Saturday, March 14, 2009

S and P 400ish 2011

After Rally a 50% sell off

A good trend analysis. I like the fact the guy is apologetic about being so bearish suggesta no sensationalism I guess. The initial rally predicted would run through the G20 meet perhaps with the market temporarily buying into the BS that will emerge from this.

Posted by bellwether @ 01:13 PM (1128 views)
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15 thoughts on “S and P 400ish 2011

  • Hi BW – that confuses me – why make an apology? If he is right and “one” heeds his advice and makes money (or doesnt lose it by liquidating) then why should he apologise. Makes no sense to me – the apology i mean. Apologise if you are wrong maybe..

    btw Got your meaning the other day and responded.

    Been to ZUG (also the name of a swiss appliance) very clean and wealthy (‘spose it would be – a bit of a finance area in Switzerland)

    “Felix sees numerous signs of an impending rally: Sentiment is deeply pessimistic. The rate of change on (most) down days is declining, even as prices fall. And, there’s lots of money around. But this rally will be for nimble traders only, affording “those with too much in stocks to sleep well an opportunity to lighten up.””

    In anticipation of a move up, Felix has closed out his short positions — for now. ”

    Well yours truly got out of virtually all of my shorts but i still hold 5% of my original short position (“just in case”) i was wrong.

    Where to get short is the next question – the stop is pretty easy – its just the amount of risk you are willing to take.

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  • Cheers Techieman, and got your reply to previous post too.

    Reason like the apology bit is just that it suggests less ego attached to his view, and therefore more likely to be accuate – he is delivering bad news but isn’t revelling or sensationalising it as some bears are apt to do.

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  • Oh and been to Zug too, down by a lake and more cash machines than I’ve seen anywhere.

    Lost a fair bit panicing over the past few weeks. Bets I had put on which were fundmentally sound (eg long on SandP at 720) were at a level that I found I couldn’t stand and discovered I wasn’t cool hand luke afterall and was apt to dump.

    Seem to have sorted the problem by reducing size of bets to a level I can be more detached.

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  • bellwhether – re your positions thats a shame. Being right but having some pain first goes with the territory im afraid. I spose you could have bought some calls, but they are expensive at the moment.

    Yes you are right you do need to have a comfort level with your positions, but its good you have discovered that now. As i said in my younger days i was very lairy and thought i couldnt ever lose. Youth wasted on the young and all that.

    Had a nightmare not long after, which is why ive been very conservative since. It took me a long time to get to the size i am trading with now.

    We spoke a while back about the £/Euro. I said i had a couple of bites to the long side with smallish losses but am now holding longs just below 9000. Its about 9220 at the moment. In any case i am expecting a bit higher then a pullback then another march foward (depending on how the pullback manifests). Do you have a view?

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  • rocket robbie says:

    Techie

    Brought some shares last couple of weeks seemed to get the timing right but keep losing my nerve once im making a profit and sell well to early. Any advice on holding your nerve??

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  • rocket robbie says:

    Techie

    Brought some shares last couple of weeks seemed to get the timing right but keep losing my nerve once im making a profit and sell well to early. Any advice on holding your nerve??

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  • RR not really because you will “hold your nerve” when its not right to. The only thing i can suggest is to calculate your stop / targets and what would make you change them BEFORE you take the trade. A roadmap if you like.

    For me i generally have these levels calculated and say – right where are we likely to go if it breaks that support / resistance? I then will get out of SOME of a position where i think the levels are. I might get back in on that same amount on a pullback. For entries if If i think (say) its going up but it might come off first i will buy about 10-25% of my normal position and if it goes lower buy the rest. Thats quite difficult though, but again you sometimes have to bite the bullet. It shouldnt be difficult – you buy low sell high but if you already have losses mounting on the table then phsycologically it takes some getting used to.

    I realise that for you to have enough to get out of bits, you need a reasonable size. Again i would say you can try this out on one of the spread betting firms for say so much per point. [for example on the FTSE i think they trade 20p a point – but im not sure re individual shares (currencies they trade 10p a pip)].

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  • RR you could have a trailing stop too – against say a moving average if you are not sure of where support and resistance levels are. The moving average will then track the market higher say and keep you in. Of course there is no holy grail, sadly. If you find one though let me know!! :-).

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  • Cheers Techieman, I’ve taken a pasting over the past few weeks but nothing fatal and sense I have turned it round now. The cost of an education! On £/Euro don’t have a view at that level of detail, I’m afraid.

    RR I was finding all sorts of unexpected non rational reactions when I dramatically upped my initial positions. This week traded at a level that won’t come close to killing my capital if it goes wrong I seem to be able to stick despite market movements unless there is a good reason to change. I’m also keen to look to keep a position for longer time frames than a day or two eg at present have some positions on indices based on theory that they will go up for some weeks and will stick to that unless the evidence suggests I’m wrong.

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  • Just back from a cycle tour of the Surrey Hills pubs. I promised myself that I wouldn’t talk about trading on this site but I’m red faced and merry so what the hell

    I think it’s important for people to realise that the ability to “stand” cannot be learned. Being cool or having balls is not the same thing at all. I’ve worked with literally thousands of traders but I can count on one hand, the ones who had the mysterious ability to stand (I’m not one of them). For what it’s worth I think it’s an overrated attribute. Circumstances change during the course of a trade so why not change you targets and stops? It doesn’t matter if you are a technical trader or a fundamental trader; there is no substitute for being right. Very often when I feel a trade is bad, I bail before my stop is hit. Years ago I used to keep performance statistics and I have some recollection that more than 70% of the trades that I bailed on would have gone on to reach their stop loss. How did I know they were bad trades? Partly technicals and fundamentals but mostly intuition. Intuition is a huge human resource. It’s important to use it and to trust yourself. Of course some trades that were bailed on would have gone on to reach their profit target but these lost profits tend not to be significant and there is the opportunity cost to consider. When you bail early on a bad trade you very often end up in a good trade instead of slowly watching the old one die. I often have a profit target when I enter a trade but I usually tinker with it. Sometimes the trade feels so good that I let it run and run.

    Perhaps the most important sentiment in this drunken ramble is that there is no substitute for being usually being right. Potential traders should ask this question of themselves and answer it honestly.

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  • Totally seperate but found this from Felix Zulauf. It is a question I’ve been wondering about ie to what extent are the marrket pricing in a decline in earnings. F seems to be suggesting that the market is poor at that – see comment about energy crisis

    Last year saw the most severe bear-market decline since 1931. The instant reaction is to be bullish after such a decline, but the situation is more complex. The watershed events of 2007 and ’08 lead to a different world in many ways. The household sector is traumatized by a 20% drop in net worth, as the worst year prior to this saw a loss of just 5%. The corporate sector is traumatized by a slump in earnings, and refinancing problems. Thus, everyone will turn more cautious, not just for 12 months but several years. Deleveraging is a structural process, not a short-term process.

    Fiscal policy and other interventions may stabilize the economy later in the year and into 2010, but economic growth will be anemic and disappointingly low once things start to improve. Less leverage means lower growth, lower profit margins, a lower return on equity, lower valuations and such. But the market is slow at pricing that in. During the energy crisis of the 1970s, it took the market six years to stop extrapolating 6% annual growth and get in line with reality

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  • rocket robbie says:

    Techie

    Cheers for the advise, hopefully the more trades i get right i will learn to hold my nerve more.

    Bellwether

    I have been trading with a small amount and so far (touch wood) its been going resonably well but i have not lost on a trade yet and when i do i just hope it dont knock my confidence too much.

    Let you know how i get on

    Good luck with your positions for what its worth i think you will do well

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  • Flash – i think you are right but the seat of the pants stuff doesnt help someone starting out. I have obviously been on the end of low ticks that hit the stop and then fly away. I suppose the issue there is not to put stops in obvious places. But as you say experience is the key and you cant teach that – you will be low ticked.

    btw if you need a snigger you might want to see me having a friendly debate with braindead (sorry deed my mistake) under the swiss thing on friday. He got all blubbery on me for reasons i cant fathom. Puts your spats with paul in the shade “methinks” – and i wasnt even trying to be provocative!

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  • bellwether yes build slowly and try to play with their money. If you cant make it work for £x per point then it aint gonna work for £x multiplied by y per point. Its not a sprint. RR not lost on a trade yet!? Blimey am impressed with that – your % strike rate is better than mine recently!

    Off out now for some champers, quails eggs, truffles and beluga. (thats for BD if hes watching). Have a good one chaps.

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  • rocket robbie says:

    Techie

    Beginners luck no doubt. Some weeks i dont place a single trade so thats probably why. I realise my comment could seem abit cocky but it was not what i intended

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