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Wednesday, April 8, 2009

Bear Market Rally: Rate of Change is Decaying

The rate of change of the rally is decaying. This rally is slowly running out of steam. A bounce early in the morning off support around 815 will alleviate some of the extremely short term oversold indicators. Expect resistance around the 830 area to kill the bounce. Everything changes above 845...

31 comments:

John Pingel said...

$VIX continues lower. Does that add a little fuel to make rally steam? Also 50 day and 100 day SMA providing support to many equities now. A little more fuel. A little coiling to get above 833 and then maybe take out 848? Who knows?

Anonymous said...

Are you sure that it is not the rate of decay which is changing?

Jonathan B. said...

It's maybe going to go down when it hits 830, or if it hits 845 it's going up. So, and let me get this straight, either it's going to go down, or it's going to go up? Thank god for your wisdom, Ben.

For the record, it's not that I expect you to know the direction of the market, but to have the humility and intelligence to just say "I have no fucking clue" (because clearly, at this point you don't) would be refreshing.

Anonymous said...

S&P 850

Everything has changed.

LOL

Sorry, bears.

Anonymous said...

So when do we decide that the put/call ratio no longer works as a contrary indicator?

Anonymous said...

nothing works because that's the way they want it to work. Today is a perfect example with eur/usd dropping like a rock, but the indices skyrocket. Oil up over 2% when the dollar is up. Go figure. Why is gold only up 0.1%! WTF is that.

IT'S ALL MANIPULATED. BIG (INSIDER) MONEY KNOWS THE PLAN, THE MM'S INPLEMENT THE PLAN AND THE GOV SANCTIONS THE PLAN.

Its simply transfer of wealth. Its all contrived. No one (other than the insiders) has any idea of WTF is going on? Not one can prove whether a bank is solvent or insolvent. No explain the markets...except CNBS, which is all bullshit.

I'm sick of this crap. I wish others would too. But there is only greed and fear in this world, and they do a great job herding us like sheep.

Anonymous said...

Oops, silly bears get crushed yet again.

Anonymous said...

Im sick of it
time to organize

http://anewwayforward.org

Hulu said...

@Jonathan B.

Must be losing big time on your long gold. Else, why so much anger at Ben. This is just a blog not a crystal ball. You are here at your own will, I hope.

wunsacon said...

Jonathan B.,

No one has the power to forsee every twist and turn in the market. And Ben does not claim that he does. But, he does share what he's thinking, which way he's leaning, and why. No more. No less.

Even if you don't like it, is there a reason to insult?

wunsacon said...

>> You are here at your own will, I hope.

LOL!

Jonathan B. said...

@Hulu:

I bailed a gold a long time ago, at a marginal profit. Having said that, I have lost about 10% of my portfolio listening to the foolish permabears like Ben. While I take complete responsibility for that, it also occurs to me that if you're going to put yourself out to be some sort of guru, you should expect to have people call you on your bullshit. So I did.

My hope is Ben learns some humility so that he doesn't cause more people to lose money chasing what "should" happen on the market.

Technical analysis is a load of crap. It's like a religion, but with even less logic.

I find his writings on finance to be fascinating, but his technical analysis is utter bullshit. If he made money on the market to pay his way through school, it was because he, like a lot of other people, cut his teeth in a market where a monkey could make money and thought that made him smart.

Times like now separate the monkeys from the men, and there are very few men writing blogs.

Jonathan B. said...

@wunsacon,

calling ben names or making ad hominem attacks would be pointless insult, but i didn't do that. i was harsh and critical. there's a difference. maybe i was too harsh, but when you're talking about investing, there's really no place for "let's all play nice and not say mean things." most traders i've met call it like they see it. i'm sure ben is no different, and his attacks on those figures in the public eye he percieves as full of shit are withering. to a certain extent ben has put himself in the public eye by writing an advertising-supported blog. i have enough respect for ben otherwise that i wouldn't be surprised if he agreed with my criticism, and regrets writing "i think it's going to go down, unless it goes up," which is really a fair distillation of his post.

how about this: why don't you let the man defend himself? he's a big boy, and doesn't need a band of internet sycophants to come to his aid. my guess is ben can take as well as he gives.

eh said...

This reminds me of early 2008, when all the worst possible stocks -- e.g. homebuilders -- rallied like crazy, only to crash later. I had the feeling then that there was a concerted effort to crush shorts in these beaten down (for a reason) sectors, and I sort of have the same feeling now (impossible to prove of course), although clearly there's a lot of speculative money back in play as well.

I also have no idea where the market is going. Certainly fundamentals are horrible: Japanese exports down 50% y-o-y in February, enormous job losses and all-time highs on continuing claims, the US federal government nothing more than a Ponzi scheme, etc etc. And now the talking-up of the fabled second half recovery; if I had a hundred bucks for every time I've heard that I'd be rolling in it. Does anyone seriously believe all of that can possibly be reversed in such a short time? It's absurd.

But that's the market for you -- absurd at times. I feel the frustration too, as due to all the poor fundamentals I am reluctant to jump in too deep here, so I'm missing out on some nice gains. A couple of well-chosen (or so I thought) short positions have taken a hit, but like in 2008 I will hold on as I cannot believe this will last because what we are entering is a depression not a recession.

It's a dangerous market right now. If you're going to play it, keep that in mind.

Ben Bittrolff said...

@ Jonathan B

"It's maybe going to go down when it hits 830, or if it hits 845 it's going up. So, and let me get this straight, either it's going to go down, or it's going to go up? Thank god for your wisdom, Ben."

Markets can find themselves at inflection points where they are in no-mans land. A move to one side or the other of a range then results in follow thru. Hence my call if 830 then lower or if 845 then higher. Personally I was short and 845 therefore becomes my stop.

For the record, just over 50% of my trades are winners... which is more than enough to be profitable.

Ben Bittrolff said...

@ Jonathan B,

"I find his writings on finance to be fascinating, but his technical analysis is utter bullshit. If he made money on the market to pay his way through school, it was because he, like a lot of other people, cut his teeth in a market where a monkey could make money and thought that made him smart."

Hey little buddy, I've traded through the tech bubble and the bust. Through Gulf War one and two. Thru September 11th and thru other catastrophes. I've gone from fractions to decimals... and yes it does matter. I've traded with the uptick rule and without.

Ive made AND lost small fortunes.

How long have you been trading?

Ben Bittrolff said...

@ Jonathan B,

"how about this: why don't you let the man defend himself? he's a big boy, and doesn't need a band of internet sycophants to come to his aid. my guess is ben can take as well as he gives."

I was busy and fell behind on the comments (hence the lack of posts this week).

I'm working on something I'm calling NinjaCam. I'll be recording my trading screens and posting them. So comming soon...

Hulu said...

NinjaCam!!!

I hope my old, tired eyes are quick enough to follow those Ninja's trades :-)

Anonymous said...

There are several lessons to learn from Friday's debacle/fiasco:

1) Technical Analysis is worthless when the fundamentals -- real or imagined -- trump it.

2) Don't fight the tape.

3) Don't fight the FED.

4) Don't bet against America; you'll lose.

5) Bear-tards never learn!

Jake said...

if you're going to use the term "bear-tards" please use the correct day of the week... it was thursday you bull-tard

paddymc said...

Wow. This is a fantastic blog. Ben, hats off to you. This is the first blog I read every day. When I come to this site and do not see a new post, I am disappointed. Ben makes some ballsy and brilliant calls.

I rarely read the comments on this site because they usually are not very insightful or worthwhile. This is not always true. However, often they are just stupid. Like Jon B's comments. Jon, just chill the f*ck out. Ok? Ben has made some fantastic calls. More than likely, he is correctly observing the market. Right now, the market SHOULD be tanking. The fact that WFC comes out of nowhere and states that they somehow made a profit is complete bullsh*t. If anything, it shows how screwed up this market is. WFC is in bad shape and so is the industry, if it was not, it would not have needed all that bailout money. They are marking the assets to what they want. This is fantasy.

Granted, the fantasy is reality, at the moment. You have to go with the market and roll with the momentum and the manipulation. This market is so sick and twisted and unhealthy. Just look @ FAZ, 115 a month ago and now just under 11. That is so f'd up and in a huge way.

I think what Ben is talking about is largely correct and that the manipulation is very difficult to combat and anticipate. This market will likely keep on rising, despite the facts and common sense. The mouth breathing perma-bears will be very happy about this but the tide will turn and the market will fight off the manipulation and act like it wants to.

Ben, I am excited to hear about NinjaCam. Keep up the great work and try to find a way to poCst multiple times a day :) I am looking forward to hearing your take on the WFC numbers.

paddymc said...

Ben, I love your site. This is the first thing I read in the AM and, frankly, when I come here and there is not a new post I am disappointed.

It is so easy to call out people who write financial blogs. If you trade purely based on what a blogger says, I will be glad to take you money. Jon B, you need to chill the f*ck out. Are you seriously calling Ben out because he did not predict that WFC would pull this bulls**t maneuver and say they are making a profit? Seriously? If anything, this validates what Ben has been talking about. How much money was just spent bailing out these companies and now WFC announces earning of this magnitude? Give me a f*cking break! This market is so sick and twisted at the moment.

Ben is talking about what should happen and what will eventually happen, sooner or later. Looks like now, the market is going to get a nice big pump pump pump before is it popped yet again.

paddymc said...

Ben, I think my previous post was my first on your blog. Please keep up the great work. I am excited about NinjaCam. Please post more often. I am interested to hear your view on the WFC earning announcement.

Jonathan B. said...

@Ben: I started trading as a hobby in 1996, and then quit after the tech bubble burst and I went back to school. Started up again in early 2006 when I inherited some money, and that portfolio is up 90% since then, though it was about 120% at its peak last month, hence my frustration.

@paddymc: "I rarely read the comments on this site because they usually are not very insightful or worthwhile. This is not always true. However, often they are just stupid." You're not helping much with that little bit of genius prose.

Anyway, what the market should do is completely irrelevent. You don't get your money back if you whine about what the market should've done. Only losers bitch about the market not doing the right thing. I don't blame the market, I blame myself for getting suckered into listening to people so sure of what the market will do that it overrides my instincts to just stay the hell out of it right now. For the record, I'm 100% cash right now. If you don't like the game, take your toys and go home.

I think we all made a lot of money on the way down, when nobody believed how bad it was going to get. But who doesn't know the economy is bad, now? Once all the news is out, the market can do crazy things. It's just sour grapes to call it manipulation. I really wish I'd had the discipline to just stay out of the market once the word "financial crisis" became a household word, but I didn't and lost a fair amount of money learning that lesson.

I perhaps was a bit of a jerk to write what I did, but my feeling is that listening to the bear gurus at this point is a good way to get your ass handed to you. I think there's a good chance we haven't seen the bottom, but good luck not getting killed trying to time that.

Hulu said...

> but my feeling is that listening to the bear gurus at this point is a good way to get your ass handed to you. I think there's a good chance we haven't seen the bottom, but good luck not getting killed trying to time that.

Any more expert advices you would like to share with us on this blog or better yet...your blog?

Jonathan B. said...

Tell you what, Hulu. Come back here at the end of 2009, and tell me how you've done in the stock market, assuming you're going to stay invested. Urging caution in the middle of a well accepted recession is not bad advice, in my book. I'm no believer in the efficient market hypothesis, but there is some truth to the idea. Let me ask this of all the people whinging about the market not going down "like it should": Exactly who the hell do you think isn't aware of our financial problems at this point? Short term trading is essentially a zero sum game. You have to find a sucker to make money off of. At this point, who are the suckers? Meditate on that, and you may not like the answer.

Hulu said...

Investor I am not, swing trader I am. My simple rules:

1) Nothing is certain, only probability.
2) Be discipline in risks/money management.
3) Cut loses early.
4) If making money looks too easy, it is time to get out. Else, my ego will destroy my portfolio.
5) Always blame myself for any failure. Else, I will never learn from my mistakes.

My TurboTax said I made a little over 4K in 2008. Definitely nothing to brag about...just started trading in the summer of 2007.

Anonymous said...

Ben,

Now that everything has changed, is the S&P500 going to 1,000?

Jonathan B. said...

Fair enough, Hulu. As for my "expert advice," I will note that if you listened to me and went to cash as opposed to listening to Ben's constant calls for the imminent collapse of this "crap rally" you'd have done better for yourself. But I'm not an expert, and I know it, so the only thing I will say is this: when all the news is out, and liquidity is drying up, the market is going to be a cluster fuck. I'm not sure anybody can be considered an expert in these situations, which may be the best advice somebody could write in a blog or elsewhere.

If there is one rule the market follows, it's that making money consistently is hard, because the people you're taking it from eventually go bankrupt or go home. It was one thing making money as the market went down and people were in denial. But that's past. Going forward, it's going to be tough. Wild swings that whipsaw you out of whatever side you take. It's no place for somebody like me or you, because it's no place for the professionals. The quants are getting their asses handed to them.

You think you can beat the assholes at Goldman at this game? Good luck. I've been getting my ass royally kicked trying to trade in an illiquid traders market, and I wish I had the good sense to give up earlier. But I eventually got the message. Based on the dearth of posts here, I'm wondering if Ben didn't get it, too.

Here is a post I wrote a couple months ago on why it may be tough to make money in the market going forward:

http://scripts.mit.edu/~birge/blog/investment-gains-are-becoming-harder-to-find

I wish I'd taken my own advice better...

Jonathan B. said...

Hulu: How have you been doing in the market? You never gave us an update. And for that matter, where is Ben? We're a long way from the 800s...

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