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Dow poised for a big drop?

Anything related to investing, including crypto

CommonCents

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Pro money is trying to get individual money in now to try and chase the market higher and cash out the pro money. Volume declining on this rally, I say we have a significant correction immediately.

The catalyst will be the treasury market driving up interest rates. If some geo-political or major financial event doesn't happen across the pond driving "flight to US Treasury quality" I see bonds falling this year. This combined w/ fundamental reasons of tax consequence selling motivation mentioned will provide strong downturn pressure.

Too many talking heads on TV are trying to talk this market up.
 

MJ DeMarco

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Screw it -- If you can't beat 'em, join 'em... I've been 100% back in stocks since yesterday's open! ;)

Cheers,

- Hakrjak

Great, that means Ill be selling first thing Monday morning. :smxB:
 

Jonleehacker

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Here's a wild audio recording from the trading pits of yesterday's market crash:

"Guys this is probably the craziest I have seen it down here ever." Here it is, memorialized for the generations and away from the now openly ridiculous disinformation propaganda of the mainstream media, just what a full market meltdown panic sounds like: straight from the epicenter, the S&P 500 pits. Luckily open ouctry still exists, if at least for shock value. Click here for a first hand account of the most shocking 15 minutes in recent market history. Fat finger my a$$.

http://www.zerohedge.com/sites/default/files/Market Crash.mp3
 
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Guest3722A

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Here's a wild audio recording from the trading pits of yesterday's market crash:



http://www.zerohedge.com/sites/default/files/Market Crash.mp3

First off, thanks again for this post. I've got traders in other forums saying this is the mp3 of the year. And for anyone who may be interested, that was the voice of Ben Lichtenstein from the S&P 500 future's pit.

Here's a brief biography for those with further interest:

Ben Lichtenstein
Ben Lichtenstein provides live market commentary in open outcry S&P 500 Futures from the floor of the CBOT.

Ben Lichtenstein is President of Tradersaudio.com, a member of the Chicago Mercantile Exchange and has worked on the trading floor in Chicago for over 15 years. Ben Lichtenstein has been a guest on many of the popular news shows including CNBC, Bloomberg TV, Bloomberg radio and has been published in numerous periodicals including Futures Magazine and Stocks and Commodities. Ben has gained the confidence of his clients and the respect of industry leaders as a pioneer in the Futures Industry with his back to basics genuine hard nosed attitude work ethic and unmatched commitment to reliability and consistency. He is dedicated to the development of audio products for traders because he’s seen how valuable and necessary audio is to traders. Ben Lichtenstein has committed himself to providing traders with the most unique data service available and devoted to the distribution of factual content so traders have the information they need to make an educated decision.

In the fall of 2000 after working his way up through the ranks from runner to becoming a CME member and trader, Ben realized traders trading computer e-products from locations off the floor were rapidly increasing in numbers and they were at a severe disadvantage due to the delay and one dimensional limitations of digital quote screens. The goal of Tradersaudio is to bridge the information gap by providing their clients with the information direct without delay from the trading floor, information that once was privy to floor traders only. The concept is simple, Ben has made it possible to see and hear things that are happening on the trading floor without actually having to be on the trading floor. Tradersaudio is your eyes and ears on the floor while you trade form the comfort of your own home or office. It’s like being in the pits without all the pushing and shoving.

For the last six years Ben has been focused on managing and operating his business and has successfully built the company into the mostly widely regarded leader of live audio from the trading floor. Tradersaudio.com is the industries leading provider of squawk box audio to traders around the world.
 
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Jonleehacker

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Here we go back up 5% today on the roller coaster.... I missed out on $2k of gains today by being in cash.... When is this pain gonna end? Son of a ..........

- Hakrjak

the market is only a roller-coaster if you are trading on emotion, which your statements clearly demonstrate that you are.

make a plan, validate it to make sure it has a real edge that can make you money, and then trade your plan.

If you react to every market gyration, you'll always be a day late.

Impose your ideas and concepts onto the market, not the other way around. If your concepts aren't strong enough, then spend time to understand the fundamentals of trading/investing. The market rewards clear thinking, not emotional reactions.
 

hakrjak

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Dow Jones Industrial Average Index Chart - Yahoo! Finance

The Dow is up huge in the past 12 months.... There is absolutely nothing to fundamentally support this climb.... Companies continue to lay off in droves.... Anti-market pressure continues to grow with the current federal government.... The same problems that caused this depression we're in still exist!

Does anyone else think it's time to roll-the-dice on a big drop in the Dow?

If you are predicting a drop, where are you investing your 401k/IRA money besides cash?

If you are loading up on PUTS -- what sectors and why?

Cheers,

- Hakrjak
 
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andviv

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401(K) up to ~75% in cash right now. Yup, passing on a lot of opportunities these days... but I have no control.

The other ~25% is in commodities.
 

GlobalWealth

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The big unknown here is the huge amount of money flowing into the markets from stimulus funds. While the fundamentals are not good, the stock market may be the best of the bad options right now. Personally, I am heavy in stocks and keeping tight trailing stops.
 

Jonleehacker

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Personally I've been doing a lot better with my trading since I stopped speculating on what I think is going to happen, and began focusing on what I see is actually happening.

If I go by what I think is happening/is going to happen, I'd agree with you, that the markets are headed for a big drop.

However what I see happening is a massive bull run where the Dow is up 40% in a year.

So I'm riding the trend until the market makes a clear signal that things are changing (it's for each individual to determine a signal that makes sense to them).

Using tight stops and good money management my personal risk of a "big drop" is minimized and within acceptable parameters.

The money is in trading what you see rather than what you think or predict... it's way easier to trade the present than it is to predict the future. ;)
 
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mcirl2

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couldnt agree more with you. The way I view my trading is this: right now its an uptrend until it proves its not - so much more focused on the longs and the follow thru (both intraday and swing trades) is much better long.

Dont try to guess - keep it simple and if the weekly and dailys are making higher highs then focus on the longs.

Traderfeed and Alphatrends - 2 of the best non BS trading blogs
 

hakrjak

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However what I see happening is a massive bull run where the Dow is up 40% in a year.;)

I think it's up more like 70% for the past 12 months?

So everyone here is playing the old "The Trend Is Your Friend" play huh?

I guess it's OK with stops in place... But following ridiculous bull markets with no fundamental basis doesn't really sound like skilled investing to me?? Missing something here??

Isn't it time to jump in and buy major puts now? How does this market have the gas to keep going up?!

Cheers,

- Hakrjak
 

Jonleehacker

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following ridiculous bull markets with no fundamental basis doesn't really sound like skilled investing to me??

In my book, the proof of skill is in the profit.

You can have your opinion about "ridiculous bull markets with no fundamental basis" but if it was me putting my money in harms way based on an opinion, I want to do my homework and really understand what is going on.

Unless you really believe that all the millions of people pouring money into the markets are idiots and you are smarter than they are...

Not saying it isn't possible, because it does happen, but I don't have confidence that you really know why the market is going up right now. And if you don't know that, then you're just gambling if you are buying puts "hoping" it will go down.
 
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MJ DeMarco

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Trying to ignore the potential forecast and waiting it for it to happen is like waiting to put your seat belt on after you get hit with the accident. While tight stops might offer some protection, when the brunt of the fall hits, it will be costly.

I anticipate the market will decline before 2010 is over. Why? New capital gains taxes take hold in 2011 ... there should be a firestorm of selling to lock in gains before the new year's rates take hold. There is now a substantial direct incentive to SELL before 2011. This means a sell-off is coming and I believe it will be in the fall. (Expectation and logic would assume it would be coming in Nov/Dec ... so I think those will adjust and sell earlier.)

Also, I expect muni's to rally despite dour yields.
 

Jonleehacker

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Trying to ignore the potential forecast and waiting it for it to happen is like waiting to put your seat belt on after you get hit with the accident.

That analogy only would only be fair if there was a huge upside to not wearing the seat belt, just as there has been a 40% or greater gain for going long in the past 12 months, despite the lack of fundamentals.

I actually think that if you boil the 2 opposing view points in this thread down, it would come to the classic disagreement between fundamental vs. technical traders.

My favorite comment on that topic comes from Van Tharp, who said something to the effect of, "You don't trade the markets, you trade your beliefs about the markets." So true!

In his book he has an exercise where he takes (I think 4) different traders and has them trade the same market during the same time period. They have 4 completely different approaches, based on all kinds of different believe system. If I recall correctly at least 3 made money and the other 1 was close to break even, and their actions sometimes seemed at complete odds with each other, but they all were following their believes (they were also all successful traders).
 

hakrjak

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Trying to ignore the potential forecast and waiting it for it to happen is like waiting to put your seat belt on after you get hit with the accident. While tight stops might offer some protection, when the brunt of the fall hits, it will be costly.

I anticipate the market will decline before 2010 is over. Why? New capital gains taxes take hold in 2011 ... there should be a firestorm of selling to lock in gains before the new year's rates take hold. There is now a substantial direct incentive to SELL before 2011. This means a sell-off is coming and I believe it will be in the fall. (Expectation and logic would assume it would be coming in Nov/Dec ... so I think those will adjust and sell earlier.)

Also, I expect muni's to rally despite dour yields.

So will you be selling anything that's gone up the most in the past year, or do you have specific sectors in mind that would benefit from short selling the most?

Cheers,
- Hakrjak
 
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hakrjak

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I actually think that if you boil the 2 opposing view points in this thread down, it would come to the classic disagreement between fundamental vs. technical traders.

I don't know if there is a real dissagreement there, because I'd say that the technical trade, as well as the fundamental trade is to sell here. That's why I'm kind of eager to jump back in, because this is the first time in a very long time that I've seen both indicators pointing in the same direction.

You've got a situation where the market has swung wildly to the upside, and is probably due a correction of whatever size.... And a bull market which there are no fundamentals to support.

I'm thinking if we get any good news at all back in housing -- Money will flow out of the stock market back into Real Estate as it has in the past.

The argument that "The market will keep going up, because it has been going up for a long time now" -- quit working around the time of the dot com bust, and the housing implosion...

Cheers,

- Hakrjak
 

MJ DeMarco

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Lets just say, I don't believe the reports that the recession is over. While employment is a lagging indicator, employment is needed to spur consumer spending. I don't see employment getting better; if anything, worse.

As the year-end approaches, shorting the general market might be worth a look dependent on the macro-economics (GDP? Employment? Cap-n-trade pass?) I moved to mostly cash earlier this month, but still move-in-and-out of gold, silver, and CEF's dependent on technicals/premium/discount.

Also, in general, I don't invest in stocks -- I trade them. There is a big difference. (I think the last time I held a stock > 6 months was during the Clinton Administration.)

Also, with the new HC law, muni's and MLP's have gained attractiveness due to forthcoming higher taxes on cap gains and dividends.
 

Rem

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I seriously believe the economic downturn is in front of us. This country is heading into unchartered territory and I believe it's glory days are coming to a screeching halt. It will be more difficult for entrepreneurs to succeed as more tax is put on them.
 
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Jonleehacker

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Lets just say, I don't believe the reports that the recession is over. While employment is a lagging indicator, employment is needed to spur consumer spending. I don't see employment getting better; if anything, worse.

100% agree.

However your statements have been equally true for the past 12 months, while the whole time the markets have rattled off one of the biggest winning streaks in history.

To me the market does not equal the economy. There may be points where the two could be seen to be synchronized, but in general, I don't expect a steady correlation.

Also, in general, I don't invest in stocks -- I trade them.

Same here, that's why I'm totally good with giving back 20% (absolutely worst, "plane into a building" case scenario) of the 40% I've made from this run. As a trader that's part of the game.

If the market turns downward... no big deal, that's just a different trend going in a new direction ;)
 

hakrjak

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If the market turns downward... no big deal, that's just a different trend going in a new direction ;)

I haven't traded options since the late 90's / early 00's (Where I promptly lost $15k betting on Internet stocks, and stopped -- I'll admit)... But the reason why I'm thinking this is a big deal is because it seems like markets turn DOWN a lot faster than they go up... Especially in this climate of uncertainty, high unemployment, low growth, etc -- So if you can accurately predict a big downturn, your potential to make money with PUT options is going to be much greater than with CALL's (Unless you have some inside info about a stock going up soon, which is illegal).

Now if you're just trading stocks, and looking to make a few points here or there, I totally agree with your point of view.... But if you're looking to turn $10k into a $100k very quickly, then I think this is worth a closer look.

Cheers,

- Hakrjak
 

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Trying to ignore the potential forecast and waiting it for it to happen is like waiting to put your seat belt on after you get hit with the accident. While tight stops might offer some protection, when the brunt of the fall hits, it will be costly.

I anticipate the market will decline before 2010 is over. Why? New capital gains taxes take hold in 2011 ... there should be a firestorm of selling to lock in gains before the new year's rates take hold. There is now a substantial direct incentive to SELL before 2011. This means a sell-off is coming and I believe it will be in the fall. (Expectation and logic would assume it would be coming in Nov/Dec ... so I think those will adjust and sell earlier.)

Also, I expect muni's to rally despite dour yields.


I agree here as well. The fed is pumping money into the system and for lack of a better place to get a return, it ends up on the stock markets. But with the huge gains many have had over the past year and the cap gains tax increase for '11, there will be a huge sell off at the end of the year. No question about it. I suspect it will happen in Nov/Dec all big money manager will want to ring out every last cent and wait for the signs of mass selling and then they will all run for the doors. Dec will be an awesome time to sell puts and Jan 2 will be a great time to buy quality stocks.
 
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hakrjak

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Too many talking heads on TV are trying to talk this market up.

That's the other thing that gave me pause.... When you see the # of Bulls on CNBC like you do right now -- You know it's time to exit. Sad that it took me years to learn this basic fact...

- Hakrjak
 

GlobalWealth

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That's the other thing that gave me pause.... When you see the # of Bulls on CNBC like you do right now -- You know it's time to exit. Sad that it took me years to learn this basic fact...

- Hakrjak

I haven't had a tv for nearly a year now and this may be one of the main reasons I DON'T miss the tv. I used to leave cnbc on nearly all day either watching actively or just in the background. And I think it had a negative impact on me and my trading/investing. I am glad to eliminate the 'noise'.
 
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CommonCents

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CNBC is a pretty good sentiment indicator for CONTRARIAN investors that like to make money ;) See what they're pushing or crying about and do the opposite.

At the market bottom, Cramer and Co. said nobody should have money in the market that they might need in the next 5 years. Mark Haines, has the guy ever made a trade in his life? What an arrogant pompous moron.

Now they are pumping all these companies that have good gains. Wow, look at that! XYZ is up 58% from the bottom! Golly gee morons, how does that help anyone? You should have been pumping XYZ last spring, not today.

Bloomberg TV is much better, more professionally focused, CNBC is more retail focused.

One other thing, I am reading that Fed is winding down its MBS market after purchasing 1.25 trillion. They'll prob still be active indirectly through fannie and freddie but not as great of an extent.

They'll have to do everything they can to keep a lid on rates. When they run out of tools there will be big trouble in a hurry.
 

CommonCents

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John Paulson was a crystal ball subprime shorting god making billions. Now it turns out he PAID Goldman to help them set up their CDO's then shorted the very same. Disgusting.

SEC is focusing on one Goldman guy, he will be the fall guy unless he has saved more evidence on others and put it in a safe place.
 
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andviv

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so, if you are going all in, what stops are you putting for your trades? 10% stops?
 
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Jonleehacker

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If you like cloak and dagger conspiracy stuff, this is an interesting read about the government's covert "Plunge Protection Team" that is possibly manipulating the stock market as a whole as part of the governments overall bailout efforts:

TrimTabs founder and CEO Charles Biderman, added further evidence to suspicions many have had for a while. TrimTabs is a research firm that tracks money flows into the market.

Here's what Mr. Biderman had to say: 'We cannot identify the source of the money that pushed stock prices up so far so fast.' More specifically, the source of about $600 billion net new cash necessary to lift the market's overall capitalization by $6 trillion last year could not be identified.'

Biderman continues, 'We know that the U.S. government has spent hundreds of billions of dollars to support the auto industry, the housing market and the banks and brokers. Why not support the stock market as well? The money did not come from traditional players.

One way to manipulate the stock market would be for the Fed or the Treasury to buy a nominal $60 to $70 billion of S&P 500 stock futures each month for as long as necessary. Depending on margin levels, as little as $5 billion to $15 billion per month was all that was necessary to lift the S&P 500 by 67% (statement was made on January 6, 2010).'

Full article here: What or Who is Driving up Prices? - Yahoo! Finance
 

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