When the markets go up and it dips a little, it’s very easy to bottom and charge higher. It’s also very easy to rip higher on good news, a Fed comment or something to do about Chinese growth. However, after suffering the sort of train wreck we just went through, it’s extremely hard to bottom out and head higher.
For one, all of the bears are pressing their luck, betting against the same names. And two, the overhead resistance is absurd, since margin levels were so high prior to the drop. Often times the bottom is found when the last bull, guys like me, give up and cry in the shower, lamenting over the mistakes made.
After the market bottoms, no one will know it. The bears will continue to short stocks, thinking we’ll retest the lows. We might even do that and it will be ugly. There will be an awfully large wall of worry to climb, all to do with valuation and how the economy cannot support such high multiple stocks, yadda, yadda, yaddda. Then we’ll get a few break out days, again leaving the bears in disbelief.
Then the big one will come, effectively alerting the bears to the fact that the market is on its way up again. By this point, all of the scared money will come racing back, hoping to capture some easy gains. Simultaneously, short sellers will provide the tinder for the fires, by covering their shorts. So you’ll get natural buyers and short covering, a recipe for a massive melt up.
But before any of that can happen, we need a foundation.
Naturally, this time might be different and perhaps the market is smart this time around, telling us something about the economy that we don’t already know. I am just laying out the most likely scenario, based upon my time in the market.
Looking at the market now, I am not happy with the action. It’s rocking back and forth between gains and losses, a bad idea when you have technical damage and people who have forced liquidations coming up.
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The bottom from the tech bust of 2000 took until 2003 to find. I hope this time is different!
the drop also didn’t occur in a two month time span. Lots of peaks and valleys.
Stay calm! Stay calm! The market will bounce today – Rong Xu has spoken of this. In China Rong Xu is known – and soon she will be known here as well.
The selling is relentless. Early morning pop, than fade past prior day lows. I took this little opportunity to sell calls and buy puts on everything.
Aaaand down we go.
Sigh. Another pop and fade. Bears are getting cocky.
I think the market can bottom as soon as phantom tech valuations have priced in ww3 in 2016-2020.
Yes, this is quite obvious.
iBankers:
Here be noon times that test us. YELP close to glory, but, dragged down by the rest of the fecals. I have purchased GIMO now knowing fraidy cats are about to be kicked bouncy like. Stay long.
Sincerely,
Rong Xu
Please stop.. you’re embarrassing yourself.. It’s hard to watch..
Excuse me, JB. I am up $5 on my YELP equity position and almost 100% on my YELP calls. All timestamped on the tweeter. Now, who is embarrassing oneself? Bounce time.
Sincerely,
Rong Xu
Thank you for time stamping, esteemed fellow from the orient, land of burritos
Rong Xu, is it true that you are from the “the orient” ?
FEYE does not give a fuck. This take down of the tape may have to get somewhere. It is rigged after all.
Watching AAPL as a hedgefund proxy and it’s looking like green is in the cards.
I’m sorry, but is that title (no homo) or (extra homo)?
This is a social phenomenon. Some men start turning gay at 40. Freudian slips like this are one of the first signs.
Like I said before, I am so glad to see a dentist join our esteemed panel.
This is the best blog in the financial universe. I am humbled to be here- in between patients.
In brazil, we are celebrating another day…The sun is shining, and the water is warm.
I hope we declare war on brAzil and fuck up their sugar crops
The president is on cnbc right now.
All hail the king
YELP demands your attention as it heads to 70 as my opium-addled dreams have foretold.
Sincerely,
Rong Xu
Rip off their arms!!!
Yelp is on a rocket ride to 70 as foretold. The market is bouncing as foretold. There are those of us here who do not doubt. Soon all will hail Rong Xu!
Rong Xu for new tabbed blogger!!
I second the nomination, but he needs to show us his dominance on the youtubes as well.
Gentlemen:
I am flattered. Red in my already red face. However, we gentleman speak only of things we know. After YELP hits 70, I have nothing more to contribute.
Sincerely,
Rong Xu
So you expire at yelp hits 70? How singular. Like a messenger from god
My dearest better:
A minor quibble — it was Cai Shen (http://en.wikipedia.org/wiki/Cai_Shen) who sent me, and until the great Cai Shen instills in me another foretelling, I must leave these holy message boards.
Sincerely,
Rong Xu
I’ve never heard of this God, Cai Shen. I shall pray to it daily.
Praying to Cai Shen is only effective during the Lunar New Year.
He tortured and killed JB. Surely that counts for something
He bought my support by supplying me with three Asian escorts. You know what they say about girls with slanted eyes!!
Super racist
The slanted eyes prevented them from seeing your ugly face?
and coming around the clubhouse turn… in the back of the pack, it is senor tropicana… now he breaks to the outside.. look at him go.. he’s moving up to the front of the pack… to be continued!
that’s it, i’m all-in yelp.
i agree, then we can pepper him with comments about how he is a bad driver
Rong’s command of the English language surely does not suggest that he is from “the orient”. His driving skills might indicate otherwise as well.
He could’ve been schooled at Oxford, like all proper Chinese aristocrats.
Maybe he successfully passed his TOEFL by taking online classes at EDU.
Rong Xu received his PHD (Plumbing Hardware Dispatcher) in Mao studies at Bejing Normal U.
Bejing U is ranked in the top 10 in pigeon racing.
Dear TraderCaddy,
Please leave the humor to the Gen-Xers on this board.
Very Truly Yours,
Dr. Muppet, DDS
PS –Just Kidding!!!!
IMHO, I think it is much easier to spot a bottom vs a top. I really thought that SPX 1755ish was the top, there was nothing left in the guns of the Bulls unless QQQEEE100 showed up from Central Banks. Yet, it pushed up around an extra 150 pts…Without Central Banks market should be down to SPX 1100ish with the Global Economic Data we have. Copper should be about 2.00. Brent should be around 70ish. Oh Well. Bubbles are really powerful. In 2009 I never thought the Market Makers would allow the market get this crazy again..but they did.
yadda yadda yadda. you can think those crazy thoughts or you can set aside your biases and trade what is.
nymph,
Im the baddest bitch on this blog and there’s not room for two sets of cans here so why dont u go work the glory hole at the local sushi joint, i think Rong Xu is next in line, leave the financial commentary to me, thanks
Cat Fight!
there’s ALWAYS room for two sets of cans.
Id be willing to wager a large sum of money that Jennifer is a guy
I’d parlay and bet that he is either from Pittsburgh or Ohio, maybe central Florida.
With cans.
Fly, I think you are right. Jen does appear to be a Guy. SheMale appears to be rather clueless in her analysis too..rather a waste of time. BTW, thank you so much for that top call yesterday..you know us Bears like that.
Jen, Come on Bitch..You name the fight, Currencies, Macro, Commodities, Any Globlal Indice, Bonds…or just throw up a ticker…Yeah, Bitch the fight is on! 🙂
go splunk yourselves
Nymph, new blood is welcome here. Besides. I have always wanted to know a Nymph you just came along too late. My hormones are all depleted at 51. We should have met 30 years ago.
I can’t wait for the panic sell. We haven’t seen that yet. So this ain’t it!! Yet!