Air Pockets Ahead

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Wed, 11/10/2010 - 12:15 | 716523 vs18
vs18's picture

Good to see Nic posts again :)

Wed, 11/10/2010 - 12:17 | 716540 HarryWanger
HarryWanger's picture

I think Nic's been a bit bruised and battered. Tough being on the wrong side of the equity trade for so long, I imagine. Great to see he posted again after two marginally down days though.

Wed, 11/10/2010 - 12:22 | 716560 SheepDog-One
SheepDog-One's picture

'Equity trade', wow thats funny, bitch.

Wed, 11/10/2010 - 12:28 | 716582 1100-TACTICAL-12
1100-TACTICAL-12's picture

Harry, wake up...wake up.... you're dreaming again...

Wed, 11/10/2010 - 14:04 | 716945 Deflationburger...
Deflationburger with Fleas's picture

So sayeth the Chariman and CEO of "Flip Floppers LLC".  Get bent, Harry.

Wed, 11/10/2010 - 12:18 | 716541 citationneeded
citationneeded's picture

Yup. Knew we would see him again after a few down days. Not that I'm complaining.

Wed, 11/10/2010 - 13:54 | 716881 Minion
Minion's picture

I've seen the light - technical analysis serves only as a suggesstion to what might happen.  Price action is not ruled by channels, retracements, or oscillators. 

It is ruled by capital flows.  POMO has obliterated any fund outflows, and if Blackhawk Ben really gets to continue the airlifts, the bulls are probably going to hang out in the drop zone with money bags to collect the loot.

Net capital flows, my friends.  Everything else is just suggestion......

Wed, 11/10/2010 - 14:01 | 716936 Orly
Orly's picture

Actually, Minion, if I may say, technical analysis can also be used as a stand-alone tool for evaluating market conditions and sentiment, with or without actual fundamental information to corroborate it.

When the actions of the whole are reflected in a picture that shows such market sentiment and momentum, then being able to read the price patterns is more vital an understanding than being able to read 10-Ks.  You're right in that SEC filings have little to do with stock price but learning the nuances of technical analysis will serve you well, especially in fast-moving markets like 4X.

The idea that everything is already known and refelcted in the price chart, from insider information to the Iron Condors on AAPL.  Try it for a week.  Just watch what the price is telling you and you may find you're having much more "luck" as a trader.

Wed, 11/10/2010 - 14:15 | 716982 Minion
Minion's picture

TA is better than nothing, but in the land of the blind, the one-eyed trader will usually win. Nothing like seeing the cards of the other players.

I will make one exception to my original statement:  I don't consider Elliot Wave analysis to be TA..... TA oscillators and sentiment indicators are tactical enhancements of the overall strategy behind theory of price waves which caused by capital flows, themseklves caused by changes in group behavior which follows a known pattern. 

Stated another way, people with dollars have been in the mood to buy.  :) They usually buy in three waves up with two pull backs, and the second pullback never retraces more than the first wave of buying.

 

Edit: I should have read all of your post.  :)  I don't ever use FE, always TA and it's failed me too many times.  But even FE is only a suggestion for future capital flows.  I still think it's all ruled by waves of emotion and group psychology.

But even this method can be corrupted by excessive bullish or bearish bias.  Prechter $ co sell more subscriptions by arousing worry..... they had to change their published wave count on a recent update as this bull market smacked them down.  :D

Wed, 11/10/2010 - 14:24 | 717011 Orly
Orly's picture

Several things:

  • It is not about mathematics, it is about people.  People trade stuff.
  • People have a very short memory but the patterns they leave are indelible.
  • No one wants to be in the middle, i.e., mediocre, for long.  People would rather be at extremes.
  • When extremes are hit (2 standard deviations...), people tend to come back to the middle.  Sometimes, they even go clear to the other extreme.

Sideburns, bell-bottoms, hip huggers, afros, buzz-cuts, piercing, sundresses, tatoos, pink pumps...all these things come in an out of "style."  Try to think of price action only in that way and discard the Five wave of A3 stuff.  Put down the calculator and open a clean chart.

It would be a step forward.

Wed, 11/10/2010 - 17:09 | 717650 Minion
Minion's picture

This would explain your avatar changes.  Indecision comes in waves..... I predict a third attempt at a glam self portrait before you give up.  :)

Seriously, I'm an engineer.  I need data, I need to see patterns.  I can't just go off emotion.... 

Wed, 11/10/2010 - 17:52 | 717826 Orly
Orly's picture

First, this is not a glamor shot.  It was taken in my backyard.  I like the black and white for contrast.

I have only changed it once, really, and that was after I got a photo of me in my ZeroHedge hat.  I thought it was cool but whatever. No one else liked it, so I changed it back.

If that shows indecision to you, then perhaps you're a little hard on yourself.

/"

_________

And now to the subject at hand: Trading!

Have you read George Soros' book on Reflexivity, "A New Paradigm for Financial Markets"?  I'll save you the twelve bucks because he uses the same basic idea as the uncertainty principle, in that if you could measure every single nuance of markets into a computer, then you wouldn't be any closer to solving the riddle than before you spent billions on the measurement- because you measured it!

You can't know because once you know, that spoils the information and the market is more random than before you knew what it turns out you didn't know anything about anyway.

Another example is magnetic resonance imaging.  The machines can take the cycles of radio impulses out to the twelfth decimal place.  Pretty precise. But inside the picture, there are phenomenon that cause artifact in the images: phase-wrap, ghosting, truncation, ringing, etc.  So even as precise devices as MRI machines are, they are still subject to errors in encoding and decoding.

Instead, I suggest to take a step back and watch for patterns to emerge from a more-or-less random interaction that occurs in markets- but well within a boundary that is easily recognisable as "science."

Use a simple Bollinger Band technique, with a period of 28 and a standard deviation of 2.  When the deviation gets greater than 2, the chances of a return to the BBMA (moving average...) is greatly increased.

If the retracement passes completely through the BBMA in one candle, or three of the same color, then the chances are the price will move back to the opposite extreme.

The great thing is that this technique works on any time-frame and with any traded chart you can imagine.  You may have to titrate your BB periods to the closest fit on the chart but once you find the right "size," the size doesn't change in the future.

The charts will tell you everything.

:D

Wed, 11/10/2010 - 21:20 | 718385 Minion
Minion's picture

I've been using a 20/2 BB for a while, as a sell signal.  I tried using it as a signal for shorting before I got tired of always being opposite the prevailing trend.

 

Wed, 11/10/2010 - 12:16 | 716536 SpeakerFTD
SpeakerFTD's picture

It's like hiding in the basement when a meteorite the size of the moon is about to crash on earth. 

So that's what the missile launch was all about!   Next up, Bruce Willis.

Wed, 11/10/2010 - 12:19 | 716549 Turd Ferguson
Turd Ferguson's picture

 "Watch 1,384/1,385 in gold as support".

Agreed. I'll say again, however, with the new POMO schedule kicking in as soon as Friday and continuing to almost Christmas, buy all dips. Our buyer(s) of size certainly will.


Wed, 11/10/2010 - 12:23 | 716562 HarryWanger
HarryWanger's picture

I think after these shallow dips and maybe a test of 1200, we'll see a meteoric run into the EOY. Do not count 1300 out. BTW: As I said, a few days ago, I'm actually short via SDS since Friday afternoon. Keeping my finger on the sell trigger though.

Wed, 11/10/2010 - 13:51 | 716908 Minion
Minion's picture

I used to think you were crazy, until I realized that markets are not the economy.  I don't think your forecast is that unlikely.

I'm expecting a brief pullback to above 10500 then back on up to new highs. 

Wed, 11/10/2010 - 12:22 | 716558 Dr. Richard Head
Dr. Richard Head's picture

Benny bouncing benji's. 

Wed, 11/10/2010 - 12:28 | 716583 gwar5
gwar5's picture

Air pockets indeed.

"First you're nauseaus, then you die, and then, well, you aren't nauseaus anymore!" Woody Allen.

Wed, 11/10/2010 - 12:32 | 716603 prophet
prophet's picture

 

If anything people should be more worried if LCH and other clearing houses start asking bigger haircuts on bonds, as this is a lot more significant since it puts pressure on bond prices which are not fundamentally sound.

Margin boost, other woes hammer Irish bonds

http://www.marketwatch.com/story/margin-boost-other-woes-hammer-irish-bonds-2010-11-10

 

Wed, 11/10/2010 - 12:33 | 716610 Threeggg
Threeggg's picture

Someone sounds extremely pessimistic today ?

Tyler ?

I dont know how they (the EE) keep this juggling act up for so long. ?

Is it the ability to turn the printing press on at will ?

 

Wed, 11/10/2010 - 12:48 | 716667 beanieville
beanieville's picture

Pretty simple, really.  The economy is improving and we're in an organic bull market.

Wed, 11/10/2010 - 12:52 | 716684 HarryWanger
HarryWanger's picture

I agree with that to an extent. As I maintain, it's improving very, very, slowly. But improving nonetheless.

Wed, 11/10/2010 - 13:21 | 716801 Tortfeasor
Tortfeasor's picture

"Improving" is a relative term.  The key is the economy isn't "improving" to a degree necessary to fund our nation.

Let's say I owe $400k on my house, have $13k in credit card debt, $35k in student loan debt, and I get fired from my $95k a year job and I get divorced.

If I get hired in my same career field at $60k/yr, relatively I'm "improving".  I'm still bankrupt, as I can't afford food, clothes, house, alimony (and child support).  So I can scream till my lungs bleed about "improvement", but I'm still fucked.

That's us.

Wed, 11/10/2010 - 12:33 | 716612 plocequ1
plocequ1's picture

Sounds serious. Private Joker asks, Does this mean Ann Margaret isnt coming?

Wed, 11/10/2010 - 12:52 | 716687 Bananamerican
Bananamerican's picture

wtf

Wed, 11/10/2010 - 13:22 | 716803 goldsaver
goldsaver's picture

movie line - Full Metal Jacket.

Wed, 11/10/2010 - 19:53 | 718193 Judge Smales
Judge Smales's picture

This line seems more fitting: "It's a big shit sandwich, and we're all going to have to take a bite."

Wed, 11/10/2010 - 12:43 | 716648 MGA_1
MGA_1's picture

IMO - QE2 was the beginning of the end.  Looks like the next several months mike be "interesting".

Wed, 11/10/2010 - 12:46 | 716660 beanieville
beanieville's picture

And that's why you need to buy stocks, pronto.

Even mother wants the squeeze.

http://abetterwaytotradestocks.blogspot.com/2010/11/rax-next-mother-of-a...

Wed, 11/10/2010 - 12:49 | 716673 RobotTrader
RobotTrader's picture

I still don't have a short signal yet.

20-day EMA has been holding for weeks on end.

Most guys are going to be buying dips until the trend changes.

Wed, 11/10/2010 - 12:56 | 716703 Ned Zeppelin
Ned Zeppelin's picture

"The backlash from international observers was quite expected as a lot of emerging countries are being choked by inflation as USD liquidity flood their markets."

 

Explain the mechanism whereby all this USD liquidity has washed up offshore. I think it has not.  IN fact, if I hear one more commentator expain that QE is a method whereby the Fed "injects money into the economy" I think I'll scream. Commodities are rising in USD terms due to perceptions of the USD declining in value in the face of QE.  I would submit that no QE dollars have reached anyone outside the insular group of protected banks, and that only 2 objectives can be obtained by QE, namely reduction in US interest rates and consequent chasing of risk assets to generate returns necessary to feed debt service. 

Wed, 11/10/2010 - 13:07 | 716755 Captain Kink
Captain Kink's picture

only 2 objectives can be obtained by QE, namely reduction in US interest rates and consequent chasing of risk assets to generate returns necessary to feed debt service.

they succeed in lowering rates iff the rest of the bond market buys into the ultimate success of the action.  Rates are as high as they were at the first mention of QE2, so the market has already priced in and is now more concerned about the consequences of dollar destruction and monetization of the debt.  Rates will not go down if the fed is the only buyer (and holder) of bonds. they will be down in the treasury purchases they make (will they mark to market?) and never put them back into the market.  the fed will be holding bonds on its ever expanding balance sheet until the last of the bonds matures.  if they are around that long.  the fed is now the "bad bank" and only its ability to print money will keep creditors from dumping--for now.

 

Wed, 11/10/2010 - 13:20 | 716796 Max Hunter
Max Hunter's picture

10 yr at 2.70   =  20 bps above QE2 announcement..

Wed, 11/10/2010 - 13:29 | 716826 Captain Kink
Captain Kink's picture

exactly! thank you.

Wed, 11/10/2010 - 14:21 | 717003 Ned Zeppelin
Ned Zeppelin's picture

And I would quickly add that the effectiveness of QE 2.0 in achieving its goals is in doubt.

Wed, 11/10/2010 - 15:42 | 717350 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Who else is going to buy the paper at that bid?  They're desperate.  Plain and simple.

Wed, 11/10/2010 - 13:06 | 716745 plocequ1
plocequ1's picture

Why would anyone short the market with all this bad news floating around? We need some good news. Nas in the green. And they're off!!

Wed, 11/10/2010 - 13:40 | 716868 Hook Line and S...
Hook Line and Sphincter's picture

As beaner-ville and Rogainecock erroneously state above, we are in an organic bull market. Try an organic bullchit market. 

In this swamp, there are quite a few posters lurking about who have never owned/managed/worked a company that produces anything. 

Observations made behind myopic beady eyes.

Stained glass self-perpetuators.

Chart chiggers. 

Disgusting.

When's the last time you drove around with your doors unlocked?

 

Wed, 11/10/2010 - 15:18 | 717246 RockyRacoon
RockyRacoon's picture

Chart chiggers... now there's a new one.

Wed, 11/10/2010 - 15:50 | 717377 Hook Line and S...
Hook Line and Sphincter's picture

Yeah, sometimes is just gets to me. I've started up and hired so many people in the past 20 years, I can't even start to remember their faces. And true, half my endeavors ended up in abject ruin for myself, but I got up and ridiculously did it again. There is a place for everybody, but there is a peculiar blindness evident by the entitled workers (who won't even try to start their own bus), the state workers (who have a repressed self-destructive hatred for job creators), and the investor/gaming class who expect to feed upon those who are either too stupid, arrogant, or balsy to stop filling the trough.

The cost/benefit ratio became a paltry ration this past year for me. My eyes are set on the future of greener pastures geographical and political. 

Wed, 11/10/2010 - 16:32 | 717525 dark pools of soros
dark pools of soros's picture

i planted some raspberries and ate them for about 2 months...  felt better than any recent job i had in decades...

Thu, 11/18/2010 - 03:37 | 737106 meichou
meichou's picture

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