So I have been one to ask a lot of questions panic etc. I'm a relatively young investor who has never experienced a volatile market and has made plenty of mistakes. What I have realized is that this is a market where everyone is trying to pick the bottom and the truth is once the bottom hits no one will want anything to do it w the market. Just Cus something seems cheap doesn't mean that you buy it. I did that w transocean and fcx and realize that I should've been more patient.
I spoke w someone who is a major market analyst this weekend ad asked a lot of questions like why is apple down 10 percent the last few weeks what's gonna happen. The truth is I think the market needs to drop and stabilize. When a stock jumps 10 percent in a week after getting killed that's not a rebound that's short covering. This morning I'm trimming all positions and buying puts. I just don't see the spy going much higher in the near terms and can see it going a lot lower. Then if the mkt gets back to bear mkt territory I'm gonna buy gradually. I would like to hear others thoughts but I finally feel like I get it now and have a good strategy. Thanks!
First like most people I agree that I don't think the SPY will go much higher. But just because I don't think it will, doesn't mean it won't.
I truely believe that over a short time frame (say 6 months) market direction is purely random. I've been doing well on buying both puts when we're over 115 and buying calls when we're under 115.
Last week I went long with 20% of my portfolio in a half a dozen select stocks. I don't think we're at a bottom, but I also think we'll go up soon enough. Unless you want to buy at the top, it might be a good idea to scale into some stocks you like.
At some point undervalues stocks shoud start to go up, even on days when the SPY doesn't.
you're exactly right - a bottom isn't set with a 4% intraday reversal followed by another 6% higher in 72 hours, which is what we're at the tail end of right now. The market needs to crumble and then trade sideways for a month or so to actually bottom... these violent up moves are powered by short-covering, HFT, dip buying permabulls, etc. I learned my lesson in 2008 and about 3 weeks ago stopped taking positions out overnight. At this point the market is nothing more than a casino on high octane. How could you ever predict that you'd wake up this morning after in all practicality a non-event weekend in Europe to the SPY up 1.7%!? It's ridiculous. I mean look at the Hang Seng - it rocketed nearly 300 points in the last 20 mins of trading today - but the biggest joke of all is our futures have been ramped so high tonight and the Dax is up a mere .5% today. There is no figuring it out... it's like a spastic child the way these futures move... the forces that be jack them as high as they can (all the way to the top end of the channel at 1172) so there is no where to go but down at the open. It really is amazing if you think about it.
Good post. What's interesting is the occupy Wall street protesters have a point, although the majority of the protesters have no idea what the point is.
From our perspective as retail traders, WE should protest the inequality and manipulation of the markets.
The facts are these markets (the past few years) are the most manipulated in history.
Casino on high octane indeed.
Here is the problem with that strategy. You just can't see SPY going much higher? Based on what? I am not disagreeing with you, I am just saying that thought in itself has no basis. It's a feeling and I can assure you that this market is designed to take the most money from the most people. I know that one from experience my friend. You may be right on....and I will probably do the same thing at some point today or tomorrow. I am just saying, have a plan to take profits or cut your losses. What's your discipline? Good luck!
no it is a thought, it is not a feeling. When someone says they cannot see something happening that means they do not perceive the neccessary and sufficient conditions for it to occur. That is a valid argument..that you see no catalyst basically.
But do agree, there is a ton we don't see so that is a somewhat dangerous trading stance. I have been burned by it before I suspect we all have. Can't trade your world view if you want to make money consistently..