Thursday, April 9, 2009

Have An Open Mind





CHECK OUT THE SIMILARITIES! History never repeats, it rhymes.


I want you take a close look at the four charts attached on this post. Let me preface that i was trading during the 2002 bear lows. I remember a very eerily similar sentiment happening among average joe investors during THE bottom of 2002. I recall that NO ONE believed that OCT 2002 was the ultimate lows, most average joe traders were still short convinced that the market WILL RETEST the lows and they will cover their bets at HUGE gains. But unfortunately for them, that 'retest' never came....not the kind of 'retest' they were looking for at least. 2002 bear market ended with a Double Bottom but this double bottom was awkward but a double bottom non the less. I am getting a gut feeling that 2009 March lows COULD have been the "retest" of the Novmber 2008 lows and might not be the 'retest' everyone is looking for. We might as well have started a new mini bull market within a secular bear market in equities. These rallies are very common place within secular bear markets and can produce at least 50% or more rallies off the bottom and can last for months or years before the primary trend reasserts itself. Are you skeptical? Then a trader with an open mind will say: "GREAT! Stocks in bull trends climb a wall of worry and the biggest strongest rallies are built with tons of skepticism."

8 comments:

Blue said...

How about this vix chart. Resistance becomes support:
http://www.screencast.com/users/erikdbrucker/folders/Jing/media/c8077c28-940a-4b03-ae98-4565e5fd2df9

Stewie said...

blue; not sure who drew that trendline but this trendline needs some more points to connect. i would use the 2001,2002, 2007 and 2008 peaks as my resistance points and run a line across these tops then you'd have a solid support line and that should take you to about 30 on the vix. which means much more rally to come if proven to be correct.

mr. squeeze said...

perhaps stewie...the charts make a good case for sure.

at the same time, many more than just the average joe are expressing skepticism this go around.

and remember this rally was inducing by not so thinly veiled short squeeze of the 4 fatties.

beware the smoke & mirrors.

this is a great site to unlock some serious opaque fundamental data:

www.zerohedge.com

with that said, as always, i'm feelin ya, especially the part with keeping an open mind. attachment to any perceived outcome is an invitation to the funeral of one's portfolio.

but i still got that sneaking suspicion that these babies are being propped so the average joe won't be fretting about their 401k's when they're filing their taxes this weekend, contemplating whether they should really continue giving their money to the MAN.

4/16-4/30 will be quite interesting & telling methinks.

have a wonderful weekend.

Stewie said...

good stuff mr.squeeze. I just have this gut feeling, that this rally will linger around longer than most people think. sure, we are gonna see steep corrections soon or along the way etc, but i think a trend of higher lows and higher highs is under way. just my intuition. i am sure this call/post will piss off many bears and some bulls might think that the timing of such a call/post is way too early BUT i just wanted to communicate what's on my mind and people can choose to listen or not. It's a free society, i think? ;-)

Blue said...

I really don't care which direction we go, as long as there is trade able action during the day. These gap ups followed by gap downs followed by gap ups are getting ridiculous, especially when the days action turns out to be low volume and sideways until the close. I have to be very careful with the close from now on as I've lost 14% (11% was one short I held over night) this year on two days trading the last 30min.

Maybe one day, we'll have a market again that isn't one giant trade dictated by the financials and our government. In the meantime I have to learn to trade the weekly range smarter.

squeeze ali said...

i share the gut stew that the next dive will be a dip not deep to set up the zimbabwe express.

while the okiedokes play rope-a-dope

growl like a bear
but fly away like a butterfly

ride with the bull
but sting him like a bee

art of trading rule #23?

Stewie said...

Blue: i felt the same as you all week, finding good movers was a challenge all week if you were in ONH and got favorable gaps in your direction but that was a crap shoot this week. I kept getting finding good movers, ride out for a profit, move my stop to breakeven and then get stopped out.
Until, i found PRU setting up in the last 30 min. of trading on thursday: saw the setup as it broke out from it's daily chart base, spotted the potential squeeze, and got long and rode it out for a $1.2 gain. That's was the only decent mover i had all week and helped me close out the week with a profit. But i hear you, it was a rather emotional week with tons of huge gaps in the mornings and drifting the rest of the day until the close where fireworks are on display....hahahaha!

Blue said...

I went long on Wed 5000 TSO, 5000 PCX and 1000 SPWRB. When I finally got my internet back Thurs night at 9pm I saw that I was up 9.2k. I expect that to get halved come Monday morning. Since I do not have a profit cushion to hold over night I'm doing a few simulated trades to test out my ideas. If that was real money I'd have my entire TNA loss back, but would have been shitting my pants on Thurs. with no internet due to the fiber optic lines that were cut in the bay area.

Holding over night is a total gamble anyways. This is not a healthy stock market, this is not a bull market, this is not the time and place for me to hold shares and sleep peacefully.

One day BAC announces early and the market goes up 25 points before the opening bell. The next day Wallmart says they're hurting the 22nd bank goes belly up and the entire move gets dumped before the opening bell.

It's too bi-polar to hold anything without taking a huge huge gamble. I rather go in big just after the open, try to catch a gap fade and get out. Tight stops, either catch it or don't. The window of opportunity for our style of trading has been pretty small. Bouncing off the prior day high/low and the day's open have been about the only repeatable setup I've seen lately. Just keep trying when the price action is there. No action no trades.

I'm interviewing for a part time job next week.

Blog Archive