Weekly Poll: Don't Short A Dull Market?

[shortie]

I am thinking that we could we make this thread educational in addition to the customary poll and BS statements like "she is gonna dump any minute now!", etc. Maybe the thread will even make it into the top 100 educational threads (or maybe not)

Let's talk about dull markets. We all know the mantra "Never short a dull market". I have a few questions about it and how it relates to today's market:

1) what is "a dull market"? low volatility?
2) is the mantra true?
3) is the current market dull?

with regard to 3):

on the one hand, Friday and Thursday intraday really put me to sleep (i don't count Thursday morning reversal which was not dull).
on the other hand we had several large gaps overnight, Thursday morning reversal, Fed jump - these are not dull markets.

On balance, is the market dull now or not? If it is dull (at least towards the end of the week) should not one have a long bias going into the weekend?

 

[tradingjournals]

I noticed that in the QQQQ we have 4 consecutive gaps, and none of them is filled. Last week, we have also gaps. It is a gappy market. It is a very dangerous market in search for a direction, but I expect it to stay up to flat next week.

 

[shortie]

googling for "dull market" gives several definitions: "lethargic with no clear trend", "shrinking volume with tight daily ranges":

"Never short a dull market means to be careful with the underlying strength of stock prices in a market that has become lethargic, with no clear trend.
..., the underlying strength can turn into buying activity on the slightest positive news."
http://books.google.com/books?id=xq...onepage&q="never Short A Dull Market"&f=false

"...the old Wall Street saw, "never short a dull market." Indeed, with shrinking volume and tight daily trading ranges, it does appear that the market is preparing another attempt to rally."
http://online.barrons.com/article/SB124458395737099553.html


apparently this important adage does not work in bear markets:

"...By William Peter Hamilton
New York, NY: Harper & Brothers
1922
Pg. 146:
In the old days Wall Street formulated a number of maxims for itself, and one of these was, “Never sell a dull market.” It is bad advice in a major bear swing, for the markets then will become dull after a sharp rally, and experienced traders will accordingly put out their shorts again."

more really old examples are here:
http://www.barrypopik.com/index.php...sell_a_dull_market_short_wall_street_proverb/

 

[S2007S]

I am a bit bullish for next week but still extremely bearish over all, I think after the markets fell over 3% last week that a little recovery might be back for the markets next week. Keep in mind that there are still earnings coming out and next week earnings from WMT, HD, LOW, HPQ and DELL can all be market movers one way or the other.

 

[LEAPup]

Hey, a shortie poll! I look forward to these.

As far as a dull market goes, last week was dull with low volume up until the last 30-45mins.

Volume leads price, and the volume just hasn't been there.

I was drinking extra Diet Dr. Pepper just to stay awake...

I don't have any bias either way going into next week. I'll trade what I see. Wait a second, I did vote bullish, so guess I am biased.

 

[shortie]

i forgot about the small dump into the close. could be a bullish sign for Mon: the bulls are nervous holding over the weekend.

 

[gov]

Quote from S2007S:

I am a bit bullish for next week but still extremely bearish over all, I think after the markets fell over 3% last week that a little recovery might be back for the markets next week. Keep in mind that there are still earnings coming out and next week earnings from WMT, HD, LOW, HPQ and DELL can all be market movers one waQUOTE]Quote from S2007S:

This is pretty much my view exactly at this time; looking for a bounce and then a short entry somewhere along the near timeline. As evidence, I think a bull flag can be drawn from all the way back into early April on the 60 min; we broke out 7/23, and now it is back re-testing the downtrend line. I think a bounce is close, if not here already. Should it gap down on Monday, I think a double-long position is in order on the first sign of strength...

Here's a chart to illustrate

 

[gov]

Here's the latest half...

 

[KMAX]

I was right (Bearish) last week so now my record is 1-3.
I guess with the VIX starting to rise and the large dark candle that we now have on the weekly SPY chart I'll be chillin' with the Bears again this week.
We are now in the worst two quarters of the sixteen quarter presidential cycle. And I won't go into President O Boo Boo
and his anti-business policies.
Dull markets? Maybe if the market is dull AND the VIX is low it's time to go (Short).

 

[shortie]

"Borrowing from the Fed’s discount window fell $61 million to $1 million, the lowest since September 26, 2007, when there was no borrowing at the window. .."
http://www.bloomberg.com/news/2010-...changed-bank-borrowing-lowest-since-2007.html

how bad is this longer-term? the market did nothing but drop for 1.5 years starting sep 2007

''...M2 money supply rose by $16.9 billion in the week ended Aug. 2, the Fed said. That left M2 growing at an annual rate of 1.8 percent for the past 52 weeks, below the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target. .."

what about this? slow economic growth going forward?

sorry, these are relevant to the short-term market predictions, but i am too lazy to start another tread