Is the market about to take another HIT?

[bunyip]

Re: Is the market about to take another HIT??

I like the way everyone breaks out his or her crystal ball every time there's a bit of movement!
Who cares which way it goes. We can trade both long and short can't we?
React to the market rather than try to predict it. Just trade it as it comes.

Bunyip

 

[Magdoran]

Re: Is the market about to take another HIT??

Wayne,

Excuse my ignorance but why have you just sunk 400 grand into the market???

Hello jemma,


When Wayne emerges from his crypt (standing joke), I suspect he’ll let you know that he was talking to someone at a social engagement who has just sunk $400,000 into stocks (probably unhedged), not wanting to hear that a significant correction is a real possibility, and that they thought he (Wayne) was nuts for thinking this way.


I suspect the quotes didn’t quite come out right, hence the confusion. If Wayne was to “sink” $400,000 into the market, it would all be hedged and risk managed I’m sure…

(Am I close Wayne?)


Regards


Magdoran

 

[MichaelD]

Re: Is the market about to take another HIT??

I like the way everyone breaks out his or her crystal ball every time there's a bit of movement!

That's fear talking. Say it loud enough in a forum/wherever and the market's sure to hear and respond to the predictions and make the pain go away.

It's a lot like us TAs drawing resistance and support lines, proclaiming them in a forum and being surprised when the market goes ahead and happily ignores them.

Like you said, reacting, not predicting is the way to go.

 

[wayneL]

Re: Is the market about to take another HIT??

Hello jemma,


When Wayne emerges from his crypt (standing joke), I suspect he’ll let you know that he was talking to someone at a social engagement who has just sunk $400,000 into stocks (probably unhedged), not wanting to hear that a significant correction is a real possibility, and that they thought he (Wayne) was nuts for thinking this way.


I suspect the quotes didn’t quite come out right, hence the confusion. If Wayne was to “sink” $400,000 into the market, it would all be hedged and risk managed I’m sure…

(Am I close Wayne?)


Regards


Magdoran

Just had to emerge from the crypt for a moment (had to get Mrs to sut all the blinds) :batman:

But yes Mag... precisely

 

[visual]

Re: Is the market about to take another HIT??

(had to get Mrs to sut all the blinds) :batman:

Sut?
please explain. :

 

[wayneL]

Re: Is the market about to take another HIT??

Sut?
please explain. :

oops!

sut = shut

 

[visual]

Re: Is the market about to take another HIT??

I think I like the mystery of SUT. :
thanks Wayne.

 

[YOUNG_TRADER]

Re: Is the market about to take another HIT??

I am perplexed as regardless of fundamentals the mkt appears to be simply giving in to knee-jerk reactions and while I am a firm believer of the stronger for longer theory and do believe everything will eventually settle down in the middle east (notice I said settle down, not resolve itself or peace, there has been tensions and wars there since the BC times and I suspect it will continue like that)

But am I the only one who is getting fed up with the mkts random volatility?

Lets look at the issues that have been the No 1 concern of investors

- Bird Flu, so what happened again?

- Chinese Economic Slowdown, hmmm nothing here

- US Economic Slowdown, maybe slight signs but nothing of real concern

- Collapse of the US $, nothing yet

- Collapse in real-estate prices both here and US, hmmmm nothing in AUS, nothing yet in US

- Iran and its nuke ambitions, still there but not on front page news anymore

- N Korea, well this is certainly up there on the list


And now Israel-Palesting-Hezbulla dispute, well clearly we should sell our resource stocks and hide under our beds, its the only thing to do!

 

[MichaelD]

Re: Is the market about to take another HIT??

But am I the only one who is getting fed up with the mkts random volatility?

It's not random. It's GREED or FEAR. The madness of crowds. Right now, its FEAR for bulls (but not yet GREED for bears) so down it goes.

When the bears get greedy and the bulls despair, then up it will go again.

 

[Smurf1976]

Re: Is the market about to take another HIT??

It took me quite a long time, and lots of $ in losses, to realise that it's better to react to the market than try and predict it. More profit that way and a lot less stress.

Just look at how often professional economists get it wrong and I think you'll see the point in how difficult prediction of financial markets really is.

The one exception is if you have some kind of deep knowledge in a specific field and could use this to your advantage. For example, if you have your own oil production model then you've got an advantage when it comes to predicting oil prices over the long term. You could still get wiped out by economic cycles, wars etc in the short to medium term though unless you've got some good knowledge of them too.

 

[Realist]

Re: Is the market about to take another HIT??

But am I the only one who is getting fed up with the mkts random volatility?

Personally I love volatility. The more the merrier.

 

[blinkybill]

Re: Is the market about to take another HIT??

I am perplexed as regardless of fundamentals the mkt appears to be simply giving in to knee-jerk reactions and while I am a firm believer of the stronger for longer theory and do believe everything will eventually settle down in the middle east (notice I said settle down, not resolve itself or peace, there has been tensions and wars there since the BC times and I suspect it will continue like that)

But am I the only one who is getting fed up with the mkts random volatility?

Lets look at the issues that have been the No 1 concern of investors

- Bird Flu, so what happened again?

- Chinese Economic Slowdown, hmmm nothing here

- US Economic Slowdown, maybe slight signs but nothing of real concern

- Collapse of the US $, nothing yet

- Collapse in real-estate prices both here and US, hmmmm nothing in AUS, nothing yet in US

- Iran and its nuke ambitions, still there but not on front page news anymore

- N Korea, well this is certainly up there on the list


And now Israel-Palesting-Hezbulla dispute, well clearly we should sell our resource stocks and hide under our beds, its the only thing to do!

I think the March 2003 bull market is over and the warning signs have been there for a long time now.

Although some of the issues might not be on the front page everyday they are nonetheless still on most investors (fund managers') minds imo and so influencing their decisions.

It looks like oil prices will go even higher in the short term at least and it looks like this is now starting to seriously affect consumer spending in the US, which is the main driver of the US economy.

I think our markte will most probably go sideways from here but if you look at the chart for XJO you will see that if it falls below around 4800 then we will be in a true bear market the way I see it.

I doubt very much our market will return to its previous all time high any time soon.

 

[Smurf1976]

Re: Is the market about to take another HIT??

Add the global tightening of monetary policy to the list of potential triggers for a bear market.

 

[wayneL]

Re: Is the market about to take another HIT??

Personally I love volatility. The more the merrier.

In a few years, you will have a different view

 

[Porper]

Re: Is the market about to take another HIT??

In a few years, you will have a different view

I can't see why anybody would like a volatile market.It just makes it impossible to trade from what I can see.The only winners here will be those that can guess the direction, gyrating up and down.Most people will lose.

I suppose long term investors may do ok, but even after the 87 crash it was a hell of a long time before those losses were made back.Stand aside seems a good philosophy, everybody is saying the top has been made, so it probably hasn't, fact is nobody knows.That makes it a 50/50 chance in my eyes.

When a trend, up or down is obvious, that will be the time to jump in with both feet, until then I am playing with my pocket money to stay in the game.

 

[bunyip]

Re: Is the market about to take another HIT??

I can't see why anybody would like a volatile market.It just makes it impossible to trade from what I can see.The only winners here will be those that can guess the direction, gyrating up and down.Most people will lose.

I suppose long term investors may do ok, but even after the 87 crash it was a hell of a long time before those losses were made back.Stand aside seems a good philosophy, everybody is saying the top has been made, so it probably hasn't, fact is nobody knows.That makes it a 50/50 chance in my eyes.

When a trend, up or down is obvious, that will be the time to jump in with both feet, until then I am playing with my pocket money to stay in the game.

Porper

You echo the views of many, but I have to disagree with you.
Irrespective of market conditions, there are always stocks trending strongly upward and stocks trending strongly downward.
And they both offer the opportunity of pulling regular profits from the market.
Profitable trading has nothing to do with guessing direction, but everything to do with finding the stocks that are trending strongly and consistently in one direction. Admittedly there are less of these stocks during volatile times, nevertheless there are still enough of them to supply us with more trades than we can ever utilise.
The trick is to follow plenty of stocks, and have scanning software to help you find those that are trending well.
Trade only these good trenders, use money management and stop losses to ensure that your losses are kept small, ride the winning trades as long as they keep moving strongly in the right direction.
Do this consistently and you'll make money under all market conditions.

Bunyip

 

[NettAssets]

Re: Is the market about to take another HIT??

Trade only these good trenders, use money management and stop losses to ensure that your losses are kept small, ride the winning trades as long as they keep moving strongly in the right direction.
Do this consistently and you'll make money under all market conditions.

Bunyip

Have to agree with you Bunyip
How do you determine if a stock is still moving strongly in the right direction - what sort of exit do you recon works best

Thanks
John

 

[lewstherin]

Re: Is the market about to take another HIT??

Damn the Dow took a serious hit on Friday. If the ASX stays true to form, I guess we're gonna see more red come Monday...the longer the Middle East stays hot, the higher oil is gonna go, the less attractive long term boom theories look.
Time to fill up my car methinks
Also considering place some short positions for the first time

 

[Porper]

Re: Is the market about to take another HIT??

Porper

Irrespective of market conditions, there are always stocks trending strongly upward and stocks trending strongly downward.
And they both offer the opportunity of pulling regular profits from the market.
Profitable trading has nothing to do with guessing direction, but everything to do with finding the stocks that are trending strongly and consistently in one direction. Bunyip

Bunyip,

Totally disagree.When the market shoots down 2.3% as it did on Friday, I for one don't want to be in a position where I lose more than my initial stop loss due to stocks gapping down, especially when using leverage.

2.3% Friday, but what about when that becomes 5%, or worse.You will wipe out a large percentage of your trading capital.

Yes, we can all short the market, but at the moment it is just as likely to shoot up as down.

I will stick to my trading plan and have most of my funds in cash until we see a trend develop, or at least the markets stabilise.

 

[bunyip]

Re: Is the market about to take another HIT??

Have to agree with you Bunyip
How do you determine if a stock is still moving strongly in the right direction - what sort of exit do you recon works best

Thanks
John

John

Signs of an uptrend are higher tops and higher bottoms, moving averages heading north, price above moving averages.
If you want to get more technical you can use tools that measure trend strength, e.g ADX or ROAR.

As for exits, I don't think you can say that any one exit strategy works best under all conditions.
Stops based on moving averages can do a pretty good job. A crossover of two moving averages can be a handy exit signal to take you out of a trade. The longer the moving averages, the longer they'll keep you in the big trends, but also they leave more profit on the table when the trend is over.

An exit from a close below a longer term moving average such as 100 day EMA or 20 week EMA will often do a good job of snaring the bulk of a big trend.

Swing lows....another handy exit system, trail your stop under each higher swing low until you're taken out. Daily or weekly charts, your choice. Trail you stop under the swing lows on a daily chart if you're happy with smaller but more frequent profits. Or trail your stop under the swing lows on a weekly chart if your aim is to nail those really big trends that can go for months or years and return hundreds of percent profit.

Alan Hull has some useful exit strategies based on his indicators, but of course you need software that includes his indicators. Most software doesn't.

The simplest way to trade is probably with patterns......your entry, stop loss and profit target can all be set at the same time, thereby removing the dilemma of where to exit.
The disadvantage is that quite often the move will go well beyond the profit target, meaning you missed out on profit you could have had.

I could name dozens of entry and exit strategies, all of which work. I think you just have to settle on one or two entry setups and exit strategies that work for you, and fit in with your lifestyle.
And always go for simplicity. No system or strategy can do more than take a bite out of a trending move, and I don't care what the system is.
A simple system that can achieve this is always preferable to a more complex system that can (maybe) achieve the same thing.

Bunyip