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The question now: where does the latest batch of good "bailout" news come from?
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The long duration of the topping process leads me to believe that this is a valuation bubble of historic proportions, soon to be followed by the biggest rolling crash in the history of markets. And yeah, that includes tulip bulbs.
A long topping process relative to what?
It is a rather long distribution process due to many bullish ANONs buying at the top as insiders and pros sell to them. The process is relative to a spiking top or an "up wave" of lower order. If you expand the time frame out far enough, this will appear to be a spike as well, but on a 60 minute chart it appears to be one big rolling top.
Thanks for the explanation. I still don't understand why this charting pattern means the mother of all corrections is imminent. I'm bearish mind you and playing a bit of devil's advocate here. But this is an example of my problem with technical analysis. It's great for looking backwards but useless for predicting the future. We have no idea what lurks around the corner. Many technicians look at chart patterns and assume that they portend certain givens. For individual stock names there may be some validity to chart patters, but once you make macro calls on technical analysis, I think it becomes hocus pocus.
Have you tried actually verifying your claim that technical analysis is useless using backtesting?
There's a (relatively) easy way to find out if it works or not: pick up a copy of TradeStation, write algorithms, and see if they get you better than 50% predictive accuracy.
Obviously, nothing will give you 100% predictive accuracy, especially where longer time frames are involved.
However, until you have actually encoded a lot of different technical patterns and other indicators in many different ways, I think it would be foolish to state that none of them work at all.
Think of it this way:
Can you build algorithms that can tell you with a high (greater than 60-70%) degree of accuracy what will not happen in the near future?
I would argue that you absolutely can, and if you can determine what will not happen (with a certain probability), that will allow you to constrain the set of possible outcomes of what will happen.
Okay, fair enough. I appreciate the feedback, but remain skeptical.
I have no idea how to write algorithms and am not familiar with TradeStation, so I don't think that will be of much use to me.
I probably shouldn't have been so cavalier about dismissing technical analysis -- it certainly has its uses.
That said, do you agree with the above post that a long duration topping process means the mother of all corrections is imminent?
I don't disagree that the S&P seems to be stalling at these levels and can't break through this resistance.
It's one thing to observe these patterns taking place. It's another thing entirely to read into this data and say that it portends a certain outcome. This is a significant logical leap and one that I have difficulty reconciling. This seems to be the basis of technical analysis, recognizing patterns and assuming that these patterns will be duplicated. Sure it can happen, but as we all know, the markets are unpredictable. Anyone who says they know with certainty what is going to happen next isn't credible in my book.
Ahh, I love when there are still some people who live in reality and not make-believe everything is gonna crash tomorrow world.
Most people here don't trade at all, they are just here to scream that market is rigged, it will crash in 2 days. yada yada. It doesn't make any sense, I don't understand why something happened, thus I can't trade it.
And rounds of momo bashing whenever there's a move.
I can't tell if you are serious. You should google "data mining" if you are.
There are an infinite number of events that will likely not happen in the future (eg sun rising in the West, Jesus's second coming, unicorns farting out rainbows) - to go through all of them and to try to determine what might happen tomorrow by the process of elimination would literally take forever (literally).
Good luck with your hocus pocus.
Every so often, insiders get a stock injection... many just sell them.
You and me both.
I agree, but we've been talking about it for the last several weeks now. The EURUSD if falling but the SPX is holding up, which suggests decoupling and is not validating the usd-carry trade. What gives?
That is why john_connor was talking about a "long" topping process. Major tops can take a while & this certainly seems like one. Not a pro, but I'm pretty sure the "long" tops build up so much pressure that they turn fast & hard. Find out as the month & year close out. Still looking to Christmas as the next big event, much like Thanksgiving.
I agree, but we've been talking about this for several weeks (months?) now. The EURSD is falling and the SPX is holding up, suggesting a decoupling and "violating" the carry trade rule. What gives?
patience grasshopper.
read some history on markets, look at lots of charts, learn the process of accumulation and distribution, etcetera ad infinitum.
it takes time for bear market rallies to correct themselves, particularly when the overwhelming powers that be are fighting it all the way.
That is the key.
Bear market rallys are synthetic market Kabuki theater, completely stylized, and remain inflated to suit the needs of the playerz including sovereigns for as long as they can pull it off. This in the hope that a miracle happens in the meantime or some other Joe takes a bullet. There is a tremendous amount of effort and focused churn to keep the froth going and everyone is waiting for that other guy to tire. As soon as anyone stops treading water the foam deflates a little, and then everyone jumps out at (what just became) the top. Reality asserts itself, everyone goes "deary dear" and "whodathunkit" and then Bob's yer Uncle.
Clif notes for the coming apocalypse.
cougar
Well said - I load up a bit more on my shorts with every new top now. Be brave bears, be brave!
When I read the headline yesterday, "Stock futures up on Dubai news.", I thought to myself - didn't I read the same goddammed headline two weeks ago?
Next week, WSJ will run a story, "Did we mention that Dubai is going to be fine?" ... and the friggen market will go up again.
News are irellevant to trading. When I stopped reading news, my trading got far more consistent and 2-3 times more profitable.
I like this guy's (http://livewithoscar.com/) aproach "Fundamentals come out in charts first."
That guy might be the best trader in the universe, but i swear he's also the same guy who sells his "winners" each weekend during football season.
I see the DXY setting up a large upswing as its about to dip
south seas bubble...panic of 1873.....1929 depression
1970's recession
2000 tech bubble
2007 real estate
2009 phony market rally ends real badly in 2010
I'm not sure it's priced in so much as it is already dwarfed by what is coming in behind it. Like when a wave rolling up on the beach gets your pants wet and that sucks, but you don't notice because there is a 40 foot roller now blocking out the sun and when it lands it's going to pound you into a crab cake.
Or something.
cougar
Or something is probably right. The US$ move will take time to price in. When it hits either $78 or $80, the rest of the markets will probably "snap" into place & play catch up. That would be the Carry Trade ending & giving up the ghost...sending every other market on the planet spiraling one way or the other.
Assuming there is a USD Carry trade... don't be so presumptious.
Everything priced in all time, market love you long time.
BKK t-shirt say you can't be the first but you can be next
All your market tops are belong to us. Make your time....
ES has rolled to march ... turn ur turdburgs from Z09 to H10.