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The end of the US stock market is nearing

  • #481
  • Dec 22, 2019 7:47am Dec 22, 2019 7:47am
Quoting Igrok
{quote} picking tops or bottoms requires some proven strategies and techniques... but even then it's not always possible to apply them under certain circumstance... usually the largest problem in such a case is a trader's inability to find a reliable stops level... and more often than not it's not even a trader's fault but the overall market situation that doesn't offer such an opportunity as entering a trade with definitive risk/reward ratio well calculated in advance...
I am not attempting to pick tops or bottoms (in the sense you are discussing I don’t think), just taking trades. Breakouts often fail, but a failure of a failed breakout is a breakout pullback. I just keep taking trades. Trading long this year has resulted, generally, for me, in the best follow through on intraday entries.
Small disciplines repeated with consistency lead to great achievements.
  • #482
  • Dec 22, 2019 8:09am Dec 22, 2019 8:09am
Quoting jmflukeiii
{quote} I am not attempting to pick tops or bottoms (in the sense you are discussing I don’t think), just taking trades. Breakouts often fail, but a failure of a failed breakout is a breakout pullback. I just keep taking trades. Trading long this year has resulted, generally, for me, in the best follow through on intraday entries.
that's not what I meant... you just entered shorts right ahead of a fully formed "flat surface" on the top what was making zero sense whatsoever at that particular time and under that particular circumstance...
  • #483
  • Dec 22, 2019 9:20pm Dec 22, 2019 9:20pm
Quoting Igrok
{quote} that's not what I meant... you just entered shorts right ahead of a fully formed "flat surface" on the top what was making zero sense whatsoever at that particular time and under that particular circumstance...
Igrok, no offense, but this whole thread makes no sense. A fund manager posting on forex factory about the impending end of civilization with 82% certainty? This is lunacy. I’ll keep my posts that are related to the rational world elsewhere.
Small disciplines repeated with consistency lead to great achievements.
  • #484
  • Edited 2:01am Dec 23, 2019 1:22am | Edited 2:01am
Quoting jmflukeiii
{quote} Igrok, no offense, but this whole thread makes no sense. A fund manager posting on forex factory about the impending end of civilization with 82% certainty? This is lunacy. I’ll keep my posts that are related to the rational world elsewhere.
certainly... such position of yours definitely makes more sense than the previous one...

though I disagree about "the end of civilization" because disappearance of some "market value" artificially created just over the previous 10 years doesn't look to me as such... that 82% of current "market capitalization" didn't even exist back then in 2009... it came out of nowhere and may very well go back into it without killing the entire human kind... in 20-th and 30-th the Dow had lost over 89% of its value within less than three years by dropping from September, 1929 highs of 386,1 to July, 1932 lows of 40,6... nonetheless, the world apparently still exists...
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  • #485
  • Dec 23, 2019 2:15am Dec 23, 2019 2:15am
Igrok,

is your DOW diamond still valid ? because we went above your ideal point of short, does it cancel the whole pattern ?
COT: The precious data ignored
  • #486
  • Dec 23, 2019 2:20am Dec 23, 2019 2:20am
some people are really dumb and not capable of thinking outside the box... that imaginary numbers that are supposed to represent the market may come and go... but they are unable to wipe out the real material values such as lands, crops, herds, orchards, buildings, factories, machinery, transportation, infrastructure, natural and human resources etc... industry, agriculture, infrastructure and such will stay no matter what even in case the Dow itself along with all the other market indices disappear without a trace... sure it's more than likely to cause a temporary turmoil of a great proportion but nonetheless it's not going to be the end of the world...
  • #487
  • Dec 23, 2019 2:29am Dec 23, 2019 2:29am
Quoting kuroro001
Igrok, is your DOW diamond still valid ? because we went above your ideal point of short, does it cancel the whole pattern ?
here is the chart picture with the broadening triangle in making... what do you yourself think of it?... is it still valid or not?... I tried to draw the upper line being symmetrical to the lower border against the horizontal line splitting the angle in halves but don't have a tool to measure it exactly...
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  • #488
  • Dec 23, 2019 2:38am Dec 23, 2019 2:38am
perhaps this one will illustrate the idea better....
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  • #489
  • Dec 23, 2019 2:51am Dec 23, 2019 2:51am
the ideal one would look like that... though I don't believe in ideal patterns... they are quite rare...
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  • #490
  • Dec 23, 2019 3:07am Dec 23, 2019 3:07am
I also remember that somewhere in my main thread https://www.forexfactory.com/showthread.php?t=21887 I posted a detailed explanation how I figured out the exact point to enter a short position on the usd/chf while the diamond was still in the making (see the second pic) ... I think same can be done here with the Dow...
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  • #491
  • Dec 23, 2019 3:15am Dec 23, 2019 3:15am
Quoting Igrok
{quote} here is the chart picture with the broadening triangle in making... what do you yourself think of it?... is it still valid or not?... I tried to draw the upper line being symmetrical to the lower border against the horizontal line splitting the angle in halves but don't have a tool to measure it exactly... {image}
I have no ideas about patterns, as they can be redrawn until they work.

They are just "imaginary" lines to me

But someday one of this lines will work i guess, when traders decide so, i don't know
COT: The precious data ignored
  • #492
  • Edited 4:36am Dec 23, 2019 3:29am | Edited 4:36am
Quoting kuroro001
{quote} I have no ideas about patterns, as they can be redrawn until they work. They are just "imaginary" lines to me But someday one of this lines will work i guess, when traders decide so, i don't know
the left borders of diamonds are always approximate for as long as a broadening triangle is still in developing stage... their main purpose is to outline the pattern vaguely thus keeping its general visual appearance valid till it comes into the second stage, which is forming the second adjoining triangle that is going to be a regular narrowing one... then the time will come to chose a level for entering a position in accordance with more or less definitive picture... it's pretty much like guessing the meaning of a whole sentence while not all of the words are spoken yet...
  • #493
  • Dec 23, 2019 8:52am Dec 23, 2019 8:52am
Interesting read:
Right out of the pages of the New York Times and look at the date...


September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to marginal black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison, a resident fellow at the American Enterprise Institute. '' If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary mark et. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
  • #494
  • Edited 7:20pm Dec 23, 2019 6:41pm | Edited 7:20pm
It is well-documented that from an investing perspective market-timing is ill-fated. With just a little research in US market history one will learn quickly that historially those who remained invested and endured down-turns in US markets have fared far better than those who have attempted to market-time potential future events whether they be anticipated downturns or upturns. In fact such research will clearly demonstrate that being out of the market and waiting for an anticipated event to occur is far more dangerous. Even as US markets are making nearly daily new highs those who have attempted to sell have been sorely disappointed while those who have continued a dollar-cost-average approach to investment have been richly rewarded.

From an investing perspective it is important to have a well-diversified portfolio that includes multiple markets so that when the inevitable "sell-off" occurs you're not caught with your pants down. That being said I think I'll review my portfolio and adjust for the impressive gains in the DOW, Nasdaq and S&P 500 since I've remained fully invested.
  • #495
  • Dec 23, 2019 6:55pm Dec 23, 2019 6:55pm
Quoting Winston Reed
It is well-documented that from an investing perspective market-timing is ill-fated.
ok sure, from an investing perspective. For those of us who trade US stock options though, there are many ways to trade them based on timing. Probably most common of these is trading around the quarterly earnings releases (ER). These are scheduled events that can be traded in various ways. For many stocks, most of the moves and much of the annual volume is traded around these events. Also, there is a very predictable rise in implied volatility up to the ER, and a crash in the same just afterwards. Very tradeable.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #496
  • Edited 7:30pm Dec 23, 2019 7:10pm | Edited 7:30pm
Quoting The Fool
{quote}ok sure, from an investing perspective. For those of us who trade US stock options though, there are many ways to trade them based on timing. Probably most common of these is trading around the quarterly earnings releases (ER). These are scheduled events that can be traded in various ways. For many stocks, most of the moves and much of the annual volume is traded around these events. Also, there is a very predictable rise in implied volatility up to the ER, and a crash in the same just afterwards. Very tradeable.
I’m well-aware of the trading aspect and I myself trade mostly futures. However trading represents a very small percentage of my investment strategy. Options sound very interesting and I would like to delve into that soon. My previous post comments are based on the thread starter’s comment in post 473 that his predictions are based on an investment strategy not a trading strategy. Historically it has been clearly shown that market-timing from an investment perspective is a losers game. Trading is a completely different animal and I would argue that if one is market-timing they are in fact trading. If one’s entire portfolio management strategy is based in trading they are definitely engaged in the highest risk other than what gambling would potentially provide. I view trading as just another strategy within an overall investment portfolio. In my case it represents less than 5% of my overall investment portfolio. Lest you think that is nothing keep in mind that someone of my age and over 30 years of investing is likely to have a sizable portfolio. Just for example, and this is only an example and is not representative of my portfolio, if one has a portfolio of say 2 million USD then a 5% trading account would be $100,000. I think I could safely say few traders at FF have a trading account of that size. Something to think about.
  • #497
  • Edited 7:17pm Dec 24, 2019 7:04pm | Edited 7:17pm
from my perspective the time of investors has gone... the time of speculators has come instead...

it's only partially true that historically the market was going in just one direction while making quite sizable corrections along its way from time to time... it took over 22 years, which is almost a generation life-long, for the market to recover after the 89.5% drop of the Dow that had happened in 1929 - 1932... WW2 had become a real savior for the US economy back then... by now it have already taken 30 years since NIKKEI traded at its historical top and still there is no sign of full recovery... same thing can happen to the US stocks as well starting from now... simply extrapolating today's fundamentals into the future doesn't look to me like a guaranteed winning strategy... quite the opposite...
  • #498
  • Dec 25, 2019 7:13am Dec 25, 2019 7:13am
Quoting Winston Reed
{quote} I’m well-aware of the trading aspect and I myself trade mostly futures. However trading represents a very small percentage of my investment strategy. Options sound very interesting and I would like to delve into that soon. My previous post comments are based on the thread starter’s comment in post 473 that his predictions are based on an investment strategy not a trading strategy. Historically it has been clearly shown that market-timing from an investment perspective is a losers game. Trading is a completely different animal and I would...
WR,

This is a little off topic from this thread, but I found this forum because I wanted to throw in a quip about the US economy, and why we aren't seeing the 2% inflation target...and your post got me thinking. Specifically about the low startup capital of many FF members here.

I have about 35K in savings... I'm in my early 30's. I'm taking about 8K of it and have heavily invested my mental resources to learning how to day trade currencies. I've dramatically changed my career path (engineer working in O&G for five years) towards personal finance (with only one client, me). Background: because of the ups and downs of the Canadian economy, high living costs, and not the greatest saving practices (first 2 years I paid off all my school debt, but after layoffs didn't adjust my lifestyle accordingly, effectively going through my savings) I don't have as much as i'd like to show for the past five years, nonetheless that's irrelevant in regards to this post.

Ironically, my main source of resource of extra income has dried up, but people have made more with less and this doesn't deter me from my goals. Not to be long winded, what i'm curious about, based off your comments, is how one with a small account best builds it. In the future I hope to add more, but by the time I get there, i'll effectively be able to do this with my day trading.

I've been reading a lot on debt/credit cycles and monetary policies, and am looking to invest, when the timing is right (when there's blood in the street so to speak.). I mean the proper term invest, i.e REITs, dividends, safer stock investments that we look to hold til we're old and shriveled.

My wife and I have no kids, and no debt, but are moving somewhere much cheaper to offset bills (i.e live easily for under 1K/month) and i'm devoting about 75% of my time towards day trading currencies which I then take half of my earnings out to re-invest is safer longer-term investments. We can effectively save 12K/year of extra income, from our jobs alone (excluding side gigs which are variable based), all the while working less then 10-15hrs/week.

Main goal by doing this is to free up more time to generate other incomes. She's getting into digital marketing/e-commerce. I'm focusing on trading. So far i'm seeing progress, but i'm fairly new to this and understand the steep learning curve.

My Question to You:

Thoughts and opinions on HOW to best capitalize time during this 'information/skill incubation period' and what investment vehicles one would recommend. Stressing on time, resources, best books/people to read up on.

I fully believe the S&P is over-inflated, as we can see with the QE that's happened in the past 10 years, coincidentally stocks have steadily climbed.... because of this. It's only a matter of time, unless current monetary policy dictates that QE is the norm...then we'll just print money til the cows come home. To me, Bernake wanted to avoid a repeat of 29' and now it seems that no FED wants to pull the plug on QE, nor do they want to see the house of cards tumble...

Thanks in advance. Sorry to deviate from main thread, but there seems to be good content/discussion in here.
  • #499
  • Dec 26, 2019 6:55pm Dec 26, 2019 6:55pm
Quoting Ra.
{quote} WR, This is a little off topic from this thread, but I found this forum because I wanted to throw in a quip about the US economy, and why we aren't seeing the 2% inflation target...and your post got me thinking. Specifically about the low startup capital of many FF members here. I have about 35K in savings... I'm in my early 30's. I'm taking about 8K of it and have heavily invested my mental resources to learning how to day trade currencies. I've dramatically changed my career path (engineer working in O&G for five years) towards personal...
Hello Ra.
I see your from Canada and I don't know the your country's laws regarding investing. Here in the US we can invest in tax advantaged plans that allow us to avoid taxes on retirement investments in a variety of ways. That aside I take a very simple approach to investing called dollar-cost-averaging (DCA) which is simply investing a fixed amount on a regular schedule. For me this involves having this amount taken out of every paycheck and directly deposited in my 401k. Having done this for the last 35 years and ignoring market fluctuations has allowed me to amass a generous nest-egg that will easily support me in my retirement years. My investments are quite diversified but about 60% or more are directed towards equity investments like the total stock market. I also have investments in REITs, US treasuries, foreign (non-US) equities and other. I don't let the minutia of economics, finance, interest rates, QE and the like affect my long term DCA approach to investing. I also don't try to time the market in any regard regardless of the hype about being over-bought or over-sold.

Regarding trading. Trading for me is not a profession but rather a hobby that I intensely enjoy. It is an insignificant part of my overall investment portfolio because I have a reasonable and realistic attitude about what trading can and cannot do for me. This means I understand for myself that trading as a means to achieve an income for daily living expenses and such is unrealistic and not a goal for myself. Those who believe they can do this are really kidding themselves and are aspiring to an extremely high risk style of achieving a regular and sustainable income. It would be better to acquire a formal degree such as an MBA and become certified as CTA or similar then learn to manage OPM and take commissions. I believe there are extremely few individuals who are living purely on the profits of trading their own money despite all the hype here in FF.
  • #500
  • Dec 26, 2019 11:36pm Dec 26, 2019 11:36pm
Quoting kuroro001
Igrok, is your DOW diamond still valid ? because we went above your ideal point of short, does it cancel the whole pattern ?
i was about to say.... my ratio analysis is still saying hold long on Dow and on S&P against Treasuries....
VIX futures in deep contango.... we are not selling off for the time being.
We live in a finite world with infinite possibilities.
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