Trading the Bounce

[qldfrog]

That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !

I make 5k shorting mostly fmg during the crash...
Just went too late with bhp so will probably loose 1k there
Would not have been that disastrous

 

[over9k]

That was my thinking too and thought it would be a good shorting opportunity on Iron Ore stocks like FMG a few months back. Got that call totally wrong and would have been in a deep black hole losing a whole chunk by now !

Yeah this one threw me completely when I initially looked at things as well (I haven't been in the mining stocks for a while) as I fully expected mining to be in the toilet on account of steel demand being non-existent and it took a full day of researching chinese steel stock levels etc and then also talking to a friend of mine who works in the mines to find out just wtf had gone on.

It's quite obvious in hindsight though as the chinese government targets full employment no matter the cost and so literally pays companies to produce stuff even when there isn't a market for it.

I wouldn't expect steel prices to improve for quite a while though as they have ungodly amounts of it stockpiled by now and trump & co fully intend of giving china the proverbial to boot.

The only thing I really see increasing steel demand properly is china's usual construction madness - if they decide to prebuild another dozen cities or something then that'd do it, but otherwise...

 

[Smurf1976]

There seems to be a pretty clear sentiment divide at the moment.

Based on my reading of an assortment of blogs, forums and so on:

Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.

Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.

The divide seems considerably clearer than usual.

 

[frugal.rock]

Monkey see, monkey do.

 

[waterbottle]

There seems to be a pretty clear sentiment divide at the moment.

Based on my reading of an assortment of blogs, forums and so on:

Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.

Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.

The divide seems considerably clearer than usual.

Agreed.

The difference that a week makes in the markets is incredible and humbling.
Countries are, overall, re-opening.
Economies are restarting.
Federal banks are stimulating.
Global interest rates are negative or near 0%.
And money must always find a home.

I just can't see HOW this would lead to a second crash? Perhaps I'm stubborn and I'm just not considering all perspectives?
The contrarian view is that we are headed for a second bottom. But why? The federal reserve has indicated that they will stop at nothing to support the economy. Government actions, on the whole, are in line with this thinking.

I acknowledge that there are many opinions out there that we will indeed have a second wave. This may be true, but how can it be any worse than the 1st?
Keep in mind that initially we had no idea what we were up against, or how to fight it. Now we have testing regimes and preventative measures, the expected outcome who be different, indeed milder.

Then there are arguments that the market is being fuelled by work-from-home speculators. Really I haven't seen any evidence to see that these are the primary market movers. And if so, speculators have always existed, the difference this time is that there is more money in circulation courtesy of government and reserve bank intervention.

Perhaps I'm trying to convince myself that I'm making the right call.... This past week has definitely been a wild ride

 

[over9k]

The second crash comes from a 2nd wave of infections, which some parts of the world will have and some will not. Just look at the way the ASX was spooked today despite friday being an overwhelmingly green day for USA.

And USA was deeply in the red the day before in response to a spike in virus cases... see where I'm going with this?

The market hadn't really tracked virus cases after the march stimulus. It will now. Yes we'll get another stimulus, but it's still going to be a bloodbath until the mask factories come online and can churn masks out by the million, and that won't happen until august.

VERY stormy seas ahead.

 

[over9k]

I've bet that it will. It takes 3ish weeks for virus spread to show in the data and the riots are 1-2 weeks old now and even more have just happened after another dude was shot. Then there's the spike in china over the weekend which wasted the ASX today (despite everyone's expectations of green after a green day in USA on friday) and will undoubtedly be all over the news in the USA tonight our time.

Did you see my other post RE: employment data miscalculation in USA too?

 

[Chronos-Plutus]

There seems to be a pretty clear sentiment divide at the moment.

Based on my reading of an assortment of blogs, forums and so on:

Professionals of any sort, those who post on various blogs or their own website etc, are cautiously in the bullish camp. The Fed continues to print and so on so the argument is that markets don't go up in a straight line, this is a correction to the up move, but we're going higher. Pay attention but you want to be long not short though perhaps not 100% invested.

Amateurs, and I'm taking comments on non-stock market forums as being representative of amateurs, are overwhelmingly bearish. Sell the lot straight away and pile into a bear ETF, preferably a leveraged one, and you can't go wrong. Another crash is a sure thing.

The divide seems considerably clearer than usual.

Well I must be an amateur because I think we are going lower and liquidated on Friday

 

[Smurf1976]

Well I must be an amateur because I think we are going lower and liquidated on Friday

I've intentionally excluded stock market forums, including this one, from my list since they likely have people with a range of experience posting on them.

In contrast a real financial advisor, brokerage etc I've placed in the "professional" category and if someone's talking about stocks on a music or technology forum then I've assumed they're an amateur since someone more serious would far more likely ask their questions on a stock forum etc.

As with any indicator this one's imperfect but it's another thing to consider.

 

[qldfrog]

I think you are overheating on a self induced loop; what about looking at current European situation: all green and restarting:
As for the US..well is it really getting that bad? yes Trump is still in charge so the world is collapsing but:

if the red line was : i do not know the price of gold?, would you buy gold now?
I would wait till August or September to buy..
so for the time being, the bounce may crash, but if it does, it will not have much to do with the pending second wave;
Plenty of reason like already occurred cost and losses, riots, elections in US etc, but IMHO you are shaking the wrong tree.

If people were so afraid of contagion, they would not be in the street or rioting so except for a minority of potential victims, older people, etc right now, from the US to Europe to even here, the majority of people is fed up and just want to restart.
The longer the governments wait, the more the majority will feel they are [and maybe even they were ]conned and expect some serious backlash

As for the famed second wave :
contamination number is BS as testing rate change-> second wave will only be validated/real if deaths and ICU admissions increases and reach a new peak which I doubt.
Australia is a bit special: we had no wave: good measure, good weather
Market may fall, sure, but it will not be caused by this.
And I believe we should all hope I am right.trade as you feel comfortable anyway.it is indeed a VERY volatile time

 

[Chronos-Plutus]

I've intentionally excluded stock market forums, including this one, from my list since they likely have people with a range of experience posting on them.

In contrast a real financial advisor, brokerage etc I've placed in the "professional" category and if someone's talking about stocks on a music or technology forum then I've assumed they're an amateur since someone more serious would far more likely ask their questions on a stock forum etc.

As with any indicator this one's imperfect but it's another thing to consider.

It's okay, I like being the underdog

 

[over9k]

USA is the one first world economy that never contained the virus really much at all. It was always going to have a 2nd wave, it's just that it's now going to come much sooner and much steeper as a result of the george floyd riots, and another dude was just shot/more riots were kicked off over the weekend.

Think what the data is going to look like when all those infections are actually reflected in it, which seems to take 3ish weeks from moment of infection. Just look at last thursday on the nasdaq in response to USA infection spike or today on the ASX in response to the chinese news. Think those are both one-off's?

Remember that people aren't actually afraid of the virus yet on account of relatively low infection spread. Think how they're avoiding hospitals due to the environment being so infectious, and take and apply when the whole country is like that.

Also remember your exponentials RE: virus spread.

One of the quants in another thread has already said that today's asx tank puts us very close to busting all his modelling limits too. Another drop and even his model says we're toast.

 

[over9k]

Frog - I don't own gold, but I do own a couple of gold miners.

 

[qldfrog]

It's okay, I like being the underdog

Being bear right now is not being underdog, this is the majority feeling
Was still bull up to today, based on tonight will see where my indicators point
I went from +4k to -6k between 11am and close time, would not be surprised to see trend change tonight wait and see what ny will do at close time

 

[Chronos-Plutus]

I think you are overheating on a self induced loop; what about looking at current European situation: all green and restarting:
As for the US..well is it really getting that bad? yes Trump is still in charge so the world is collapsing but:
View attachment 104814
if the red line was : i do not know the price of gold?, would you buy gold now?
I would wait till August or September to buy..
so for the time being, the bounce may crash, but if it does, it will not have much to do with the pending second wave;
Plenty of reason like already occurred cost and losses, riots, elections in US etc, but IMHO you are shaking the wrong tree.

If people were so afraid of contagion, they would not be in the street or rioting so except for a minority of potential victims, older people, etc right now, from the US to Europe to even here, the majority of people is fed up and just want to restart.
The longer the governments wait, the more the majority will feel they are [and maybe even they were ]conned and expect some serious backlash

As for the famed second wave :
contamination number is BS as testing rate change-> second wave will only be validated/real if deaths and ICU admissions increases and reach a new peak which I doubt.
Australia is a bit special: we had no wave: good measure, good weather
Market may fall, sure, but it will not be caused by this.
And I believe we should all hope I am right.trade as you feel comfortable anyway.it is indeed a VERY volatile time

Our market will fall if there is another fallout in the USA and/or China. If the USA and/or China go back into lockdown; then forget it, we will all be running for the hills again and this time the global equity markets will drop well below the March lows. The risk is too great for me; I don't need to risk my capital on such a scenario that could quite easily eventuate. I will buy at rock bottom prices or I will buy when there is certainty that the global economy is well and truly on its way out of this pandemic.

 

[Chronos-Plutus]

Being bear right now is not being underdog, this is the majority feeling
Was still bull up to today, based on tonight will see where my indicators point
I went from +4k to -6k between 11am and close time, would not be surprised to see trend change tonight wait and see what ny will do at close time

The reports out of China are a significant cluster has just come out of a Beijing seafood market and their government is adopting wartime measures to go into lockdown now: "Beijing is reintroducing strict lockdown measures and rolling out mass testing after a fresh cluster of novel coronavirus cases emerged from the city's largest wholesale food market, sparking fears of a resurgence of the deadly outbreak."(https://edition.cnn.com/2020/06/15/asia/coronavirus-beijing-outbreak-intl-hnk/index.html)

So we will see what happens. Either way my primary objective is to protect my capital, so if the fallout doesn't eventuate I don't carry. I would rather panic early than panic when it's too late.

 

[qldfrog]

I understand. Even if still bullish on my weekly, i m overall just 75% invested in my share dedicated portion.

 

[over9k]

The reports out of China are a significant cluster has just come out of a Beijing seafood market and their government is adopting wartime measures to go into lockdown now: "Beijing is reintroducing strict lockdown measures and rolling out mass testing after a fresh cluster of novel coronavirus cases emerged from the city's largest wholesale food market, sparking fears of a resurgence of the deadly outbreak."(https://edition.cnn.com/2020/06/15/asia/coronavirus-beijing-outbreak-intl-hnk/index.html)

So we will see what happens. Either way my primary objective is to protect my capital, so if the fallout doesn't eventuate I don't carry. I would rather panic early than panic when it's too late.

Yeah this is what pasted the ASX this morning after everyone expecting an overwhelmingly green day. It's kind of silly really as a lot of the stocks in the toilet have almost nothing to do with china at all.

But markets have never been rational.

 

[Smurf1976]

As for the US..well is it really getting that bad?

The issue is that the US has recorded a decline followed by a sideways consolidation and now a higher high in infection rates.

Still waiting to see a higher bottom but it's plausibly a breakout to the upside in COVID-19. Time will tell if it is or isn't but we're only days away from finding out realistically.

Death rates will follow infection rates with a time lag most likely. If infection rates turn up then, in the absence of a major improvement in treatment, so too will death rates. If infection rates don't turn up then no such concern.

 

[sptrawler]

IMO the market is being driven by fear which it loves, as waterbottle said money must always find a home, when the reality of the returns being generated on parked money hits home people will buy based on returns.
So my guess is, those companies that report stable or increased earnings, will take off.
$500k sitting on the side earning 1.5% isn't going to cut it IMO.
Greed will overcome.
Also add to that, the super companies can't just sit on the sidelines and they have to generate capital. Even at a reduced drawdown, their pension members aren't going to be happy if there 3-4% drawdown is higher than their earnings.
We've had 100 deaths, JB HiFi had a 20% increase in profits, Harvey Norman increased profits, Kogan increased profits.
The only obvious loser up until now, has been the Government $xbillion in debt.
By the way just received my cruise refund, so Carnival must be hanging in there.