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     hilarius
Member
Username: hilarius
Post Number: 2681
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Saturday, August 18, 2007 - 02:17 pm: | 
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HC
The Fear Index was established at the start of the slide and has not been changed (apart from the addition of a slightly less fearful case as an alternative scenario but still at the moment showing decline until October)
The market has been attracted to the Fear Forecast and has ignored the Fundamentals index
My own sentiment is irrelevant ... it was an attempt to measure how long and how deep the fear MIGHT go
It shows an initial disconnection between fear and fundamentals, with fundamentals starting to be affected as the fear deepens towards year end IF it lasts that long or longer
I have no idea what will happen in real life ... there could be a bounce tomorrow resulting from the US Fed throwing petrol on the flames (unlike the RBA)
As to what I do personally ... I look at index trading and the trends frequently don't last more than 30 minutes
It is immaterial to me whether I am short or long provided I have the direction right preferably for 30 minutes to an hour which is about as long as the mini intra day trends seem to last even on highly volatile days
You are lucky to get a 90 minute trend that stays intact on a 2 minute chart
It is immaterial to me whether the market turns up in a day, a week, a month, or a year or two or three
My point is that you have not been alone in assessing the implications of ongoing bearish sentiment
However, I make no assertions of likely fact beyond the next 2 minutes of real time trading
I have no clue how long the market will follow the Fear Index or return to the Fundamentals Index (currently higher)
All I know is that the longer and deeper the fear the greater the chance of fundamentals generally being damaged
With Best Wishes
Hilarius
PS 2 questions for you ... at what point does fear exceed that which is justified ... and does it really matter anyway? I suggest to you that the market will turn when it becomes APPARENT TO MAJOR KEY PLAYERS and their followers that fear has reached wholly unjustified depths of irrationality. The problem is many market participants can't measure what has become absurd optimism or absurd pessimism. The trader doesn't really care either way, unless caught on the wrong side of a mini-trend, and he or she should then be nimble enough to exit and re-enter on the right side.
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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holycow
Member
Username: holycow
Post Number: 3023
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Saturday, August 18, 2007 - 03:29 pm: |
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H,
I reckon if I continue on with my disagreement with your message, we will have another round of never ending discussion. There's quite a big gulf between your view and mine. Take this, for eg - the longer and deeper the fear the greater the chance of fundamentals generally being damaged - personally, I don't agree with this statement totally completely and absolutely. (However, I can fully understand this statement if I am an investor who is fully invested)
The longer and deeper the fear, the greater the chance of market excesses, exuberance and irrationality be removed; the better and greater will the stock/market fundamentals (and value!) be achieved.
Donning an investor hat and being selfish with cash on the sideline and not exposed greatly, I am hoping, expecting and wanting the current carnage to continue and continue (until the bear comes home and the cow goes for a holiday!). That is, if I am a true investor and a Warren Buffett wannabe!
Cheers.
ps: your 2 questions, hope my response makes sense, as I am reading your message from an opposite angle...
The responses are the questions that popped up in my mind while reading your message.
"justified", "unjustified", (who decide what is justified or unjustified?)
"APPARENT",(measures by who and with what?)
"MAJOR KEY PLAYERS", (who are they? local instos, hedgies, overseas hedgies, individual big players?)
"followers", (who again? you?, the bulls? the bears? traders? investors?)
"fear has reached wholly unjustified depths of irrationality", (measurement, measurement, measurement... and perspective too)
"absurd optimism or absurd pessimism", (good observation, stay away from the herd)
"nimble", (trading talk... how come? Not investor anymore?)
"exit and re-enter on the right side" (...my holy grail, but find it very very very hard to attain)
I can understand where you are from, the bottom line is this - you are donning a bull jacket watching on, if you take that off and change over to a bear suit, you might just see and feel differently.
In any case, I hope you and I won't dig ourselves into a hole and get buried by our bias. The best market sentiment index is the XAO or XJO. Just follow them and act accordingly. Right now, the short term trend is still down. And according to the general market wisdom in IC - all long term trade starts from a short one. So, it naturally also implies all long term market corrections are equally likely to start with a short term plunge.
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HC
"... he ain't no chart addict, but a TA junkie"
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hilarius
Member
Username: hilarius
Post Number: 2682
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Saturday, August 18, 2007 - 04:59 pm: |
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HC
I am neither a bull nor a bear
I understand the bear case and the bull case clearly
The bear depends on deteriorating fundamentals and the bull on improving fundamentals
These generate justifiable sentiment
To each can be added totally unjustified sentiment above or below real value
Your reference to the stock index reminds me that it always contains two components ... (1) correct value and (2) excessive optimism or pessimism
There can be long periods when the second component departs signficantly from correct value
You only have to look back at the dot com boom to see unjustified optimism, escalating to excessive and unsustainable heights
On the above points I do not see any difference in our views
Regarding your questions :-
"justified", "unjustified", (who decide what is justified or unjustified?)
RESPONSE: Astute students of fundamental value
"APPARENT",(measures by who and with what?)
RESPONSE: The predominant market force (buyers or sellers)
"MAJOR KEY PLAYERS", (who are they? local instos, hedgies, overseas hedgies, individual big players?)
RESPONSE: See previous reply
"followers", (who again? you?, the bulls? the bears? traders? investors?)
RESPONSE: See previous reply
"fear has reached wholly unjustified depths of irrationality", (measurement, measurement, measurement... and perspective too)
RESPONSE: As measured by those with market buying or selling power who are able and willing to act
"absurd optimism or absurd pessimism", (good observation, stay away from the herd)
"nimble", (trading talk... how come? Not investor anymore?)
RESPONSE: In a rising trend half my purchases are for the long term and half are for short term trading
At present I have only 2 short term trading positions BHP at 31.30 and CTN at 1.95; these could turn into long term holding if trading stops are not triggered
"exit and re-enter on the right side" (...my holy grail, but find it very very very hard to attain)
RESPONSE: A 2 minute chart and tight stops seem to focus the mind, with occasional reference to 5 min, 10 min and daily charts
In summary I see no differences in our views
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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holycow
Member
Username: holycow
Post Number: 3024
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 01:06 am: |
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...this is what bears do when the market opens later 
HC
"... he ain't no chart addict, but a TA junkie"
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hilarius
Member
Username: hilarius
Post Number: 2696
Registered: 04-2004
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 01:18 am: |
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HC
Will the bears have another plunge up their sleeve?
Are you predicting LHs and LLs ???
Or an early fight back by the bulls with HHs abd HLs ???
Hilarius
I come in peace to share my thoughts and to shine my candle light on possible long term opportunities
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holycow
Member
Username: holycow
Post Number: 3025
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 01:37 am: |
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H,
Yes, I reckon the market will open green, how green and how much ground it can hold by EOD is a different question.
In my view, the local market needs the lead from its US cousins. Any local rally can easily dissipate away if the US markets don't play ball. It's better to wait and see how they will fare later tonight.
As long as the sub-prime and its related problems are not resolved, the market is not in a hurry to go anywhere just yet.
...it's getting late, time for bed.
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
Member
Username: holycow
Post Number: 3032
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 07:48 pm: |
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Snap shot of Asia/Pac Markets
1) Moi am truly surprised (and curious) by the muted reaction to the great market performance, why? why? why? Why so glum?
2) take a look at the asia/pac market snapshot, I am quite willing to bet the US markets will play ball tonight...
HC
"... he ain't no chart addict, but a TA junkie"
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msparks
Member
Username: msparks
Post Number: 1058
Registered: 10-2004
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 11:04 pm: |
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HC
What are you holding or are you short those stocks you mentioned before ?
How about some HC chart magic.
Are you really that big a bear that you sit out and miss the first 1/8 gains ?
PS the rules thread is great HC,but what do the rules say about being the biggest bear in a bull market ?
I speculated on these last thursday, should i have sold today or hang on for more , i think i am too greedy , i should have taken my profits at the close today because if the US goes up tonight i will be confirming the mistake perhaps , wodayareckonhc
What do the candles say ?
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sway
Member
Username: sway
Post Number: 40
Registered: 12-2005
Rating: N/A
Votes: 0
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| | Monday, August 20, 2007 - 11:07 pm: |
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HC
Since no-one else has responded yet I'll have my 2c worth. I am glad to see the bounce today but I also have a healthy skepticism as to the chances of it being sustained. I offloaded about 2/3 of my holdings between 27th July and 7th Aug (already with some painful losses) and held on to the rest (BHP, IVC, LGL, OXR, PNA and ZFX - I know -too much gold in there!) through the horrors of last week. I must say that on Thursday I just decided to turn away and do something else....
After today's bounce I am doing nothing apart from updating my lists of potential buys, so that I'm ready to go when I'm sure that it's safe to go back in. If that takes a couple of months, so be it.
Cheers
Geoff
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holycow
Member
Username: holycow
Post Number: 3033
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Tuesday, August 21, 2007 - 12:35 am: |
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Geoff,
Yes, I agree with your skepticism. In fact, privately I would be much happier to see the 4.5% bounce spreading out in 3 days than one! It comes across to be some kind of "revenge" buying - people buying without too much thinking, seem to be driven more by impulse than careful planning. In any case, we will soon find out in the next few days if it has legs.
I have posted quite a few rules in another thread, you may want to go through some of them and see if they apply in your case.
Cheers.
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
Member
Username: holycow
Post Number: 3034
Registered: 08-2004
Rating: N/A
Votes: 0
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| | Tuesday, August 21, 2007 - 08:53 am: |
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MS,
The basic difference between you and I probably lies in this rule:
Rule #4: Focus on the process
Focusing on the process of trading instead of making profits may sound like a contradiction, but traders say this is vital because losses are an inevitable part of trading. those who focus only on making money are likely to lose because they can't cope with inevitable downturns in their investments. You will not be able to accurately predict market direction every single time. There is no such thing as a perfect system. Remember Rule #2 and Rule #3.
So far, prior to this correction, had I convinced you of buying or selling any stock yet? How's your BOL doing? Still holding on?
"There's nothing worse than someone who doesn't know who his friends or enemies are...", this is something I always caution my younger friends.
So, MS, have you found out who's your friend and who's your enemy yet?
HC
"... he ain't no chart addict, but a TA junkie"
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sway
Member
Username: sway
Post Number: 41
Registered: 12-2005
Rating: N/A
Votes: 0
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| | Tuesday, August 21, 2007 - 10:08 am: |
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HC
Yes I would like to see a few days of small movements before I feel more confident. I monitor volatility using the ATR (14d Wilder). I calculate it as a percentage rather than look at the raw number. At the moment, the XJO ATR% is about 2.2%, compared with other corrections when the peaks were:
Sep 01 1.7% (post WTC attack)
Mar 03 1.3% (start of current bull run)
May 05 0.9%
Oct 05 1.0%
Jun 06 1.4%
Today 2.2%
When I see the volatility drop back to about 1% I'll be happier to go back trend following. In the meantime, it's tempting to play short term but the risks are probably more than I can stand after making some losses in the last month.
Thanks also for the "Rules". I have them printed out and at my side as we speak.
Geoff
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msparks
Member
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