Argument for a crash?
#1
Posted 22 January 2007 - 06:09 PM
#2
Posted 22 January 2007 - 08:27 PM
Someone posted this link before, and I found it quite an interesting read, RE: 3 domes and a peak:
http://www.sandsprin...rticles/tp.html
If you take a good look at the pattern, then further into the article, look at the actual trading year 1999, and compare it to 2006 and 1/07, it looks to me like the patterns are quite different. I just don't see the 3 domes and a peak pattern now (I did see your chart earlier today).
I agree with point 2.
RE: Sentiment, at least here, by looking at actual position polls on FF, they're mixed, i.e., for today's trading day, there were 17 long vs. 15 short, although longs are more committed with more full positions. There are a number of posts declaring shorts (myself included).
And computerization, that's an interesting point, and my guess it merely adds to liquidity. With computerization and with the aid of the internet, it's never been easier to learn about all aspects of trading and to find new information so quickly, and to use software to aid in technical analysis. The wealth of information I find from traders from just this site alone is really quite amazing.
But because there's an element of imagination and art to technical analysis, what one sees as the perfect long (i.e., a well developed trend with a mild pullback to the bottom trend line), another will see as a great short (i.e., using measured moves, historic patterns, sentiment, etc.). This is especially true when bias and hope comes into play. I read once, that despite all the new software tools now available, the nature of trading really hasn't changed much (or at all), i.e., the same percentage of people who lose vs who wins has remained relatively consistent. Apologies I don't remember the source; it was an interesting read. So, until there is some technical damage to create fear, we'll probably not crash because dip buying will support the market and buffer moves to the downside.
RE crash... I agree with the thinking that it will come when it is least expected, which means to me, the consensus will likely find crash calls funny, rediculous, "never gonna happen," etc. When we see that thinking from just about everyone, perhaps that's the time we should be on guard.. not that a crash will happen right at that time, but it wouldn't hurt to be nimble.
To that end, I have noticed the correlation you made with your 2nd point, and observe we're toward the end of the run, but we also have more room to run (to the upside). Not knowing when it or if it will happen (more upside vs. the correction already beginning) I'm already probing short, all the while taking note that the consensus seems to be... that the deep correction will come later... after another run to the top.
#3
Posted 22 January 2007 - 08:54 PM
#4
Posted 22 January 2007 - 10:47 PM
And computerization, that's an interesting point, and my guess it merely adds to liquidity. With computerization and with the aid of the internet, it's never been easier to learn about all aspects of trading and to find new information so quickly, and to use software to aid in technical analysis. The wealth of information I find from traders from just this site alone is really quite amazing.
But because there's an element of imagination and art to technical analysis, what one sees as the perfect long (i.e., a well developed trend with a mild pullback to the bottom trend line), another will see as a great short (i.e., using measured moves, historic patterns, sentiment, etc.). This is especially true when bias and hope comes into play. I read once, that despite all the new software tools now available, the nature of trading really hasn't changed much (or at all), i.e., the same percentage of people who lose vs who wins has remained relatively consistent. Apologies I don't remember the source; it was an interesting read. So, until there is some technical damage to create fear, we'll probably not crash because dip buying will support the market and buffer moves to the downside.
RE crash... I agree with the thinking that it will come when it is least expected, which means to me, the consensus will likely find crash calls funny, rediculous, "never gonna happen," etc. When we see that thinking from just about everyone, perhaps that's the time we should be on guard.. not that a crash will happen right at that time, but it wouldn't hurt to be nimble.
To that end, I have noticed the correlation you made with your 2nd point, and observe we're toward the end of the run, but we also have more room to run (to the upside). Not knowing when it or if it will happen (more upside vs. the correction already beginning) I'm already probing short, all the while taking note that the consensus seems to be... that the deep correction will come later... after another run to the top.
Great posts. The wealth of information thing is what is gonna trip people up some day. Many traders have a ton of information, and so does the general populace if they take the time to look. But how they use the information and what the information means is changing dynamically. The same info. yesterday, may mean didly squat today or two weeks from now.
I think this time around people are highly prepared for any sort "crash." However, If it comes they won't be able to do anything about it. Something will happen and the cause and effect people are used to won't work anymore. Someone will see a crash coming. Many people will likely see it. They will either sit there and wait (expecting it to recover at some logical point) or not be able to anything except sit and watch. Don't ask me how. I don't think anyone knows (how). If they did, there wouldn't be any "crash." Some people honestly believe all of their indicators will work. Considering how shallow the event was in 2001 to 2002 and the fact we've "recovered" except for the Nasdaq, The NYSE didn't hardly see a blip. This is what makes the next event interesting. If it comes.
I hope you guys keep posting about a possible crash. It may help some of us.
#5
Posted 22 January 2007 - 10:58 PM