This time it's different..

Quote from Maverick74:

Here you go: facts and figures.

http://www.ici.org/research/stats/trends/trends_12_10

Get to know that site really well. They track all the inflows and outflows month to month of mutual funds and ETF's.

What you will see is over the last year, money has been pouring out of domestic stock mutual funds to the tune of billions each and every month. What you will also see is that the small investor has been piling into international stock funds and bond funds over the last year.

This would be obvious if you looked at how badly we are actually under performing other markets around the world as I cited on another thread.

Here are the return numbers for the last 12 months:

Argentina 55%
Singapore 54%
Germany 37%
Australia 37%
Taiwan 36%
South Africa 36%
Peru 35%
Canada 35%
Chile 32%
Sweden 31%
Netherlands 29%

USA 28%


And year to date:

Spain 16%
Germany 12.5%
Italy 11.5%
Greece 11.0%
France 10.0%
Sweden 7.5%

USA 5%
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All right, you convinced me. I'm turned. I'M A BULL! EVERYBODY IS BUYING AGAIN SO I AM A BULL! YEAH!

In the meantime, it is not as relevant to look at these kind of absolute numbers, but relative numbers. You need to look at flows to and from both long and short mutual funds and ETFs. I prefer to look at mutual funds because then I can sepparate the institutional activity from the retail group with the right data and they have been around a lot longer. Have a look at the RYDEX funds. According to my data, the market whole market is more optimistic than any point during the last 7 years and about as optimistic as it was a few months after the top in 2000 (this would make sense because it is only 10% or so below that level). The retail group is about as optimistic as during the 2007 highs.

Also don't discount the economic climate. It would be an easy mistake to think that the retail client is "only just coming back" while in effect it is a highly optimistic (thus dangerous) print. Other effects are dampening the inflows to mutual funds which makes inflows now compare with much higher inflows then.

Also, I believe the structural unemployment in the US is now between 7 and 8%. Watch it happen, it will go to 15% and then back down to 8% in the next decade or two.

THIS TIME IT'S DIFFERENT! IT'S A REAL BULL!
 
Everything known by the universe about a regulated, universally-disseminated commodity or instrument is reflected in the last price print.

If you just go along with the market you can make a very good living in this business.

The fact that you are convinced that you are right, and somehow the market is wrong is, in fact, irrelevant. It is irrelevant because you get paid on price, not on your opinion.

In my professional opinion, most traders fail at it because they think that they are right and the market is wrong, and it is their obligation to prove the market to be wrong. Market timing, that is, picking botoms and tops, is absolutely shit risk/reward and the expectancy outcomes are terrible. The market is what the market is. Your opinion will not get you paid, but your ability to risk capital based upon price action will get you paid ridiculously well.

If you show this chart to some drunk chick at a bar, or a nine year old kid at McDonalds, they will know exactly what to do, and they will say so right away:

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There is liquidity in the markets because alot of naive but egotistical punks put $5K into an account and read the entire "Market Wizards" series by Jack Schwaeger. And they want to time the markets in broad macroeconomic terms and slap everybody else around with their monster phallus.
 
Yes Bone, I mostly agree. However this is not a terrific entry point for either long or short (for a long-term play) because there are many uncertainties around. I would not assume this trend is going to continue for a lot longer nor would I assume with certainty it is going to collapse.
 
People that make money in the markets based on my long experience with them fall in 3 categories:

(1) front-runners, insiders, manipulators with size and other illegal types

(2) Market makers and HFT with a valid edge (very few)

(3) Retail traders that apply high probability trading methods

I am surprised that Bone, whose comments I like in general, used hindsight as a trading rule. Tell me something Bone, you say that now but what about last October? Were you sure that the rally will continue? But even now, how can you be sure? This is not a high probability trade. Actually, it is 50/50 the market will continue going up no matter how much money the FED plugs into the system.

The reason is that long term rates have begun rising.Rates will have to rise further and the stock market will fall as bonds are getting cheaper.

As a matter of fact Bone, I expect a good correction next week.
 
Quote from Locutus:

Yes Bone, I mostly agree. However this is not a terrific entry point for either long or short (for a long-term play) because there are many uncertainties around. I would not assume this trend is going to continue for a lot longer nor would I assume with certainty it is going to collapse.
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You claimed the same thing in November and it actually was a good entry point for longs. I personally believe we trend higher until summer 2012 ( minimum ). Might be a few hiccups along the way but a keen eye you can avoid any damage to your account.
To me this remains an excellent time to trend trade on the way up in certain sectors.

Lets see what the charts look like April 2012. If its still a long term trend up by then you will have to admit I nailed the market outlook for two years.

My recommendation is large cap financials and technology which have strong earnings and particularily stocks that have lagged the market move in 2010. You won't get rich on these stocks but you will make money. If you leverage using options, you might get somewhat rich off a few trades if you catch short term moves.
Last week I only had two trades on but one of them paid 353% profit in one week.

On the short side some of the riskier resource and metal plays have come too far too fast. As long as the US economy continues to improve, the gold play as a safe haven trade is susceptable to a correction. Same thing happened in the 1990s, once other sectors started to run the junior gold plays went out of favour. I'm not dead set convinced on this trade yet but playing the volatility might be decent in both directions.
 
Quote from intradaybill:

People that make money in the markets based on my long experience with them fall in 3 categories:

(1) front-runners, insiders, manipulators with size and other illegal types

(2) Market makers and HFT with a valid edge (very few)

(3) Retail traders that apply high probability trading methods

I am surprised that Bone, whose comments I like in general, used hindsight as a trading rule. Tell me something Bone, you say that now but what about last October? Were you sure that the rally will continue? But even now, how can you be sure? This is not a high probability trade. Actually, it is 50/50 the market will continue going up no matter how much money the FED plugs into the system.

The reason is that long term rates have begun rising.Rates will have to rise further and the stock market will fall as bonds are getting cheaper.

As a matter of fact Bone, I expect a good correction next week.
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Did you even read what Bone said? Read his post again. I thought it was spot on.

I think a lot of people on this thread are confusing time frames. There are some people who are long the market for the next minute, the next hour, the next day and some for the next month or longer. These threads all generate a traffic jam of ideas when you don't clarify your risk/reward, time frames and stops.
 
Quote from Nine_Ender:

You claimed the same thing in November and it actually was a good entry point for longs. I personally believe we trend higher until summer 2012 ( minimum ). Might be a few hiccups along the way but a keen eye you can avoid any damage to your account.
To me this remains an excellent time to trend trade on the way up in certain sectors.

Lets see what the charts look like April 2012. If its still a long term trend up by then you will have to admit I nailed the market outlook for two years.

My recommendation is large cap financials and technology which have strong earnings and particularily stocks that have lagged the market move in 2010. You won't get rich on these stocks but you will make money. If you leverage using options, you might get somewhat rich off a few trades if you catch short term moves.
Last week I only had two trades on but one of them paid 353% profit in one week.

On the short side some of the riskier resource and metal plays have come too far too fast. As long as the US economy continues to improve, the gold play as a safe haven trade is susceptable to a correction. Same thing happened in the 1990s, once other sectors started to run the junior gold plays went out of favour. I'm not dead set convinced on this trade yet but playing the volatility might be decent in both directions.
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Well I was wrong about being bearish in november and it was a reasonable long entry point because the market was still relatively bearish (late September was an excellent entry point in hindsight because the market was bearish while about to break out of a range on "fundamentals", that usually makes for a nice up move). But then it is all easy with hindsight. I tend to do best in a ranging market, like we had for a while in 2010 and still (I hope) have in what I mostly trade (the CAC40) with a light upward bias there. It's only about a percent above the April high now so I am not *that* wrong if you look at what I trade.

I wouldn't be as bearish if I traded the ES I suppose, there is no substantial downside action there.

I might become more bullish if I see short interest go up (in ETFs and mutual funds) to what would be in my mind an acceptable level for a long entry without the S&P going down more than 10%. I'll let you know if that happens. If it just keeps going up I'll just sit on the sidelines, but I really have my doubts about that.
 
Let me be very clear - I am not making market calls. I am building an indictment of the naivety and total lack of supporting technical price action presented by the OP's in most of these 'grand market top or bottom' timing threads started here on ET.

It is my sincere hope that if someone is brave (foolish, really) enough to start one of these grand macro market timing proclamations in the future, that they provide some sound technical reasoning in the original post. Futile gesture on my part I am sure.

I would wager that the fade risk/reward skew on new ET market timing proclamations by an OP is absurdly high. Think about that.
 
Quote from intradaybill:

traders that apply high probability trading methods
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Quote from bone:

supporting technical price action
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Quote from Kobayashi:

The technical picture supports it.
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Above are the magic words.

Mastering technical price action is the key to the kingdom of consistent profitability. Price action reflects everything driving price.

On Monday morning, in response to some back-and-forth from short term swing traders both long and short, I posted in ES Journal, "The channel off 11/30/10-01/31/11 lows invites a target of 1325-1330."

Where did price close Friday?

I have a secret to share: Targeting levels accurately more often than not isn't magic. It's a matter of putting in the hours necessary to learn high probability price action patterns.

Here's another secret: It doesn't matter what time frame you trade, the same patterns work in any time frame.

And here's yet another secret: If you let price instead of bias take you into your trades, your probability of profiting increases dramatically.

My best individual trade ever in the instrument I currently trade came out of a price action entry Friday that was the opposite of my bias. I had a long bias, because the micro-trend was up. But because of price indecision at an extended level, I bracketed orders in both directions and with great surprise found myself in a trade opposite my bias which produced a huge momentum move based on news. Even if I had a state-of-the-art automated system programmed to react to an expensive live news feed, I would've been late to the party. But by simply following my standard technical price action rules, I was positioned perfectly right out of the gate.
 
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