Re: Financial topics
Posted: Thu Sep 05, 2019 10:10 am
No we did not forget the future either
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Enough negative sentiment has dissipated from the herd that the stock market could have made the high yesterday (current price about 2980). I'm betting that a high has been reached, but am allowing for more pain ahead as well.Higgenbotham wrote:From Saturday. At that time, the herd was super bearish at the 2820 low of the flutter pattern.Higgenbotham wrote:Higgenbotham wrote:This weekend we read on the boards that sentiment has gotten very negative very quickly and therefore the stock market will rally to work off that bearish sentiment. Or something like that.
Is that right? Not necessarily, but it can be right and it has been generally right in the past, though maybe not entirely precise.
Why has it been right? Well, the primary reason in my opinion is because stocks have been in a bull market for, oh, about the last 500 years. Therefore, since stocks have always continued higher at some point after sentiment turns more negative, it seems right to think that will continue. But it won't if stocks have indeed made a 500 year high and are heading much lower for many years, if not forever. In that case, the sentiment figures are accurate at best and overly optimistic at worst.
So sentiment really means nothing. What matters is how accurately the sentiment figures reflect reality.This is from last weekend. Strangely, the herd on the boards are no longer this weekend quoting negative sentiment figures and pointing to those as a reason to be positive on the market. I am only reading that the herd is now negative. That means that even though the market is in a position to crash, it could actually rally from here. For me, that is too hard to call at this point because the Fed officials stated on Friday that they will now cut rates versus what we heard before that the July rate cut was mid cycle. The market didn't respond to that, but it might respond positively on Monday.Higgenbotham wrote: That's another thing that crossed my mind as I was typing. This is a time when sentiment is likely to swing wildly day to day or even hour to hour. So quoting sentiment figures as if they mean something in relation to future stock market prices is most likely bogus anyway. Probably the better indicator is the herd thinking these sentiment indicators they are quoting actually mean something.
From there, the market has been able to rise to near the top of the flutter pattern at 2940 (currently 2926 or so).