10 replies to this topic

[MikeyG]

Not saying to get in front of a moving train, but...

 

 

FMV

4888

Edited by MikeyG, 19 August 2024 - 02:52 PM.

[andr99]

spx is overvalued, 

 

probably, but overvalued is a concept like overbought. Many often say the market is overbought, but nearly no one can say how long it's gonna stay overbought.

If I'm long, I'm not interested in knowing if the stock market is overbought, I'm only interested in knowing how far in time the turning point from bullish to bearish 

will be. Being overbought is a sign of strenght  which means that your long term long position is right. You will have brief corrections somewhere, but your long

position is correct. You have to start worrying when you start to see signals of long term distribution, because that means the strong hands are preparing the fall.

So far there are not signals of distribution anywhere.   

Overvalued is a not important concept, the important concept is money flow, how much money is placed out there waiting to enter the stock market. I think in 

this moment there's more money that wants to enter the stock market than how much wants to leave it.  

Edited by andr99, 20 August 2024 - 01:20 AM.

[MikeyG]

I understand what you are saying, depending on trading style I think overvalued is an important concept for context. 

[pdx5]

Not just the stock market is overvalued, also inflated are real-estate, land, groceries, auto & home insurance, hospital bills, doctor's bills, airfare, auto repair costs, electricity, water utility bills, new cars, and many others. But natural gas is cheap, and commercial office buildings have 30% vacancy rates in many cities and are selling at huge discounts.

[qqqqtrdr]

Market is overvalued but with good momentum, you stay long. 

[slupert]

Barry,you think this is good momentum.Looks to me like we have entered news driven volatility time.

[hhh]

I understand what you are saying, depending on trading style I think overvalued is an important concept for context. 

I don't understand money flows the same way most other people do. The perfect example is the "money on the sidelines" myth. Money only can be conceived as "entering" the stock market in an IPO or additional new share issuance. Once in the float, the money is exchanged between parties' cash accounts, and the stocks are exchanged between participants. When the money moves from one cash account to another, it wasn't "on the sidelines" either before or after.

 

Price changes happen at the margin based on the excess/dearth of shares available and greed/fear of participants. But no money enters the stock market when prices go up; money enters the cash account of someone who sold shares purchased at a cheaper price.

[andr99]

I've got a bit of head ache, probably because I'm not so fluent in English to understand everyone. But put it this way, imagine that the valuations of stocks are not cheap, the stock market is overvalued, but 

all the other forms of investments provide  just laughable profits. Where do the people drive their savings while seeing the stock markets rising day after day ? Where do the money flows ? Towards the stock

market. Is it a bubble ? Yes, it is. But it usually lasts longer than anyone thah get short on the market might ever suspect. Longer than they can hold their short position, without getting bankrupted.    

[hhh]

andr99, I agree with everything you wrote except money flowing towards stocks. Stocks exchange ownership. Money exchanges ownership. The prices depend on supply/demand and greed/fear, not money flowing into or out of stocks. When you buy a stock, you don't "put money into a stock," you give it to someone and that someone gives you his stock. The price is by mutual agreement. 

 

"Market capitalization" is a very nebulous (cloudy, misty, hazy, indefinite) concept based on current supply/demand and greed/fear despite having a precise figure associated with it.

[12SPX]

I've got a bit of head ache, probably because I'm not so fluent in English to understand everyone. But put it this way, imagine that the valuations of stocks are not cheap, the stock market is overvalued, but 

all the other forms of investments provide  just laughable profits. Where do the people drive their savings while seeing the stock markets rising day after day ? Where do the money flows ? Towards the stock

market. Is it a bubble ? Yes, it is. But it usually lasts longer than anyone thah get short on the market might ever suspect. Longer than they can hold their short position, without getting bankrupted.    

That's very simple, do you know why cash hoards are so high, because you can get 5% plus on short papar with no risk.  Market is already up big for the year.  People are smarter to take their profits and sit in cash now until the new year when you know whats going on.  The market is priced at 23 times current earnings so there can be no mistakes and as we saw it took all of 2 weeks to take the market down almost -10%.  There is a reason why its called smart and dumb money lol!!