How long can the market do the exact same thing every day?
For nearly three weeks now, every single day with only two exceptions the market has opened or traded down early in the morning, then trended upward the rest of the day, usually starting around 10:30. Can it really be that simple to consistently and reliably make money in the stock market? Sell out and go short at the end of the day, cover at 10:30, go long, hold for the rest of the day, then repeat the cycle. Every single day. Over and over. Virtually guaranteed to make money. On the rare occasion that this doesn't work, the small losses are easily eclipsed by profits from following this pattern the very next day.
Just how long can the market remain this predictable? I remember the old days when the market had surprises and trend reversals and everyone couldn't get rich all at the same time by simply following the crowd and trading according to a simple formula. I guess this is the New New Economy, huh?
Okay, we all know the drill. Bad economic news in the morning will be the catalyst (read:excuse, explanation) for an early morning dip, then it will reverse to the upside at 10:30 give or take 10 minutes, and trend up for the rest of the day, to finish higher. Those are the rules now, the economy doesn't matter.
Hey! No fair! Wasn't it supposed to dip "because" of the bad news until 10:30? What, we don't even get the early dip this time? Oh, I get it. It dips on normal bad news, but if it's *really* bad news, then it just goes up from the opening bell. That's okay. You still sell at the close today, go short, cover tomorrow morning, and go long, because that's how it works.
Okay, I guess we all know what to do now. It's the end of the day, so you take a short position. Tomorrow morning it will either open down, in which case you cover at the bell and go long, or it will open flat or slightly up, in which case it will dip for the first hour, and you cover at 10:30 and then go long. Then hold until the end of the day, sell, and go short again.
That works every single day, apparently. No surprises, no curveballs, no deviations from the pattern. Forever.
Well, you know, when triple-digit P/E ratios became the norm for tech stocks in the late 90's and conservative old grumps bellyached that it was getting out of hand, they kept being told that they don't understand that the rules of changed and this is the "New Economy" and they need to get their heads out of their history books and catch up with times, or the 21st century would arrive and they'd be left behind in the dust.
We all know how that ended. But this time it's a "new economy" for real. This time the rules really have changed, and everyone can get rich if they quit looking to the past as a guideline and just buy at any price with maximum leverage. Right? Right???
Please tell me I can get rich buy just buying as much of the hottest stocks as I can on margin and walking away.
All in on GOOG, NFLX, BAC, and FB! Now time to hit the beaches in the Caribbean, then jet-set over to a 5-start hotel in Monte Carlo and just live off the profits. Right? RIGHT, I asked you? Please tell me Ben will take care of us forever with free money for all.