Why Do People Buy At A Top?

Now that we have hindsight, let us review things so that the people who were a bit confused might see things a bit better.

This thread started on October 21, 2013. Now take two charts: one of russell and one of the S&P.

These questions may be in order:

1. How far was the top of the russell from the value of the russell around the date when this thread started?

2. Which index has a higher risk?

3. If the risk in a russell stock is say twice the SP, how much relative return should a long russeller expect?

4. What was the return of the SP and the Russell from October 21 to the day of the sell off? (one looks positive with lower risk, the other negative and with higher risk).

5. Given the ratio of the numbers of stocks in each index and your answer to 1. and 3. , what is ratio of the longs who picked a losing stock vs. those who picked a winning stock?

6. How do we explain the number of longs, and their triumphs in this thread since october 21, vs. the fate of the longs as per the answers in 1,4 and 5?
 
When this thread started, ES top was 1742.50
Now ES trades at around 1794.
Who bought at that top and kept the trade,now has an open profit of more than 50 points.
Is this a good reason to buy tops?
 
Quote from tradingjournals:

What is the answer to your question pfranz? I am positive you are smarter than 80% of the fund managers.
More...

80% of fund managers have underperformed the S&P the last few years.
 
Quote from tradingjournals:
What is the answer to your question pfranz? I am positive you are smarter than 80% of the fund managers.
More...
What I mean is that high/low channel test has always been a good trend indicator.
In recent years it wasn't anymore,but now that we have Uncle Ben / Aunt Janet who tells us s/he will drag markets up and s/he wants us to buy, well, top re-test is a good reason to buy (maybe together with other indications).
 
Just developed a model and want to see how it does:

Estimations for SPY for tomorrow Monday: (Sellers, buyers)@(180.52; 177.82).

Friday close was 180.12. I plan to try it for 25 days.
 
Some people in this forum keep repeating the idea that all one needs is 2:1 and 3:1. I then thought to put a paper trade to record what would happen between today and March 2014 or until stops are hit. Imaginary profit is: 14points. For 2:1: 7 points lower from 180.12. For 3:1: 4.66 points lower from 180.12. I believe their stops would be hit well before March..

I am plan to try to estimate when the stops would get hit. If someone has numbers please give them to save me the time from doing it.
 
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