“It’s all one big card game” says Fly over on Alpha’s strategic game plan post.
Couldn’t agree more! Here’s another way we can look at the market… as a poker game. This actually helps to illustrate how to “position size” your trades and the timing of them. Basically, the rule of thumb is… higher probabilities, mean bigger bets.
Here’s the scenario:
1) Bears were dealt card first. Nice hand! Ace Queen suited always brings a smile to my face (actually it doesn’t… you will never see me smile during a poker game. Unless I’m bluffing.)
- In October Bears were dealt an Ace of Diamonds when the House rejected the big bailout plan.
- Weeks later, bears were dealt a Queen of Diamonds as many financials/banks/commodities sold off on institutional selling.
- … this Ace-Queen suited gives bears a huge edge from the beginning, with chance for high pairs or even a straight, or a flush. Nice hand bears!
2) Bulls finally gets their cards
- First card comes out at the end of November. A Jack of hearts. Wish it was a Jack of diamonds. The market was just way oversold from a technical standpoint and fear was too high.
- Next card comes out… bam! Jack of Spades. Things look good for the bulls after Quadruple Witching week when Bernanke cuts borrowing rate to zero!
- … pocket Jacks shift the tables and we are almost dead-even here before the flop! Right now, the Jacks are favored 52.4%. There are now 6 cards in the deck out of 48 that can beat these pocket Jacks. This is what makes this hand so dangerous! Many players with pocket pairs go “all-in” on this strong hand, only to get knocked out on the flop. Bulls keep telling themselves “market is oversold” and so go “all-in.” Yikes! Wait for the flop.
Soon the flop will be shown! I think the cards will come sometime around January 20. Yeah, you all know what happens around there. The bulls are obviously waiting for another Jack, or NO queens or Aces. Stay tuned for the cards!
So, what cards are in your hand?
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So now we’re down to betting strategy, dumb luck, and straight-faced deception.
Count me in.
@alphaDawgg “So now we’re down to betting strategy, dumb luck, and straight-faced deception.” you just described the market in one sentence!
btw …you still holding those two Jacks?
Very cool post!
I have a 2 and an 8.
go fish.
It’d be better if the bears had two aces in the hole and then flopped quads…that’d be funny.
The deck is stacked, for the bears.
Always appreciate you analogies GIO!
awesome post Gio.
poker is kickass.
From a short-term technical standpoint, looks like the first card on the flop will be a 10 of hearts or spades.
Anyone care to try and solve for probability (warning, this is difficult. brings me back to college-level probability, which was tough! or discrete mathematics which was tougher. Where’s my ICS people?)
I got a coupon for 35 cents off some bacon flavored breath mints and a bail bondsman’s business card.
I’m all in!
I went to a private, Christian high school and we weren’t allowed to bring/play cards because it was the Devil’s Game. Sounds like the stock market is the same thing.
Last night I stayed up late playing poker with Tarot cards. I got a full house and four people died. — Steven Wright
I’ve got a hand that looks like a foot.
Fuggint, I’m all in.
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(Eddie Izzard Head Shake)
Btw, if anyone can find me the “Eddie Izzard Head Shake” (when he says “yes,” but shakes his head no for about two minutes), I’d be much obliged.
This is not it.
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Gio, I’m already long the market, but I want to add some big solar blocks to my position. What solar play do you like?
Gio —
Vix bounced pretty much right off it’s 61.8% (ie, “Strong”) retrace line.
That’s gotta be good for at LEAST a two of spades on the flop.
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Vix bounced off support.
I have pocket Aces: Long and Short with a hefty cash chip stack to play when the flop is revealed….
@JakeGint … i think you’re right, the first card looks like a 2 of spades! lol.
@charlie …depends on solar. Fundamentally, ENER and FSLR are the better ones. If you want to go for a big winner, there’s several oversold ones like JASO and SOL. but when does it rally? Watch oil.
@GW …definitely. heavy cash position = pocket aces
Six of a kind.
The Jack of Diamonds is next.