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starbucks4ever (97.43)

The market will do what it takes to cause greatest pain for the greatest number of players.

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October 02, 2009 – Comments (8)

That's a truism, but it's still worth remembering. And in my opinion, what is likely to cause the greatest pain in this particular setup is NOT another drop to 666 and NOT a parabolic rise to 1500, but a great shakeout of the longs' positions FOLLOWED by that parabolic rise to 1500. What can be more painful than to hold the right stocks, only to sell them at a loss and see them skyrocket? 

We are going to have a correction that will LOOK like it's going all the way back to 666. Most people wouldn't believe it just one the basis of fundamental analysis, but this correction will do a good job of convincing you that it is the real thing. All the TA indicators will tell you to sell and wait for that 666 bottom. And then somewhere in the 850-900 area, GS will pick the debris and pump this market all the way to 1500. As for that 666 bottom, it won't happen because everybody will be expecting it.

8 Comments – Post Your Own

#1) On October 02, 2009 at 1:41 PM, russiangambit (29.12) wrote:

Intresting, but just one of possibilities. I think anything can happen for about next 6 months, depending on availability of liquidity. In 6 months, if there is still no recovery, another crash is inevitable. If there is a recovey, sure we can proceed to 1200 - 1500, since the bubble physhe will remain intact.

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#2) On October 02, 2009 at 2:08 PM, davejh23 (< 20) wrote:

With bullish sentiment high, I think many that had been holding out jumped back in late in the game and kept the upward trend going an extra few weeks.  I think we could also see a decline to 850-900 and the market leveling out, causing many to believe that's all their going to get, and then many more going 100% long.  Then, a crash towards March lows...these same people then sell as bearish sentiment peaks, and only buy back in after a 20% rise. 

For example, investors that sat out the rally waiting for a big correction go 100% long around 900, the market has a few up days and then rapidly falls to 650 and they sell.  They then buy back in around 780 and the market levels out below recent highs and starts to rise very gradually.

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#3) On October 02, 2009 at 3:32 PM, leohaas (31.85) wrote:

Nonsense! It presumes that "the market" is some kind of sadist. The market does not "do" anything, does not have any feelings (good or bad), desires, or any other attributes that are so typical of humans.

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#4) On October 02, 2009 at 3:44 PM, vriguy (68.37) wrote:

Leohaas is right.  No one, not even GS, really knows what will happen the next 6 months, so those of us who choose to play the game must tolerate whatever the market throws our way. It is likely to be a rough ride. Smart people who cannot tolerate that - seek shelter now. 

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#5) On October 02, 2009 at 3:45 PM, starbucks4ever (97.43) wrote:

The "market" is run by people (and we even know some of these people), and as such, it is subject to the same feelings, desires, and other attributes.

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#6) On October 02, 2009 at 3:50 PM, truthisntstupid (81.04) wrote:

Well - I have just one question, but it's more like a statement.  Why does anyone believe in TA?  I think it's B.S.  Let the market drop like a rock.  I won't care.  I will do the same thing then that I do now.  And any time I have extra money burning a hole in my pocket.  I will buy dividend-paying stocks in companies that have me convinced that their free cash flow is strong enough to weather a drop in business and still pay them.  The only difference is, when the market plummets, I automatically buy more shares with each dollar invested.  Many of you would think of this as averaging down your cost basis.  I think of it as averaging up my yield.  I don't buy to sell.  I buy to keep.  And I haven't been screwed at all. 

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#7) On October 02, 2009 at 4:11 PM, starbucks4ever (97.43) wrote:

truthisntstupid,

A very reasonable approach. As long as you don't abuse margin and don't buy too many Pets.com's you should do better than most active traders.

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#8) On October 02, 2009 at 6:49 PM, truthisntstupid (81.04) wrote:

No competition, care nothing about 'beating the market.'   I just like buying income.  The more I buy, the happier I seem to be.  Todd Wenning best described it in his article "Build A High Yield Portfolio."   Wonder why they don't run that article more often.  That's always been my approach.  I was mighty surprised to see an article describing it.  I'll tell you what...there was no better attitude to have through the last year or so than "Well!  I never planned on selling anything anyway...but MAN! WHAT A GREAT TIME TO BE BUYING!!"  Wish the durn thing would crash again, it sure was good for me.

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