10 handle rally in 20 minutes
if we're breaking the long-term downmove in the VIX then I think the market from here on will be more of a pleasure to trade
Quote from Kensho:
notice that when markets are going up the sell-offs can be near very steep
and when markets are going down the rallies can be very steep...like today's 10 handle rally in 20 minutes
if we're breaking the long-term downmove in the VIX then I think the market from here on will be more of a pleasure to trade
Agreed. This is why at thier core, all trading strategies are either trend or counter trend (leaving out arb for the moment). For those who trade trends but get easily shaken off, it's virtually impossible to make money since a trending move behaves more like a cruise ship than a clipper ship. Countertrend moves are quicker and are often just as, if not more profitable, than trading the main trending move because when the trend feels attenuated, it's easy to load up on big size and hold it with confidence.
Basically, it just comes down to how one's mind works. I prefer countertrend, but I do look at indicators like the opening range, pivots and such to prevent me from seriously injuring myself.
With that said, I think the market is done for today (5/22 1247pm). That's not to say it won't move. I just don't see any entry points.
Report: Markets 'Are Like 1987 Crash'
No they're not. The chart patterns leading up to the crash can be found many times over since then, and with out a similar result. As far as interest rates and their relation to the crash, they were nuts then, they're not even close to being similar now.
IMHO this looks more like October 2005 than October 1987.
Be cautious, but don't freak out. This is called a downtrend. Learn to trade it now, because eventually you will see this type of market regularly during a long term bear. Right now I'd have to guess this is just a retracement of a bull, and probably not a full reversal into a bear. After the markets start a rebound, they'll probably reach lower highs followed by higher lows. At which point in time, the market will decide for itself if this direction is going to be a permanent fixture (a new long term bear) or just a minor stumble on its way to higher highs (a continuance of the current long term bull) If you're trading stocks or ETFs in short term time frames, try not to get caught up in predicting future market direction, it's not nearly as important as identifying and reacting to the markets current direction.
The only difference between trading a long term bull's retracement and a long term bear's down trend is price movement. There is typically more singular direction movement in downtrends following (or inside of) a bull market than there are in long term bears (excluding crashes and bubble bursts). Learn to trade short in a move like this, and you'll be fine in a long term bear market.
Learning to trade both sides of the market is a major key to success. Unlock one door and you find a corridor full of others.
No they're not. The chart patterns leading up to the crash can be found many times over since then, and with out a similar result. As far as interest rates and their relation to the crash, they were nuts then, they're not even close to being similar now.
IMHO this looks more like October 2005 than October 1987.
Be cautious, but don't freak out. This is called a downtrend. Learn to trade it now, because eventually you will see this type of market regularly during a long term bear. Right now I'd have to guess this is just a retracement of a bull, and probably not a full reversal into a bear. After the markets start a rebound, they'll probably reach lower highs followed by higher lows. At which point in time, the market will decide for itself if this direction is going to be a permanent fixture (a new long term bear) or just a minor stumble on its way to higher highs (a continuance of the current long term bull) If you're trading stocks or ETFs in short term time frames, try not to get caught up in predicting future market direction, it's not nearly as important as identifying and reacting to the markets current direction.
The only difference between trading a long term bull's retracement and a long term bear's down trend is price movement. There is typically more singular direction movement in downtrends following (or inside of) a bull market than there are in long term bears (excluding crashes and bubble bursts). Learn to trade short in a move like this, and you'll be fine in a long term bear market.
Learning to trade both sides of the market is a major key to success. Unlock one door and you find a corridor full of others.
I'd be interested to know how many times the Nasdaq has been down 8 consecutive days over the past 25 years... looking at the 1987 data, I don't show that we hit 8 days even then (in fact, I show the most consecutive down days as 5)... leading into the crash, we had 5 days lower, followed by an up day, then another 5 days lower, then an up day and finally 5 more days lower.
I think we need to look at the bond market too before we start talking about a crash. In 1987, the bond market peaked about 9 months before the crash. In 2005-2006, it peaked in early Sept. I do not think we will see the market crash before June. 1240 will be the last support for S&P. If the S&P closes below 1240 on a weekly chart, we might see a crash. There is a good chance the S&P will try to bounce from 1240 which I think will be short-lived and the sell-off that we get will lead to a crash.
Please see the attached chart. Notice how the red-line and green-line has been the major resistance and support for S&P. It is currently at 1240.
Please see the attached chart. Notice how the red-line and green-line has been the major resistance and support for S&P. It is currently at 1240.