Wednesday, July 15, 2009

Bear Capitulation

Can the "overall view" of the market change in 3 days? From Abyss Dwelling to Jump on Before You Miss This Second Train.

How many people are thinking....darn, I wish I would have jumped on in March, but I missed it, so I better jump on now before I miss this one too. Fear and Greed, and fear of missing out. This market can only be bought based on a greater fool theory, stock is not selling for the Net Present Value of expected future earnings. In other words, it ain't worth what it costs. However, as traders this should only be a secondary consideration for us. If it is going up, we should assess the risk and reward and place our money appropriately. Cash is a position, always. To say that these are times of extreme uncertainty is an understatement.

I was too young to understand Vietnam and nothing else real bad happened until the last several of years of bubble after bubble to cover up the reality that we have to live closer to our means or invite disaster. Sure 9-11 was bad, but our reaction to it was worse. What does this mean? Just that we are in a once in a generation, at the very least, funk, and maybe worse.

The super bears...EWI and Tim Knight have basically thrown in the towel. Many others are talking about "covering my shorts at the earliest opportunity". Other smart bears are saying if it drops to 910, cover. I called it on 6-7-09 and I am calling it again.

This is a top.

The Banksta's are incidentally gaming both Elliot Theories and patterns, and doing a wonderful job of it. Amazing they can do so after some multi-billion dollar making trading programs were "stolen" and there is no backup anywhere. Does that make any sense people?

As a small business man, if I spend $3000 on custom programming or computer setups you bet I am going to have backups, and also off-site backups.

So we live in interesting times, eh?

PS I shorted ES at 929.5 and covered at 921.5...about the best and fullest extent of the move I have achieved. Certainly I have in the past bought at the worst time and sold at the worst time. Full disclosure -- luck counts, don't discount it. Or the effects of randomness or the likelihood of a 6 sigma event, when almost all the financial models are based on a statistical theory called "Normal Distribution". Also, try not to be deceived by deception.

Again think about all those people who are thinking...boy, I sure don't want to miss the next bull run. And this is expiry week, so in theory the real fireworks already went off.

Full disclosure-- I bought 1 future long at 921.5 with a stop at 920.75 in order to tank the market. When I go long, you know hell is about to freeze over, tonight we dine in hell, and bring a jacket.

Forex never sleeps (so you can't get gapped out!) GBY/JPY see annotated chart.

1 comment:

Insightful and Useful Comment!