Wednesday, April 2, 2008

Not an April fool this time!

BBC

European and Asian stocks rose on Wednesday as investors hoped that the worst of the credit crisis may be over

Posted by holding out @ 11:47 AM (947 views)
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10 thoughts on “Not an April fool this time!

  • FTSE 100 & 250 are however currently down on the day

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  • Well thats ok then ! we can all breath a sigh of relief and go back to old habits of borrowing excessively and spend spend spend.

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  • It now says “Stocks grow cautiously”

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  • The next bit of bad news means they will all be down again…..

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  • jack / hpwatcher

    i hate to disagree (well actually thats not true) but a couple of things – one i bought some FTSE DAILY calls – strike was 5740. Now stupidly I got out with a profit of around 50 points (even though i told myself to wait until the close) as you probably know the market closed on the highs, but thats the name of the game (and anyway i have some April calls too so suppose i wasnt being greedy). OK well im not saying this to brag but am gonna explain to you the REASON i bought them (i actually bought them the night before after the uk market had closed). Now i heard that there was huge lumps of cash on the sidelines which hadnt been invested for obvious reasons in 1Q08. Add to that the technical structure was such that upside acceleration was on the cards and it looked to me well worth the risk of buying some (as they were then) out of the money calls for a day trade, finally i have to say that i had been waiting for a few days for this one in the shares (mostly because of the references by S2R1 and the Armstrong model). Now as ever i was wasting time value because i was being cautious.

    The second point is this – and this is a direct quote from Elliott Wave.com talking about yesterday’s 400+ move up.

    “Logic and a heap of recent history be damned — or, perhaps, it’s the vain fondness for consistency which unleashed the hobgoblins into my little mind. “News” Flash: Bearish news isn’t bearish if the stock market goes up. If you and I don’t know the difference beforehand, well, too bad. It must be our fault.

    Enough of all that, dear reader. Anyone can say anything AFTER the facts are on the record.

    It may SEEM like longer than two weeks, but that’s how recently the news broke about the implosion and bailout of Bear Stearns. In the time since, have you heard or read any conventional sources claiming beforehand that a large rally could erupt on the same day as the announcement of $23 billion in subprime losses?

    Of course you haven’t — nor will you, at least not from “conventional sources.” On the other hand, if you know that news is IRRELEVANT to the major trend, then you’d ignore the “bad news” and let the market speak for itself. For example:

    “The important point tonight is that the market has gone down as far as it is going for now…So one needs to re-orient their thinking for the coming weeks to the new potentials. ….That analysis flowed from the only factors that really matter, namely what the market itself was saying. ”

    Now I agree we are in a bear market rally, BUT it may go further than you think.

    Ftse up now, which is very impressive (if the markets holds a gain at the close and doesnt get taking down by profit taking after yesterdays upmove).

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  • Bull trap bounce?

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  • in summary its NOT the news but the Market reaction to it thats important.

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  • …and if Bernake says anything less than extremely bearish this afternoon expect more upside in the next few days. Even if he is bearish the market will (i believe) buy the dips.

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  • TM
    I’m no expert, but these bear market rallies seem quite frequent and to last longer than the drops which seem more sudden. I note that you called the top of the last rally at 6200. Pretty close (6150 from memory). It took BS to reverse it. How can you judge when something like that is going to happen or would it have dropped anyway? Are you calling the top of this one?

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  • holding on – it was not that close sadly (for me) 6114 was the high. I was long quite a bit lower though, but had got pretty close to the prior top to that. I am merely applying some Elliott rules actually, basically i am long and looking to get out at around 6000 – 6020, but that is just before a pullback and then a bit higher (not sure i want to get back long after that move – purely because i think there is more scope in other markets).

    I cant judge when something like that (BS) will happen, and there is always the chance that something will blow you out of the water, as ive said just when you think you are a master of the universe skelator bites you in the ar*se. I cant tell what would have happened but this large pattern since the low looks “normal”. Having said that the secondary low of March 17th went lower than i thought (but you should understand im not always in the market).Re the Bear M rallies lasting longer, im actually not sure thats right. This move should be bigger than the move up from the prior low 5315 to prior main high 6114,projected from the low of 5416 so overall back up to 6200 ish!! Having said all that action between now and then determines modifications.

    After this bull move though i am bearish. Frankly as i said i am very conservative at the moment and will either take small cash positions or larger option positions, rather than an all out long or short.

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