Thursday, October 1, 2009

October is here

Predicting the Stock Market Crash

Crashes are very rare and are almost impossible to predict. Yet the likelihood of their occurrence can be very high if conditions are ripe. The Standard & Poor's 500 Index, whose increase in the past three months was the steepest in seven decades, is rallying in tandem with benchmark measures for raw materials, developing- country equities and hedge funds. The so-called correlation coefficient that measures how closely markets rise and fall together has reached the highest levels ever, according to data compiled by Bloomberg." - Financial Times

Posted by sold 2 rent 1 @ 02:38 PM (2249 views)
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44 thoughts on “October is here

  • sold 2 rent 1 says:

    I am still going for the low on 9 October as it links up with 31.4 months after Armstrong’s high on 26 February 2007 and the top of the banking index
    http://www.safehaven.com/article-8778.htm

    Here is a good video?
    http://www.marketoracle.co.uk/Article13670.html
    With the reference to 86 day lows, personally I think it has Armstrong’s PI Cycle written all over it; with a major refernce to Oct 7 as a low in gold.

    Not sure if you have been following this case
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aSab0xkcV8jc
    If/when The Fed finally have to hand over the info of who got the $700bn bailout money, all hell will break loose in the markets.

    This could well be the shorting opportunity of a lifetime.

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  • sold 2 rent 1 says:

    Remember the 31.4 months takes us to 9 October 2009

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  • Ah, somebody who talks some sense on this site for a change. Welcome back s2r1

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  • sold 2 rent 1 says:

    smugdog,

    Agreed.

    Our whole way of life is about to change (in the next 2 years) and most people here are still concerned about buying a cheap house.
    Time to wake up.

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  • what utter utter drivel – monkeys in a room stuff

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  • Oh yes, it tallies perfectly – the markets have been declining since March..;)

    And now confidence is going to go rip-roaring forward as we start the next cycle..;(

    I’m amazed that you’re still posting that graph..!

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  • You are so so right s2r1,

    Our whole adult life is an obsession with houses. Panic and fear if we don’t own one, panic and fear if we do and prices are against us. Something really has to change in order to enjoy life again.

    What a wonderful life I’ve had! I only wish I’d realized it sooner.
    (Sidonie Gabrielle Colette)

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  • sold 2 rent 1 says:

    titaniccaptain,

    “How is our whole way of life about to change? Genuine interest not a belittling question.”

    Where do I start? How about with a 80-95pc drop in purchasing power in indebted western nations’ currencies within 6 months
    And that is just the start of the massive transformation.

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  • S2R1

    Just so I can be clear on your chart

    I take it the last shoulder top on the right is where we are now and the rise upto it represents the stock market and house price recovery over the last 6 months or so ?

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  • sold 2 rent 1 says:

    The VOLATILITY INDEX (^VIX) has just jumped to over 27

    http://finance.yahoo.com/echarts?s=%5EVIX#chart16:symbol=^vix;range=1m;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

    Remember the VIX jumped from 11 to 18 on 27 Feb 2007 when the banking index topped out. I think the Dow dropped 416 points on that day too. It would seem fitting that this bottom would not be a bear but a crash.

    If the crash does happen, I have a target for gold of $700

    UT, you were a master of the old world with your Chinese import business. But the old world is finishing and a new one is beginning. You will need to adapt.

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  • sold 2 rent 1 says:

    str 2007,

    The high on 19 April 2009 mapped to the low in gold.
    This signalled that the PI Cycle was now tuned in with the gold price.

    As I have said before, once you are all convinced that this PI cycle stuff works, then it will break down forever.
    It only works whilst most think it doesn’t – so in a strange way….thanks UT for your negative support = LOL

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  • With the FTSE down 86 points I think today could be the start of a downward spiral of the stock markets

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  • Nice of you to pop in sold 2 rent 1.

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  • @dgj – “I think today could be the start of a downward spiral of the stock markets”

    Please expand as to why you think a downward spiral will take place?

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  • Well Crunchy what do you make of all this ?

    Looking at the FTSE chart it does appear that a possible double top has formed hitting 5190 on the 22nd and yesterday.

    The Dow has picked up a bit from earlier, so maybe things will move sideways awhile – perhaps ’til the 9th October.

    Do any of you actually have a particular stratergy in place (that doesn’t involve pies TitanicCaptain) with regard to making a few quid if things do fall off a cliff ?

    And by that I mean catching the fall rather than looking back a week to late having missed a big chunk of the action.

    For instance I guess you could place a series of short positions on the FTSE with stops attached that will open on the way down. Or is there a better way ?

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  • Welcome to Fray Bentos Mansions the Home of Titanic Captain constructed entirely of empty tins. Lets hope it holds up better than your boat did. LOL

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  • 16. str 2007

    I will forgive you a little.

    All you need to do is look at the gbp/jpy the signs are obvious. It’s called a market sell order, but where does one place it? lol

    Frankly I am already in on a long term position trade and having fun intra-day. Yes it was a good day for this pair. I did mention shorting

    this pair yesterday!

    Captain you can look at the pie charts but have something to eat first.

    The splender of surrender. You should be able to work that investing snippet out yourselves!

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  • UT, you were a master of the old world with your Chinese import business. But the old world is finishing and a new one is beginning. You will need to adapt.

    I already have..

    ..I retired over a year ago – and I’m not yet 50..

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  • sorry i missed this thread. Its like a reunion!

    Personally If that the high on FTSE below 5200 then i will be surprised. (and yes its broken 5050, the next level to watch is 5012) Having said that i am short the S&Ps since 29th Sept – @ 1057 basis Dec. [basically was thinking we would go up in the FTSE to break the prior high from the 5050 level, to the low to mid 5200s – but thinking that the S&Ps had topped and would only go back up as a retracement to the high.]

    We might still do that! But i would agree its looking less likely, we need an upmove tomorrow or else it will be sell the rallies. [Of course if the high has been achieved then the failure to break the 5190s and breach 5200 is a very bearish development]. Lets see what tomorrow holds! Clearly if the break does happen we will probably have some retracements first to get out the first set of shorts. All in all for me its best to be sidelined. A break of 5000 would mean that there would be a high probability (confirmed in much the same was as my comentary on the £/$) that the top of the bear market rally since March was in..

    As for you UT – i made a comment a few days ago re inflation and i would like your comment on it. I will try and find to re-post.

    As for the £/$ – 1.6115 was made within 15pips of the high – as i write now we are 1.5950, so its not actually set the world alight, but it was relatively low risk… and may prove to be a good position for a while.

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  • Nope UT – couldnt find it! Still never mind.

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  • @ jack c
    Well this is just my opinion but with the recent upward trend and expected negative news on the economy this is what I think might be happening over the nex t few months

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  • sold 2 rent 1 says:

    uncle tom,

    Don’t be so smug. I can tell you now – you will not have the retirement you have planned.

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  • 31. uncle tom said…Downwave,

    I’m not saying you’re wrong, because I gave up half way through..

    Re Yesterday, Sorry for posting this here to try and catch you, thanks for you comments. Problem: When I cut and paste old documents here, they always end up as a long string of words. The original document that you criticised was in short paragraphs and actualy typed for my own amusement. Candidly, I can hardly be bothered to post the consequencies for G Brown here as all of you have said it all too many times. I only post here while I am waiting for CD’s to burn to send to my publishers etc. or I am bored and so on. Nevertheless, I do like to read it each day. Thanks

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  • Well Crunchy

    I haven’t placed a currency trade before so I’ll have to get you to help me a little here.

    Firstly would I be correct in assuming that the reason for you shorting the GBP/JPY is a double top first hit around 15th June and again around 9th August with the dip inbetween around the 12th July having just been brken to the downsideon 25th September ?

    Secondly I assume each £1 that goes on will be per 0.01 movement. Therefore if I wanted to short £/pnt or pip I think you call them and risk no more than £100 I would need a sell stop at 143.00 and a buy stop at 144.00. So if things went the wrong way tomorrow £100 is at stake.

    I’ve only got an MF Global chart to work off so I can’t draw lines etc. What is you target price for GBP/JPY ?

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  • Crunchy

    And of course is that a sensible sized stop 100 pips or should it be more or less.

    Jees, I feel like a lamb to the slaughter, and I don’t want to end up in one of TitanicCaptains Pies.

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  • Take care str2007 if something is obvious its obviously wrong :-). – Le Crunch’s 19. By the way i will dig out a couple of vids that might help.

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  • TC on bbc 2 and here at the same time? I thought only women could multi-task?!?!?

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  • Elvis in Porthcawl?

    Welcome to my world?

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  • TC The reason is because everyone thinks they can do him – have had a go meself….wooden heart is my party piece.

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  • nprobs TC – str2007 – 32 is for you. Particularly do lesson 2. Re traders failing. it might help!

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  • Str 2007 – you see i am (i hope) near UC!

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  • Watched it TC – funny you were doing the bit with GI Elvis and i had just told you that i did Wooden Heart!! Strange strange world – perhaps S2R1 would concur!

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  • Thanks techieman, I’ll have a watch of those. Would Crunchy be so cruel ?

    Been reading your FTSE analysis, intruiging. How fast could it fall I wonder? It’s funny looking back you’d think falling from 6700 odd to 3400 odd in the space of not taht long would be asinch to make a bundle. but when you scroll the FTSE chart of that period day by day, it’s up and down all over the place. Although obviously down overall.

    I was considering setting up a series of ‘parachutes’, just little £2 per point shorts from 4998 at 20 point intervals heading down to say 4898 with 40 point stops behind them (1/2 ATR) so they don’t all get opened and stopped out in the same day (that would be disappointing). As a little insurance policy so to speak incase the ar5e does fall out of the market and I’m not there to take advantage, or as an offset against any longs I might have in.

    I guess you’re in front of your screen all day and know what to do quickly so I assume would have no need for such a device.

    Myself I like to plan ahead a little as if and when it happens, it won’t be a convenient day.

    Any recommendations on fine tuning the above ?

    Titanic

    I’ll have a look at your video aswell.

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  • Very good TC, you’re not the only one in Portcawl who likes Frey Bentos Pies.
    They must be popular in Wales.
    Love ’em myself the Steak and Ale takes some beating.

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  • Don’t be so smug. I can tell you now – you will not have the retirement you have planned

    I worked my backside off, didn’t cheat anyone, and put my money where my mouth is – so I’m entitled to be smug.

    And as you have no idea what my retirement plans are, or how I’m placed to fund them, you havn’t got a clue whether I’m going to achieve them or not.

    But then, not having a clue does seem to be your trademark..

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  • Vacuouspolitician says:

    Congratulations to all the independent voices on this site… keep expressing your points of view…
    …this isn’t an exclusive club to certain people and their sycophantic A W s

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  • 48. uncle tom said… But then, not having a clue does seem to be your trademark..

    And yet… the world is moving towards s2r1, not away from him.

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  • Techieman

    Thanks, that a good little site. Just what I need – a trading coach.

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  • I feel that TC is dangerously over exposed to the pie market, what happens when they reach their use by date?

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  • sold 2 rent 1 says:

    UT,

    This has nothing to do with what you deserve. Most people are entering this period of chaos blind because they haven’t the time or inclination to look into the future.

    You, on the other hand, have spent many hours pondering the outcome of this mess and your conclusions will be wrong. Why? Because you don’t understand gold and you don’t give any credit to conspiracy theories or cyclical models.

    No offense.

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  • morning STR2007 – Re yours @ 44:

    Re Le Crunch – im not saying that he will be wrong or is being disingenuous, all i am saying is that nothing is “obvious” and when you start thinking like that the market will bite you in the ar5e.

    There are a few diffs between me and Le Crunch. The differences are just that it doesn’t make his style more right than mine or vice versa. Personally i have always been a position trader. I look to get in with low risk and where i think there is a decent size move ahead. I generally wont “job” the market, i.e. i wont look for a place to liquidate say a long position, and then get back in that long position lower down.

    E.g. say ftse is 5100 and i think – god forbid 🙂 – that it goes higher.

    so i buy (+) and sell (-) as follows:

    + £100 (per point) @ 5100; [market moves to 5250 – where i see a potential for a pull back and is my first target to lock in gains] – £30 @ 5250; [market pulls back to 5175 – where i believe its the end of the pullback]. Generally i wont pay for the 5250 sale with a 5175 purchase.
    What i will do is look to see if i am right and then move the rest of my stop to that 5175 level once action confirms that 5175 is the high of the pullback.

    I say generally wouldn’t because I did exactly that with my £/$ position – i.e. [email protected] 1.6550; + (some @ 1.5970); +(some @ 1.5800) and -some of those that i had already bought @ 1.5970 / 1.5800, at 1.6115. We are now @ 1.5930 so i am thinking that i should reduce the stops for those i have sold @ 1.6115 a bit…. [on the basis that if that is the end of the pull-back i.e. i am right, then the market shouldn’t re-challenge or beat that high. There is a danger of that and if it does then i will look for the next sensible place to short – which i did mention in that very long (i know there’s a lot of them) post.

    All this, playing around intra-day i dont do. The reason i dont do it is because of my method. I look for decent moves and then have relatively low size, you can do it the other way – look for small moves but with big size, but your margin of error is small and tracking where you are – in your brain i mean – because the account will show you where you are – is diffficult. For me i could have said – right the market is going to turn up from the 1.58 level – so i will liquidate my shorts and go long looking for 1.61.

    Obviously this time it would have worked a treat – but say if the market had just kept falling through the 1.58 without a pullback? In essence i was looking for a short sale, and, if i am right, the next stop if we break 1.58 will be down to 1.50 (not a recomendation etc).

    So no – having a position and then going in and out intra day doesnt work for me – it can work, you might want to look at an indicator and use that intra day (say on 15 min bars) and see if it works but for me thats a no no. I think thats what Le Crunch does some sort of MACD entry / exist system, but, as i said thats too clever for me and actually a bit boring.

    Also i have never seen Le Crunch mention any levels at all, so again we differ there, of course if he doesnt mention a level then he cant say why he thinks its a good level. If he wants to keep that to himself thats fine and understandable – the main reason i mention levels is that it re-inforces them in my mind.

    I will deal with your proposed FTSE methodology in the next post. I will finish this one by reverting back to the example. The platforms work by applying the current trade to the existing open positions to determine profit. So in my example

    in my mind : -£100 @ 1.6550, +30 @ 1.5970, +20 @ 1.5800, -40 @ 1.6115, means i have matched the £40 sale against some of the 1.58 and 1.5970 purchases as a jobbing profit, and my position is -£90 @ 1.6550.

    but per the platform the +30 and +20 have been matched against the -£100, so i am -£50 @ 1.6550 and -40 @ 1.6115 – so overall i am -£90 @ the weighted average of the two positions, although of course the account books a bigger profit than in my mind.

    BUT my mind is more important for where i put the stops targets. If you think about this a bit you will see what i mean. So if you want to position trade and “play” intra-day – you should use two different accounts or even brokers / platforms. oh and by the way the £100 size is an example size … ;-).

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  • Re 44 part 2 – by now you may have realised i dont personally look at a screen all day – i used to but not anymore. I know i keep going on about IG but i have mobile dealer on my phone and i set alerts on the platform which texts me. So no not tied to the desk. If there is a big economic number due out i will generally stay by the screen but if not i wont. Sometimes you get caught up in the minute by minute moves, and it can distort your judgement.

    The only reason for seeing how the market reacts to a big economic number is that you might get stopped out on a silly reaction so for me i would then probably grit my teeth and get back in. Similarly if there is a big move down that reaches a target in very volatile trade you want to be there to lock that in because of the volatility. So for those two reasons i would be there.

    And no i dont put in orders generally – i set alerts and then take a look at the market to see what the market looks like when those alerts are triggered. So if i am on the move i will look at the chart on the mobile dealer. Of course reception might be a problem but for me its normally ok. I really cant explain to you what i am looking for at that time, because it just depends – as i said that is just where experience comes in. My UC.

    Re your FTSE idea – i would say backtest it on the move down previously and see if it looks good – having said that personally its too prescriptive, you have to look for support and resistance, and i would generally either get involved in a bigger postion if it breaks that twice or if it reaches resistance on the way back up (in a downmove) as i illustrated in the cable.

    The next question is what – or more accurately where – is support and resistance. Thats something you will have to learn, although i think some websites will help there. Remember Support becomes Resistance and vice versa.

    I hope i have helped rather than hindered. I will be out all day today – so speak another time.

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  • Techieman

    Many Thanks for your help and patience there.

    With regard to FTSE trading I’m generally looking for channels of movement and tryng to catch a bouunce up off that channel. I’m looking at trades that give a min 3:1 risk reward. IE if I risk £100 ie 10 points at £10 (keeping numbers simple) between my entry and stop, I would want to see a 30 point gain before I would expect that share to turn down again.

    I suspect there are various other lines of resistance I’m not using yet such as Fib lines which I should perhaps learn touse which would perhaps enlighten me to certain price movements I’m not currently understanding.

    It’s very early days yet, but I feel I’m making some progress. I’m even starting to understand some of what you say 😉

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