The Next Leg Down?

J

Jahajee

After this bout of mini-irrational exuberance realism will
soon step in, resulting in another leg down.

I think it starts sometime this week, possibly on Tuesday.
There was a time when end/beginning of month was
bullish because of "window dressing".
But, not in this era, post-Greenspan/Rubin/Bernanke disaster - hedge funds and institutional investors are biding their time and waiting for every decent bear market rally to sell ...and sell...

SPX 950/960 appears to be an eminently shortable zone.
 
yay for my double-response post, but i'd rather be 1st response then page 6.

well i never covered all my shorts, just covered all my leverage. i'm 100% short right now and as we start to crash next week i'll be going slowly up to 400%. why does everyone always fall for the same tricks? this isn't a rally- this is a there-is-no-one-here-to-stand-in-our-way-holiday-week-dramatic-move. (see oil 4th of july). there are three big players in markets that i can really identify. technical traders, fundamental traders and game theorists. the latter simply look for opportunities to give the first two what they are looking for to make their money off of lighting those triggers up. what's better than a light volume 5 day rally through a week where half the industry took off the entire week and the other half just took off the last half. this was nothing but a short-squeeze and maybe has legs monday, but realistically the increased liquidity provided by everyone returning to work monday will simply be used to liquidate their longs through the first day or two of next week and then move back into net-net short and crush all the permabulls into hitting their stop loss. whether or not we break into new lows mid dec is questionable- but unemployment is going to be an absolute shitshow.

dm
 
I'm waiting on the retail report to jump back in, I dont want to be short if by some miracle its better than expected.

This rally was fueled by bailout news, not exactly the stuff sustained rallies are built on.

While markets usually recover 6 months before the economy turns around I still think the economy has a long long way to go. The commercial loan crisis hasnt even played out yet, I expect this to be the catalist to send the market back down to Oct lows.

I think the financial & homebuilders are particularly overbought atm & will be opening short positions in JPM, TOL & CTX on monday or tuesday. JPM has the most to lose in a commercial loan crisis & the homebuilders are in serious trouble if the economy doesnt recover by q2-q3 2009.
 
You are going to have to wait until next year for your next big downage IMO. You are forgetting what drives the world economy - the Foolish American Consumer (FAC).

Here's the way I see it, for the rest of the year and a month or so after, we go mostly up. Even after all this financial horror, the FAC will want to spend again. For a while anyway. Holiday optimism and hope that 'Bama can fix things with new spendy policies, will send us higher. Desperate fund managers will jump on hugely, but they will all bail at the first sign that things aren't getting better. Next year.

The FAC is a crazy animal. Even near bankruptcy, given just the tiniest bit of hope they will spend spend spend. The numbers will start to show up...and bam, up we go for a few months.

But then, I could be wrong. I usually am.

Good trading to all! :cool:
 
Quote from village trader:

We haven't seen the bottom yet imo.
More...

Do you think oil and gas will go lower?

I have some O & G trust stocks that were holding up very well until a week or so ago when everything crashed.

Now they are big losses. They gave out monthly dividends between .40-.78 per share monthly. Up until a week or so ago I was trading in and out of them every couple of days and then holding at the end of the month to get the dividend.

400 shares each of SJT, MTR, CRT.

Now tho this sector was really crushed in the last leg down...how much more will it go if we have another leg down?

MTR had these wide spreads and for me...I could make 1800.00 in a couple of days just buying low and waiting for the price to jump way up.

I am in the negative with these stocks now trying to decide if we are close to the bottom for oil....40-50 barrel or if we have farther to go.

Any ideas?
 

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Quote from Jhershierra:

Do you think oil and gas will go lower?

I have some O & G trust stocks that were holding up very well until a week or so ago when everything crashed.

Now they are big losses. They gave out monthly dividends between .40-.78 per share monthly. Up until a week or so ago I was trading in and out of them every couple of days and then holding at the end of the month to get the dividend.

400 shares each of SJT, MTR, CRT.

Now tho this sector was really crushed in the last leg down...how much more will it go if we have another leg down?

MTR had these wide spreads and for me...I could make 1800.00 in a couple of days just buying low and waiting for the price to jump way up.

I am in the negative with these stocks now trying to decide if we are close to the bottom for oil....40-50 barrel or if we have farther to go.

Any ideas?
More...


I believe Oil and gas stocks will remain at or near current levels, based on the fact that Crude and natural gas are not going to go up anytime soon. Look for crude to trade between 40 and 70 during the next few months.

In terms of the economy, the worst is yet to come. Stock markets will not bottom as yet but should do so in Jan/Feb, about 3 to 6 months before any upturn in the economy. If you could wait until next December and tolerate drawdowns as much as 50% then start buying stocks selectively.
 
Quote from Jahajee:

I believe Oil and gas stocks will remain at or near current levels, based on the fact that Crude and natural gas are not going to go up anytime soon. Look for crude to trade between 40 and 70 during the next few months.

In terms of the economy, the worst is yet to come. Stock markets will not bottom as yet but should do so in Jan/Feb, about 3 to 6 months before any upturn in the economy. If you could wait until next December and tolerate drawdowns as much as 50% then start buying stocks selectively.
More...


YIKES I trade daily or weekly. So I am not sure what to do about another large leg down between now and February. I could sell everything at huge losses and sit on the side lines with my money in the money market account or I could try and keep trading selective stocks ( in and out) in a day or two and hold onto the oil/gas stocks or just sell them off at a loss and ' start over' with a blank slate and just do very few trades for a while..ones that are well into momentum.
 
It's pretty clear. This is a BEAR market, so we short a rally. Just wait for your daily oscillators to confirm OB territory, then choose a basket of fundamentally weak stocks to short. Couldn't be easier (unless there is a strong christmas rally-watch out for this and perhaps wait for Jan to sell some stinkers). Either way it's currently a lovely swing traders landscape.
 
Quote from Jahajee:

After this bout of mini-irrational exuberance realism will
soon step in, resulting in another leg down.

I think it starts sometime this week, possibly on Tuesday.

SPX 950/960 appears to be an eminently shortable zone.
More...

Why would any TRADER worth their salt not take advantage of being LONG for a 7% move to the upside to your 960 target?
 
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