Wednesday, Feb 25, 2009
How far will stock markets fall?
MoneyWeek: How far will stock markets fall?
After a brief rally into 2009, the markets have ground lower. But they are now at key technical levels. A breakdown from here and things are going to get even nastier – with uncomfortable parallels to the 1929 crash.
Posted by damien @ 11:39 AM (649 views) Add Comment
17 Comments
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1. bellwether said...
I'm really tempted to short gold counting on its seasonal decline, I think the bet will depend on the the stock markets rallying and key to that are US financials continuing yesterdays gains.
Longer term agreed the pattern is down down down for stocks with a question mark over gold. Thought Pretcher's comments were interesting.
2. techieman said...
"When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.” sys Mr P.
Well he's basically telling clients to cover shorts now which is not quite the same as (heaven forbid) initiating longs. Also his view that there may be a vicious rally is because he thinks we are at or nearly at the low of the first stage of the decline. That means there is a second stage retracement and then a third stage capitulation.
3. Dan said...
Its a brave man who tries to call the bottom. I think there will be another sharp drop in 2009. Some brokers Ive talked to, have suggested Footise could fall as low as 2000.
CFD's are a better bet at the moment.
4. bellwether said...
Thanks Techieman, how you doing anyway? The messages from the market seem incredibly difficult to read. The story is bascially one of prices dropping day on day but with the theme of a bounce keeping the suspense up. You still think there's going to be a serious jump up?
5. plato said...
I'm in here on the FTSE 100 with 50% of my personal pension((yesterday). So I'm putting some of my money where my mouth is. This is pure gambling territory and I feel comfortable there will be a short bounce. This low looks inviting to me. The decision now is to get in and out quick or look to a couple of years ahead and be patient, depends how tempting it is. This volatility is very inviting.
6. str 2007 said...
Well I actually sold my small gold holding Friday afternoon and got the top perfect.
Screwed up today though (so far) as it's picked up again sooner than my anticipated buying time of 20,800 GBP/KG.
Bellwether, I've also seen a couple of bearish Gold comments recently and was wondering if it was going to fall back for a week or 3.
7. rocket robbie said...
Techieman,
Any guesses as to how far the ftse will move up??
I set up my spread betting account today, looking to bet against the ftse (famous last words) but it seems like to much of an oppertunity to miss.
Also how far down do you think the final down leg will go??
8. plato said...
rocket robbie.........
When I said 'gamblng territory' that is exactly what it is. Even so with that in mind I have a great deal of choice over the period I invest as mine is a pension fund switch. I'm not gambling in the short or long term. I'm not committed as such. I can watch and choose over any period of time.
In your case the odds are strongly against you and you are asking the impossible regarding advice. You either learn (and lose - which you will) the hard way (which means you can afford to) or stay well away and practice in theory only until the day you can prove success with your own knowledge and experience.
9. rocket robbie said...
Plato
Cheers for the advice. I have been trading shares for more than a year and while i have not made loads i have made a lot more than if the money was in the bank. I had a go on a spread betting simulator but now i feel i would like a bash at the real thing. Im not exactly going to throw my life savings into it just enough for a bit of fun.
10. str 2007 said...
rocket robbie
Listen to Plato.
I started playing with a barclays 'demo' spread betting last week. I got off to a flying start. £350 profit on day 1, after loosing £2k turned that around to a £500 profit day 2. So £850 profit 'tax free in 2 days' with pretend money.
Day 3 came and I think not being able to close a position on their web site threw me (don't know what was wrong with the website/platform but it kept coming back as the instruction wasn't accepted). Anyway by the time I did close it half an hour later I'd gone down about £1000.
From that point on I just wasn't able to make the right decision on any position I took. Each time you change your mind on direction you loose the spread multiplied by you stake (ie 4 point spread x £40 per point = £160) just for clicking 3 or 4 buttons.
Play a simulator for at least a week before you do it for real. It is also very time consuming.
If you can make money regularly fair enough, but make sure you can. I'm still trying, it's trickier than you think.
11. str 2007 said...
Sorry Rocket robbie
You posted above while I was typing.
Sounds like you've already done your test run. Good luck.
Which demo platform did you use ?
12. plato said...
rocket robbie........
Sorry to get back so late. I spend a lot of time reading this site and check back every so often. Anyway was not commenting on your ability and I really wish you all the best. Now that you've given me some insight. You appear to have a little experience!..... but share trading is very different to spread betting as you well know.
If it's fun and you are ready to lose, no harm done. Personally I don't touch spreads. To put it simply, I make specific predictions in partcular sports of 3 or more results in the same event. The maths is simple and I enjoy these particular sports. I do not lay.
No I'm not professional but over the years I've done pretty well. My interest here is just that, I find technical knowhow in financials fascinating and enjoy reading people like techieman, especially their philosophy but would never try to do what they do.
The most important rule in gambling is to Know your limitatons and bet accordingly.............. Good luck! (This is 50% of success)
13. techieman said...
Sorry Chaps[eses] have been out and about today. Now where were we? oh yes....
14. techieman said...
ok here goes (this is with the benefit of the seeing the close in Chicago and Wall Street and seeing that the FTSE is being quoted in the high 3800s.
3. Dan - I dont EVER speak to Brokers! Also you can short the FTSE - if the brokers think that ask them how much (of their own money) they have in a short position.
4. Bellwether - Stand by my position a i've already given - dont think the downmove has finished quite yet (although do think we are close) I am still short looking for a test of the Nov lows although i have got out of some of the position. A bigish move up now will probably negate the bear - although i am not surprised by this move up from 3770 - it does lessen the probability that we will have more downwards move. In summary still short and still lokking for a new low. Will get out if it beaks around 4100 (but i may modify that since the issue is then really one of money management rather than technicals). Re the jump up - yes but it might take a while and be a bit nasty, but really the juries out until I see how we behave if and when we test the Nov lows.
7- RR - this downmove tests the Nov lows, then a more substantial upmove (i would say i would wait and see the way the maret starts o move up before sticking my neck out further - generally i look to trade the middle of the move rather than trying to sell the absolute top and buy the absolute bottom).
10. STR 2007 - "it's trickier than you think." YES it is im not 100% sure of the stats but about 90%-95% of traders (well people who trade) lose. IF you want to do it (and i dont recommend anyone does) then the best way is to spend MONTHS having a go on a variety of stuff with real money but small values. You really cant paper trade because you will ignore the bad trades and convince yourself you wont do them. You WILL make mistakes nd lose money (even on what you think is a great trade you will provbably buy the high and sell the low). Once yuou gain some consistency in your account you will get a feel for it and the emotions that go with it. You can then decide if its right for you, and what things to trade.
From alot of experience i trade what look to me to be highish probability trades that have a high risk / reward, i then take a reasonable sized position and run it for a while. Thats my particukar style others go for the smash and grab approach. For me Its a bit like flying, take off and landing are the 2 most difficult parts. 2 bits of advice - always take a view and NEVER forget about the money management. Accept that you will be wrong - ALOT - we all are. And (this is my view - DONT overtrade). Take a look at the FAQs of mptrader.com. He is much more active than me.
I would recommend everyone to have a go as it teaches you things about yourself but i wouldnt recommend people have a serious go at it because it can be very very scary, and if you are not prepard.
15. techieman said...
my batteries are low on my keyboard hence the mistakes..... Goodnight!
16. str 2007 said...
Thanks for that techieman
17. rocket robbie said...
Str 2007
I used the trading simulator on iii.co.uk. Made £700.00 the first day and thought why not have a go for real. I have now opened my proper account and put in a small amount of money. I will not be rushing to use it but if i think i see a good bet then iv got the money ready to go. I have physical gold (so i am bullish on gold) but i think short term its a good time to short gold.
Techieman
Sorry i keep asking you questions but you do seem to be right all the time.