Is the bear here?

william the wie

Gold Member
Nov 18, 2009
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All markets have declines and all bull markets run into a 10% or greater decline to eventually end them in a bear market. I thought I would ask what people expect and why to see if the contrarian indicator still works.
 
For it to be a bear market, I think the economy has to fade pretty badly.
Quite true but the lack of worry about a downturn scares me. Bull markets climb a wall of worry sucking in ever more optimists until no one is worried. Even gas prices are treated as an annoyance not a real market risk. That sounds toppy. Or hitting below the belt look at your own melt-up posts over the past year vs. your own actions. LEAP NDX calls and buying puts on the way up to lock in profits would have made you seriously rich if you had listened to yourself. But in the absence of a brag thread over making the Forbes list I must assume that was not the strategy you followed. That is the kind of wall of worry I understand but I don't understand this market at all.
 
We might get a good shake-out. In fact, I think it would be healthy to get a 10%-15% decline.

The end of QE2 at the end of June may be that catalyst. Or it may be this ME thing.
 
We might get a good shake-out. In fact, I think it would be healthy to get a 10%-15% decline.

The end of QE2 at the end of June may be that catalyst. Or it may be this ME thing.
But I sure wish I could see either more worry or more one way bet BS:

The only one way bet rants I have seen are in tax liens and gold bugs talking about the lack of pension fund exposure to precious metals. And given those two markets it sounds more like arbitrage of market inefficiencies than bubble talk.

But as to serious worry of the end of the world as we know it variety the only place I see it is in the Precious Metals and Real Estate markets. I don't see any of that in equities and very little in the bond market.
 
Uncle Ferd says its a rough ol' world out there...
:eusa_eh:
Stocks tumble on job report worries
May 5, 2011 -- A sell-off on Wall Street accelerated late Thursday as oil prices plunged and investors braced for the government's monthly jobs report. The Dow Jones industrial average (INDU) fell 140 points, or 1.1%, to 12,584. The S&P 500 (SPX) lost 12 points, or 0.9%, to 1,335. The Nasdaq (COMP) sank 13 points, or 0.5%, to 2,814.
The broad-based retreat was sparked by weakness in shares of energy companies as oil prices plunged 8%, falling below $100 a barrel. It was the largest one-day decline since April 2009. "The selling has been concentrated in the energy sector, and that pulled the entire market down," said Nick Kalivas, vice president of financial research at MF Global. But the retreat accelerated into a full-blown sell-off late in the day as investors turned cautious ahead of Friday's report from the Labor Department on hiring and unemployment. "People are not willing to take a stab on the long side ahead of the payrolls report," said Kalivas.

Friday's report is expected to show employers added 185,000 jobs in April, according to economists surveyed by CNNMoney. The unemployment rate is forecast to remain unchanged at 8.8%. The government reported Thursday that the number of Americans filing first-time claims for unemployment benefits rose sharply last week. Labor Department officials said the increase was due to seasonal anomalies, but jobless claims have been on the rise recently. Stocks ended in the red Wednesday, as disappointing reports on jobs and the service sector weighed on investors.

Currencies and commodities: The dollar rallied 2% against the euro after dovish comments from the president of the European Central Bank. The dollar gained 1.5% versus the Australian dollar and rose 0.7% on the pound. But it eased against the yen. The stronger dollar weighed on prices for commodities that are priced in the U.S. currency. Oil prices sank $9.44, or 8.6%, to $99.80 a barrel. Gold futures for June delivery fell $26.30, or 1.7%, to settle at $1,489 an ounce.

Silver futures for July delivery extended their retreat, sliding $2.58, or 6.7%, to $36.80 an ounce. Just a week ago, silver prices were within spitting distance of breaching $50 an ounce. Investors had been plowing money into commodities this year, based on expectations that the dollar would remain weak as interest rates rise in Europe but remain low in the United States. "That whole trade is looking pretty bad now," said Dan Greenhaus, market strategist at Miller Taback & Co. "Things are getting worse as the commodity selloff accelerates."

Companies:

See also:

'Flash crash' worries go global
May 6, 2011 -- On the one-year anniversary of the infamous 'flash crash' that sent the Dow industrials plunging nearly 1,000 points in less than 20 minutes, questions remain about how prepared markets around the world are to stop a similar event.
"The SEC has done a good job to create an infrastructure, but in other markets creating this type of infrastructure is not as easy," said Larry Tabb, CEO of the Tabb Group, which tracks the exchange industry. In the aftermath of the May 6 flash crash, the Securities and Exchange Commission established new rules -- including expanding the use of "circuit breakers" to include exchange traded funds and stocks. Circuit breakers halt trading when a stock or an index falls by a certain percentage in a short period of time.

As U.S. regulations were being shored up, volatility and volume on U.S. exchanges was drying up. And that was forcing high frequency traders to seek out other markets, largely in emerging economies. But that shift could be leaving those exchanges vulnerable to a 'flash crash' scenario. In the May 6 flash crash, all it took was one trader who accidentally tried to sell a massive amount of a security tied to the S&P 500 index. That led to a cascading amount of sell orders throughout the market.

High-frequency trading remains a high-growth source of revenue for stock markets in developing economies, and stock exchanges in countries such as Brazil, Russia and South Africa are increasingly marketing themselves as venues for that type of trading. Russia unveiled a new trading platform in February, while Brazil cut its fees for high-frequency trading late last year. And the Osaka Stock Exchange launched its own high-frequency and algorithmic trading platform in February. "The global trend is toward increasing algorithmic trading at all exchanges worldwide," said Roman Goryunov, CEO at Russia's RTS Stock Exchange.

MORE
 
...see if the contrarian indicator still works.

Ah yes contrarian trading, that's what we're hearing so much about these days because the pack sentiment is exactly where we don't want to go --hell eveyryone knows that by now.

Hmm, if everyone's a contrarian then I need to do the opposite and go with the crowd, and the crowd's all contrarians so that means I need to not go with the crowd but...

I need a Tylenol.
 
...as to serious worry of the end of the world as we know it variety the only place I see it is in the Precious Metals and Real Estate markets. I don't see any of that in equities and very little in the bond market.

We're seeing the same thing.

I don't trade bull/bear markets (time frames in several month) but rather rallies and corrections (a few weeks at a time). We've been in a correction for about a week and this morning's futures hint we may be starting a new rally today.
 
The market has been acting recently like it has been for the past year. We have these 3-5% pullbacks, the market stabilizes then moves higher. And every time it pulls back, angst stampedes into the market, traders buy puts and short, providing fuel to the next leg up.

I'm wondering if the contrarian trade is for stocks to move higher after QE2 ends. It's not like it is an unknown event. And I don't think the Street is positioned for a big move up.

But we are overbougt in the intermediate term.

Oh and the ECRI WLI are accelerating.
 
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For it to be a bear market, I think the economy has to fade pretty badly.

Given the events surrunding the PIG in Europe, and the immediate effects that spikes in the price of oil have on most people's personal economies, the ever present danger of foreign disasters in Asia, and the fact that the government appears to be doing nothing to really change the fundamental problems facing this national economy?

I think this economy (hell the world's economy) could (not necessarily will, but could) get knocked over with a feather.

ANIMAL SPIRITS, folks.

That's REALLY the operative phrase for market behavior of late.

The faith-based belief that the market is driven by an economically rational animal is proven wrong time after time.

Still some of us cling to that flawed economic theory.

Players in the market are rational economic players until they're NOT.

Sort of like a herd of cattle will graze peacefully on the pastureland, each steer maximizing their grazing efforts, until they're spooked.
 
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The market has been acting recently like it has been for the past year. We have these 3-5% pullbacks, the market stabilizes then moves higher. And every time it pulls back, angst stampedes into the market, traders buy puts and short, providing fuel to the next leg up.

I'm wondering if the contrarian trade is for stocks to move higher after QE2 ends. It's not like it is an unknown event. And I don't think the Street is positioned for a big move up.

But we are overbougt in the intermediate term.

Oh and the ECRI WLI are accelerating.
I am positioned for that move up but will only buy puts on the way up to lock in winnings.
 
FFS the market turned on the oil inventory numbers. That's what happens when 75% of the players are algo driven machines. The technicals turned against me and I was stopped out.
 
FFS the market turned on the oil inventory numbers. That's what happens when 75% of the players are algo driven machines. The technicals turned against me and I was stopped out.
need a translation on algo.
 
As in 1987 all over again only we don't know when? I was certain you meant computer trading but the trading systems I am aware of are actually heuristic. In fact every major economic crisis of the past 30 years has been at least partially the result of mistaking heuristics for algorithms. If there is any possibility of failure in execution then the programmed trade is heuristic. The archtypical algorithm is finding lowest common denominator: take the set of prime numbers and do divisions without remainders until you reach 1 then multiply each divisor once by the others. If you have anything less exact than that then it is a heuristic. That is simply a way of putting a "kick me" sign on your ass.
 

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