Financial topics

[Higgenbotham]

By being short, I am trading against the 8 traders I've talked about who are normally right about market direction. That's not something I want to do very often.

To summarize their positions, 3 are trend traders and they all have a different way of determining trend. However, for all 3, the medium term trend turned up yesterday. Of the remaining 5, 2 are very bullish medium term, 1 is bullish short term, 1 is neutral, and only 1 is still bearish.

Meanwhile, I'm continuing to build shorts as the market rises.

[Cool Breeze]

These bear market rallies will keep the masses asleep until the the real economy implodes, then there won't be anywhere to hide.

Yes, that is it.

[Cool Breeze]

The S&P futures came close to 4000 last night (3997.50) but the S&P cash index has been nowhere near 4000 this morning. During the crash of 2008, a similar thing happened. The futures hit a key level overnight but failed to get anywhere close to that the next day. After that, the market crashed. That's not to predict with a high level of certainty that it will this time. The only thing I would say is, as a strategy, if the market were to start dropping fast from here, I would not be long anything and would not be as quick to cover my short as I would be otherwise (which is still small).

I agree, I think the next move down is coming shortly. Destruction through December, then some pivot in January which will make it worse for a while, then it'll start going back up. The economic realities will be stark at that point, a very dark future lies ahead.

[vincecate]

I still am thinking the markets will head lower. It is so much like 2008 and that is what is next by that plan.

[richard5za]

Something I pasted in my notes years ago:

"A very, very successful trader once told me, to watch the Thursday the week before futures/options expiration. If there is a major move that day, the week of futures/options expiration will move in the opposite direction."

I believe that very, very successful trader was Marty Schwartz of Pit Bull and Market Wizards fame, as well as associate of Terry Laundry.

https://www.yahoo.com/news/market-wizar ... 32764.html

Thursday 10 November was up 5.6% so if this is correct Friday 18 November 2022 will be down

[richard5za]

I still am thinking the markets will head lower. It is so much like 2008 and that is what is next by that plan.

I am not sure that history repeats itself but it does rhyme

You are proably right about markets going lower but the timing is a hard part. It may not happen for a year or two or it could happen from next week

The hardest part of investing in, or trading markets is the psychology. We take a position and our ego lets go with great reluctance.

Its why I put a stop loss on every single trade I do, having calculated how how much I am prepared to lose, at present 1.8% of total trading funds. So for example if my total funds are 1000 my maximum loss on any one trade is 18
The other thing I do is calculate a target / win price before each trade (without which you cannot evaluate the risk reward ratio) and if the price shoots past the target, now I am a clever big dealsky and subject to serious manipulation by my ego; which is a formula for losing money! So I increase the stop loss to my original win/target price, and keep increasing it, and close the trade earlier rather than later.
I also have stop losses on my long term holdings

[richard5za]

By being short, I am trading against the 8 traders I've talked about who are normally right about market direction. That's not something I want to do very often.

Meanwhile, I'm continuing to build shorts as the market rises.

Higg, this is my two penny worth as of today. Treat it with caution because it is my analysis not from an analyst or accomplished trader.
If I take the up trend from 17 FEb 2020 to the 3 Jan2022 peak and to the current date, I get:
A 61.8% retracement at 3903
A 50% retracement at 4078
A 38.2% retracement at 4252
Weekly chart: I have a rising short/medium term trend: Macd and 5 ema rising; 50 ema at 4171; stoch over 80; price higher than both 5 and 15 ema and looking like a bullish chart
Daily chart: Both 5 and 15 dma above 50 dma and pushing aginst 200 dma at 4010.
BUT since January 2022 there have been 5 false break outs on the 200 dma, not one succeeded.
Therefore taking this into account and since the market is in a down trend I must assume for the present that the price will stall at one of these levels: 4010; 4078; touch 4171; and maybe even touch 4252
Thereafter resume downtrend. If that trader you quoted is right about Thursday before option expiry then Friday 18 could be the down day

Would be very interested in any additional views you may have

[richard5za]

On the subject of deflation here's an extract from John Mauldin's weekly news letter:

David Rosenberg had a different way to see inflation, one which struck a chord with me. Under the headline “Deflation Thumbprints All Over the CPI Data,” he wrote:
“If not for big increases in shelter (+0.8%), energy (+1.8%), and food (+0.6%), the CPI would have declined outright by 0.1%, the first dip back to deflation on this measure since May 2020.”
That’s monthly, not year over year, but certainly a good sign. We need many more such signs, though.

[vincecate]

This past week the FTX.com crypto exchange went from normal operation to bankrupt with estimated $8 billion in customer money lost.

This past week the dollar/DXY had a sudden drop.

So the question is, did the first one cause the second?
There were lots of people taking their money out of crypto as people got worried about FTX and others.
If they were outside the USA and converted back to their local currency it might put downward pressure on the dollar.
If they were in stable coins and sold those, they would sell some of their dollar holdings, and that could put downward pressure on the dollar.
Maybe not as end users will end up holding about as many dollars as the stable coin used to, but maybe as these are dollars
with velocity on them and not just locked up.

And what happens next? There seems to be some other crypto that will have trouble because of FTX (contagion). So maybe a bit more
this next week? Or does it bounce back?

[richard5za]

This past week the FTX.com crypto exchange went from normal operation to bankrupt with estimated $8 billion in customer money lost.

This past week the dollar/DXY had a sudden drop.

So the question is, did the first one cause the second?
There were lots of people taking their money out of crypto as people got worried about FTX and others.
If they were outside the USA and converted back to their local currency it might put downward pressure on the dollar.
If they were in stable coins and sold those, they would sell some of their dollar holdings, and that could put downward pressure on the dollar.
Maybe not as end users will end up holding about as many dollars as the stable coin used to, but maybe as these are dollars
with velocity on them and not just locked up.

And what happens next? There seems to be some other crypto that will have trouble because of FTX (contagion). So maybe a bit more
this next week? Or does it bounce back?

I am not a FX man but my guess is that $ 8 billion is a drop in the ocean compared to DXY trading through which much trade and commerce goes; trillions; e.g. you can't convert from British pounds to Aus$ without taking it through the US$. The US$ is the lubricant which keeps the planet going.
So my suggestion as to why the US $ dropped last week, (DXY opening 111.030 on Monday to 106.255 closing Friday) is because US$ is a global safe haven. You saw the huge increase in the stock market last week and it seems that for the present the financial community is seeing less risk.