WHO ARE THESE PEOPLE?
I was really concerned yesterday so I turned on the news and fortunately there was an "expert" there to explain what happened in the stock market Thursday. I really had no idea. He went on to explain that due to concerns about our debt and the international sovreign debt crisis people were selling their stocks.
GOOD GOD ALMIGHTY
What a moron. You mean to tell me that just yesterday, not the day before, the week before, the month before, not any other day. Collectively millions of people across the world on one day all decided in unison to sell because of a big picture view that the debt problems were getting out of hand. Unbelievable. He might be an expert in something, but it is not the financial markets. Fox news also has a certain commentator they bring in for explanations on things like this, and it is always some partisan political explanation. I am fairly sure that person does not trade at all and have no idea what the credentials are for expert status with this person.
Of course readers of this blog knew the trend had turned down a few weeks ago as I repeatedly stated, so were prepared for downside action. I did not think we would see a wipeout yesterday due to how oversold we are here, but I did say not to try and pick a short term bottom. I said to wait for a bounce to get short. The bounce has not happened yet and who knows where it will come from. I think the further down we go the more violent this move is likely to be. Maybe we bounce today, maybe next week, but we are going to bounce.
As to the explanation of what caused this?
We are in a downtrend, HELLOOOOOOOOOO. The large moves happen in the direction of the trend. If you try to engage in the exercise of theory as to why a move happens on a particular day you will chase your tail forever. Nobody knows and will ever know that. Some pinhead on a news channel sure as hell is not going to be the guy to give you clarity. Arghh that still irks me. They should at the very least get a top hedge fund manager on who actually trades and ask him, not some suit who is getting a pedicure while the markets are open. We are going to get a bounce, and we will have to see as it progresses where the best place to get short is. I do have a concern that because of how oversold we are that the bounce could be very sharp and make the entry tricky, but that is not based on anything other than a random opinion which is worth nothing.
I think there is no doubt the debt issues are a concern, but they have been there since 2007, nothing at all has been done to address them at all. The only thing that happened is the Fed injected untold amounts of money to drive rates down in an attempt to raise asset prices. They accomplished that and nothing else, but never have addressed the real problem. As I have said over and over and over, what they have done will make the next move down worse than the last one because they have created a larger bubble than what we had before by just extending it forward. This type of really sharp move is what happens when artificial market manipulations are done, it always happens. It just becomes a matter of time, and fortunately due to the suit on the local news station yesterday, that moment must have been mid day yesterday.
I reiterate that I think it is not advisable to try and pick a bottom here, we could fall 5000 Dow points. I am not predicting that and seriously doubt it could be that bad, but we do not know. The markets have never been manipulated to this degree at any time in history so all bets are off. Had that manipulation not happened we would likely be several thousand Dow points lower at this point in time. We do know that statistically reversion happen from extremes, so we should get one any day now to begin. However, keep in mind rallies are sells not buys.
I mentioned the Coffee market the other day, and that market has a wild bar going today so far. If you were inclined to look at the long side there, numerous things would have triggerred long entries today so far. Maybe this will fall victim to overall market weakness as well, but you cannot trade with those types of thoughts in mind. That is random emotion not sound market logic. If setups for trades are there you need to take them and see what happens. When they don't work, that is where stops come in handy.
Here is the Lean Hog chart again. I just have not been able to find my way into this short yet. I keep looking at it and just don't see an obvious entry yet so I am biding my time. Ironically even this market seems to move down when the big equity drops occur and bouces on intraday rallies. Maybe next week things will clear up here, or maybe it just falls without me. There are some things I use that would even indicate a long entry if yesterday's high were to get taken out, so it is just not clear to me yet. This market is setup very well to decline based on cycles, seasonals, and COT data, so I am holding out for a short entry pattern.