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Crash Buyer

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  1. 100% retracement of the breakout move. Impressive stuff.


    Indeed. Although I think the gold correction may be done here (in the 1500's). Closed my gold shorts today. No doubt there will be some volatility to establish a bottom over a longer period and I think subsequent performance will not be as impressive as recent 'breakout' history (i.e. like silver).

    EDIT: Improved clarity.

  2. My favourite 3 trading commentators (Hamilton, Walayat and Tiho from Short Side) plus Macro Man have all been on the "this is a Bull Market correction/buying opportunity" meme. There is a part of me that would love them all to be utterly wrong to teach me never to follow anyone blindly (if I needed that lesson). Of course another favourite, Grantham, has been far more circumspect and waits with the patience of a praying mantis to strike at the bottom of bear markets...not just 'corrections'.

    Hamilton's written the most convincing explanation I've read explaining why this is not a bear market. RK linked to it a couple of weeks ago - link below again for anyone that missed it.


  3. S&P close -6.66% :ph34r:

    The bull market debate:

    Latest from Nadeem



    Clearly the stock markets remain immersed in panic mode so not in any state to make a new bull market high any time soon, I see the likes of Dr Doom Marc Faber, AFTER the event claiming that stocks are in a bear market as of 2nd of May 2011 and won't make a new high. WRONG. The only question mark is how long will the current volatility extend before the bull market in stocks RESUMES. That is not clear, the stock market is oversold and set to bounce, but after the bounce it could make another lower low. It is not clear, which is fine because the market is not always predictable. My best guess is for an imminent bounce to resolve in a retest of the lows, stocks historically tend to make major lows in September and October.

    The Bottom Line - The stocks bull market is not over, the current correction extends to about 11%. Therefore I have an on going opportunity to accumulate target stocks and will likely get another bite at the cherry after a bounce and plunge into Sept/Oct, after which the future prospects for stocks for the balance of the year will become much clearer.

    One of Angela Knight's regulars (Short Side of Long)


    Also, before I continue I would like to point out that I believe the market has now been technically damaged very substantially meaning that the trend according to the Dow Theory has changed from an uptrend to a downtrend when that 1,250 broke on the S&P 500. So keep in mind that I am buying stocks here for a trade and a powerful snapback bounce and not for a long term buy and hold.
  4. SPX:GOLD close prior to bizarre writedown of global reserve currency


    Precisely on March '09 support. i.e. equities at exactly the same ratio now to gold as they were at their lows. Another Goldman 666 moment or a crash right through moment? If the dollar isn't worth the paper it's written on then clearly gold must go parabolic or what's it for?

    Jewellery. :P

    Nice chart RK. IMO the ratio should head back to 0.9, which could be delivered by gold correcting to around 1500 & S&P at 1350 (again). If gold was then to hit say 1750 (at 0.85 congestion) S&P is nearly 1500 (again), i.e. near to 1999 / 2007 tops.

    S&P +25% anyone?

  5. Adam Hamilton

    Major Stock Buying Op


    I’ve written many similar essays deep in major past selloffs, and the feedback is always similar. All of this contrarian stuff sounds logical, people reason, but how can we know when a selloff is over? How can we know where it’s going to stop, in pullback territory or stretching into correction magnitude? The truth is we can’t know, we mere mortals can never see the future. All we can do is game probabilities, nothing more. And the odds for a sharp rally immediately after a fast selloff and meaningful fear spike are very high.

    Just like in March, the interim lows after fast selloffs like this week’s seldom persist for long. So buying a little early in one of these selling events is no big deal at all. Even if it isn’t over yet, and your stocks plunge lower with the markets, within weeks they will still have surged far above your entry prices. Personally since I can’t know the exact days of bottoms in real-time, I intentionally try to straddle my stock deployments across them to maximize my odds of getting the best entry prices. Some stocks are bought before the bottoming, some during, and some after. But all still surge dramatically as the SPX recovers.

    The biggest threat in a major selloff like this is not gaming exactly when or where it will bounce, but whether it marks the transition between cyclical stock bull to cyclical stock bear. Buying stocks early in bear markets obviously leads to big losses. So if careful study and analysis (never merely selling-event emotions) lead you to believe we are entering a new cyclical stock bear within today’s secular stock bear, you definitely don’t want to buy stocks even given today’s oversoldness and meaningful fear spike.

    But as I analyzed in depth in an essay in late June, the bull-bear cycles today argue that the past couple years’ cyclical stock bull likely remains alive and well. The probabilities of a new stock bear being born this summer remain fairly low. And there is definitely almost zero risk of another panic or crash so soon after 2008’s epic selling event, as I explained last August as traders also cowered in irrational fear. So with more cyclical-bull rallying likely, this buying opportunity ought to be seized.

  6. A 50% re-trace from 5200 to 6000ish would be about as much as one could hope for, would give about 5600.

    I think like catflap there are a lot of things indicating the bear has started, although it can take quite some months for all of that to be properly confirmed. So it may start to be right to start betting the other way once the change in trend has been fully confirmed. Laying Puts on the re-trace.

    We also may get surprising growth numbers coming through with lower gas prices in the US. So the strategic reserve release may eventually have done a job and the market clock has been set back a bit.

    Yes, 50-62% would put us around 5600-5700. That's what I'm looking for relatively quickly - usually a near-vertical drop like this is matched by a similar rise. Looking at calls on Monday, depending on what announcements come out this weekend.

    I agree about long vs short. We've been conditioned to be long only over the past two years and this market requires a change of mindset. Looking at the FTSE chart, the signs have been there for a while. Instead of consolidation followed by upside breakout we got the opposite. Jeremy Grantham made an excellent call on this in the last GMO newsletter (as posted by RK).

  7. No one has mentioned the phrase "endgame" for a while so given the panic stricken main board could I please add a hint of panic here as you seasoned guys seem far too jovial for good citizens :)

    Well I did post that alarmist Bloomberg headline, complete with shouting capitals and underlining.

    TV news on in the background, stock market is the top news item - must be the first time in nearly 3 years!

    Surely a contrarian indicator?

    It's a bit annoying that Roubini was early, you can usually rely on him. :lol:

  8. Looks like 1680 was the figure but was that a top or just the raid before the jobs figures tomorrow?

    I had reservations about it reaching 1700 but not enough conviction to add any positions, is all beer and popcorn from here for now.

    Well based on the last time we had trouble like this (S&P -5% :o ) the main place to hide was bonds, not gold, which sold off like other commodities (i.e. deleveraging). So I think we've seen the high for this cycle.

    If only my view on equities had been as near the mark, that would have been more useful. :angry:

    Another spike in VIX to 31.66.

    Also in case we didn't get the message, Bloomberg headline:


  9. I think it's a re-run of the July '10 panic low which had people like Richard Russell, Bob Juanjah etc screaming 'sell' if you recall but turned out to be a bear trap and into the August highs, then Jackson Hole.

    Alternatively.................it isn't.

    Brave trade here would be to short bonds long equities but I'm not that brave so sticking with some calls and FTSE longs.

    It certainly feels like panic at the moment - it's been a while since we've seen the major indices lose over 3% in one session, let alone following sharp falls in previous days.

    As you said, the name of the game must be to get QE3 started (as having a head start on the announcement must be the most profitable strategy for the Giant Vampire Squid).

  10. :D

    I wanted to short it a couple of days ago but held off, i still want to short it but i think it has about 1700 in it so im not going to even reappraise it till then, if it spanks before that so be it

    I'm tempted to short too , but I think it's tougher shorting an uptrend than going long around the low. So I intend to wait for the low 1500s and ride the next phase up.

    Although I can't think of a better short at the moment.

  11. H&S: this year's Hindenberg omen?



    Aug 2

    The S&P 500 made a 2011 closing low today after breaking below the lows from 6/16 and 3/16 all in one swoop. Cue the head and shoulders calls. The pattern is pretty apparent in the chart below, so we'll likely be hearing quite a bit about it in the coming days. There have been quite a few head and shoulders and reverse head and shoulders calls for the market in recent years, and based on our recollection, most haven't worked out as planned. Hopefully for the bulls, the pattern doesn't fit to script this time around either, or else we've got some rough times ahead in the near future.

    As RK noted, now that we've heard from Roubini, I doubt there is much further to go. :lol:

    Edit: Chart

  12. I think we may have seen a short-term top in gold, based on the established trend from Lehman-days.

    I was looking for 1680, and we got fairly close today. IMO downside to around the 1520 region.

    If we get a rebound in risk, this could be the catalyst for the decline. Seasonals also unfavourable.

    * Disclaimer:

    The author does not hold any positions in any securities mentioned in this article. Honest.

    But did note the gold bubble discussion a few days ago on this thread.

  13. Sounds like a 'buy' then doesn't it. At least for a couple of weeks. (I'm not biting btw).

    Yes - I think sentiment is too bearish to be bearish. IMO to be resolved by a 'surprise' debt agreement, which in reality will be the least surprising possible outcome.

  14. Time to pour some cold water on our overheated brain cells. The Walyat speaks in ways we all understand...


    Nadeem tries to resolve complex problems in simple-sounding terms in an industry where most gurus do the opposite, for obvious self-interested reasons.

    However should panic strike and support fail at 12,290, then the Dow would likely revisit the June 2011 low of 11,860, which would act to just delay the inevitable breakout higher, but would give all you lucky guys and gals another great panic driven buying opportunity.

    Not far off at the moment. It's worry time - Japan crisis, then Greece crisis, now US crisis. We've got the three major industrial continents taking turns to justify a pullback. So Japan again in a couple of months? Tell the PIIGS to behave and wait their turn (although I do think Europe has the "best" crisis by far out of these). :P

  15. From Adam Hamilton's latest post



    So until the VXO shoots up above 28 or so on close, or into the mid-30s if this SPX pullback extends to a correction-magnitude 10%+ as I expect, I would be very careful here. Pullbacks and corrections within ongoing bull markets don’t end until sentiment is rebalanced, and it takes well-defined levels of fear to accomplish this. And so far, even despite June’s aggressive selling, we have yet to see it. This means there is likely more selling to come.
  16. You would prefer to buy the $ then?

    No, actually I think we're about there. Finally getting a bit of action on the VIX too. I'm adding to longs but nothing too aggressive yet. Will wait for a bit of upward momentum before going further. Maybe the Fed will help us out again later in the summer. :P

  17. http://www.marketoracle.co.uk/Article28641.html

    My overall conclusion is towards a stock market low being pretty close if not imminent, following which the stock market can be expected to spend several weeks carving out a bottom into late June / early July in the form of a volatile trading range with an upward bias in preparation for the resumption of the bull market towards a new bull market high as the stock market attempts to play catchup after a more significant but still normal early summer correction. However, the big question remains for how long will the trading range extend ? At this point in time I am leaning towards a breakout to new highs taking place during mid August 2011, but it could extend well into September.

    Nadeem agrees.

  18. Anyone else easing into indices or is greece putting everything on hold for you?

    This chap says buy, for the second time this week.



    Look at the S&P chart on the 2nd link.Linear scale shows it exactly at channel support. Although I suspect a log scale would show it conclusively dropping out of the channel. As the S&P has doubled over the chart period, I know which scale I think is appropriate.

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