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It is not the beginning of the end but one way or the other this week will mark the end of the beginning. The assumption that either the rally or the bearish fundamentals will continue to act in the same way they have been is obviously a trap. This means both short and long are the wrong move since the market could turn on a dime, or simply keep grinding along sideways all summer as anxiety builds. It’s honestly too choppy to even day trade with confidence, and there are very few stocks I would consider to be at bottom right now since all value is predicated upon speculative future production and there’s simply no way for anyone to accurately calculate what we’re going to be looking at in the next 24 months for natural gas production, copper prices, discretionary spending in asia, the value of the Australian dollar, the political situation in the middle east, etc.
Really, I’m not bearish or bullish here any more, I’m just deeply, deeply confused.
The swirl of rumors, fundamentals, technicals and general nonsense has become past what any human realistically calculate, even if we had perfect information. I feel like getting out of nearly everything today at a loss and being 99% cash.
Assuming that a rally here has real strength and is reliable is the height of foolishness, but betting against the feds keeping the balloon inflated is also pretty dangerous. Even piece of shit stocks are going to get a big, meaningless boost making it dangerous and pointless to short, but on the other hand everyone knows the fundamentals are really weak and this skullduggery isn’t going to end well. The idea that the real economies are going to fully recover before the central bankers run out of tricks is wildly, stupidly optimistic. It’s also stupidly optimistic from the bear side to assume that at this present moment they’re already out of tricks.
4 Responses to “It’s a trap?”
drummerboy
it’s also a good time to stay away from options,imo.they turn on a dime also. they get beat up every day,puts or calls doesnt matter anymore.
zenhunter
While it is good to have a thesis on the market based on the fundamental out there; it is generally much better to go along with what the market is doing or “trying” to do.
Remember last November when everyone was feeling so doom and gloom? How many actually predicted the strong rally in the 1st quarter of 2012? How many actually missed the gigantic AAPL rally which went from $400+ to $600+ in the same quarter? I know I did because I over-think the fundamental on AAPL and failed to act on price actions. But fortunately, either by intuition or by instinct, I loaded up betting on January effect and got rewarded for it.
In summary, sometimes you must take a side with a small sum (dipping the toe in the water) and then go with the flow. It is much easier to move more cash into equities when you are already participating in some form. Otherwise, you could just be watching the market go up (or down) w/o you while still sitting in cash. You see inertia is also difficult to get out of because it takes a lot of energy to start an object (or your mind) in motion. Once it is in motion, it is much easier to move it faster.
In summary, to me, 99% in cash is overdone.
Just my humble opinion of course.
Good Hunting!
en1gma
Good post.
Zen, you also make some good points but I think the market is a roulette table and the double 0 space is increasing in size daily. Red, black, long or short doesn’t matter. The market is going to take your money.
Many high fliers have been halved. Price action with tight stops maybe, but that’s a grind hoping you catch lightning in a jar.
As much as I like investing I am glad it’s a hobby and not a job. I would shoot myself in the face.
zenhunter
The market is a casino only if you trade it randomly with your ego and unrestrained emotion.
But if you look at it from a business point of view, it is no difference than running a business. You spend the time to research before you buy or sell. You become more selective in your choice of product (stock). You lay out a business plan and follow up with execution.
IN summary, if you are willing to spend the time to treat trading like a business, you are no longer gambling. But how many people actually spend the necessary time to treat stock trading like a business? That is why there are only a few % of trader who make money consistently here.
To most, the stock market is a very good diversion to our mundane and boring life; unfortunately, this diversion is not for free.