Interim Update Dec 4, 2022

[Yodean]

Maybe another contrarian sign that we will rally to the moon or maybe at least to the space station

To Mars!

Before Elon barfs!

[Cinnamon]

Maybe another contrarian sign that we will rally to the moon or maybe at least to the space station

To Mars!

Before Elon barfs!

I will settle for the moon but I will handily support Mission mars. Now lets some magic come into play.

[Cinnamon]

I realize most don't like to look at FED news and how it impacts the markets, but today is super ugly.

Maybe it's just never been very good or it's impacts have been too manipulated.

If you look back to the beginning of August at all of the PCE and CPI releases there was incredible movement in equities on those days. Huge one day moves. Very intense speculation. Downward moves after each release August to October, following the trend, then upward moves October to December. market in uptrend. The talk of the town. The gossip mill. What's the Fed doing? Blah, blah, blah. Everybody waiting on pins and needles. Even live coverage in awards show style to get the crowd worked up.

But after all, in the scheme of things, one months data offers little valuable information going forward. The FED is more concerned about the next three years.

Of course this week's softer CPI print moved the market but could not hold the early momentum and has done little, maybe nothing, to improve risk sentiment. Maybe a change to a new narrative has occurred.

Consider this. Maybe the expectations of the imminent reversal of liquidity from the US Treasury drawing down its account with the Fed, which has added hundreds of billions of USD in liquidity in recent weeks is the new focus.

I found this chart today

Strange market, good news and the markets rallied and then dropped. Bad news and they dropped. I would think that retail sales coming in weak would have been treated as a somewhat positive from a contrarian angle, as it indicates that the consumer is getting hammered and this might force the Fed to step of the pedal faster than they are letting on.

[bpcw]

“Observers’ job, as they see it, is simply to identify which external events caused whatever price changes occur. When news seems to coincide sensibly with market movement, they presume a causal relationship. When news doesn’t fit, they attempt to devise a cause-and-effect structure to make it fit. When they cannot even devise a plausible way to twist the news into justifying market action, they chalk up the market moves to “psychology,” which means that, despite a plethora of news and numerous inventive ways to interpret it, their imaginations aren’t prodigious enough to concoct a credible causal story.

Most of the time it is easy for observers to believe in news causality. Financial markets fluctuate constantly, and news comes out constantly, and sometimes the two elements coincide well enough to reinforce commentators’ mental bias towards mechanical cause and effect. When news and the market fail to coincide, they shrug and disregard the inconsistency. Those operating under the mechanics paradigm in finance never seem to see or care that these glaring anomalies exist.”

[jonnyfrank]

“Observers’ job, as they see it, is simply to identify which external events caused whatever price changes occur. When news seems to coincide sensibly with market movement, they presume a causal relationship. When news doesn’t fit, they attempt to devise a cause-and-effect structure to make it fit. When they cannot even devise a plausible way to twist the news into justifying market action, they chalk up the market moves to “psychology,” which means that, despite a plethora of news and numerous inventive ways to interpret it, their imaginations aren’t prodigious enough to concoct a credible causal story.

Most of the time it is easy for observers to believe in news causality. Financial markets fluctuate constantly, and news comes out constantly, and sometimes the two elements coincide well enough to reinforce commentators’ mental bias towards mechanical cause and effect. When news and the market fail to coincide, they shrug and disregard the inconsistency. Those operating under the mechanics paradigm in finance never seem to see or care that these glaring anomalies exist.”

Well put. However, the FED does have an immediate impact on the markets lately. And for my short term portfolio, that matters. I understand that regarding LT it probably matters little, and is probably built into TA. Besides, looking at the market from a psychological standpoint can be entertaining, just like walking into a roach infested room with a flashlight can be

[bpcw]

“Observers’ job, as they see it, is simply to identify which external events caused whatever price changes occur. When news seems to coincide sensibly with market movement, they presume a causal relationship. When news doesn’t fit, they attempt to devise a cause-and-effect structure to make it fit. When they cannot even devise a plausible way to twist the news into justifying market action, they chalk up the market moves to “psychology,” which means that, despite a plethora of news and numerous inventive ways to interpret it, their imaginations aren’t prodigious enough to concoct a credible causal story.

Most of the time it is easy for observers to believe in news causality. Financial markets fluctuate constantly, and news comes out constantly, and sometimes the two elements coincide well enough to reinforce commentators’ mental bias towards mechanical cause and effect. When news and the market fail to coincide, they shrug and disregard the inconsistency. Those operating under the mechanics paradigm in finance never seem to see or care that these glaring anomalies exist.”

Well put. However, the FED does have an immediate impact on the markets lately. And for my short term portfolio, that matters. I understand that regarding LT it probably matters little, and is probably built into TA. Besides, looking at the market from a psychological standpoint can be entertaining, just like walking into a roach infested room with a flashlight can be

I was quoting somebody else!

We have had a bad cpi and the market plunged tgen rallied and a good cpi where the market rallied and then plunged, so in both cases the news effect was very short lived, within the same day.

[SOL]

“Observers’ job, as they see it, is simply to identify which external events caused whatever price changes occur. When news seems to coincide sensibly with market movement, they presume a causal relationship. When news doesn’t fit, they attempt to devise a cause-and-effect structure to make it fit. When they cannot even devise a plausible way to twist the news into justifying market action, they chalk up the market moves to “psychology,” which means that, despite a plethora of news and numerous inventive ways to interpret it, their imaginations aren’t prodigious enough to concoct a credible causal story.

Most of the time it is easy for observers to believe in news causality. Financial markets fluctuate constantly, and news comes out constantly, and sometimes the two elements coincide well enough to reinforce commentators’ mental bias towards mechanical cause and effect. When news and the market fail to coincide, they shrug and disregard the inconsistency. Those operating under the mechanics paradigm in finance never seem to see or care that these glaring anomalies exist.”

Well put. However, the FED does have an immediate impact on the markets lately. And for my short term portfolio, that matters. I understand that regarding LT it probably matters little, and is probably built into TA. Besides, looking at the market from a psychological standpoint can be entertaining, just like walking into a roach infested room with a flashlight can be

I was quoting somebody else!

We have had a bad cpi and the market plunged tgen rallied and a good cpi where the market rallied and then plunged, so in both cases the news effect was very short lived, within the same day.

Maybe the PPT (plunge protection team) morphed into the PCT (plunge creation team) or CCT (chaos creation team).

[jonnyfrank]

SOL,

Are you ready to concede that the NAS is not going to rally as the charts suggested?

[bpcw]

SOL,

Are you ready to concede that the NAS is not going to rally as the charts suggested?

It could turnaround today and rally through Christmas, time will tell and ultimately the markets themselves dictate where their going. It could be that August was the real bounce high and we have to accept this. Sol or any other advisor has to work on probability not certainty as no such thing.

[chippermon]

SOL,

Are you ready to concede that the NAS is not going to rally as the charts suggested?

It could turnaround today and rally through Christmas, time will tell and ultimately the markets themselves dictate where their going. It could be that August was the real bounce high and we have to accept this. Sol or any other advisor has to work on probability not certainty as no such thing.

Today is triple witching. There is $4 Trillion in option expiry today. There has been a lot of maneuvering around this event. Let's see how this plays out when it's over. This can create a lot hypersensitivity to moves and events.

[SOL]

SOL,

Are you ready to concede that the NAS is not going to rally as the charts suggested?

It could turnaround today and rally through Christmas, time will tell and ultimately the markets themselves dictate where their going. It could be that August was the real bounce high and we have to accept this. Sol or any other advisor has to work on probability not certainty as no such thing.

BPCW you are dead on'; there are no certainties when it comes to human emotions and the markets are reflection of this. It gets insanely complex when you move from the long term to the short term. Jonny, note that around the 4th of December or so I stated that the easy trade was over. Now comes the harder part. Let's see what happens after today. Current action indicates also that this market has not really experienced a true selling climax, given the disorderly nature of this market. I would suspect that will be at least two selling waves. Rough projection for a multi-month bottom, March-April 2023. Today could mark a short-term low, but in general, the markets should not take out this low on Monday. If this objective can be met, then the odds favour a rally to the recent highs at least by the Dow and potentially a fast upward move by the Nasdaq before a rolling top formation starts to build.

[jonnyfrank]

SOL,

Are you ready to concede that the NAS is not going to rally as the charts suggested?

It could turnaround today and rally through Christmas, time will tell and ultimately the markets themselves dictate where their going. It could be that August was the real bounce high and we have to accept this. Sol or any other advisor has to work on probability not certainty as no such thing.

BPCW you are dead on'; there are no certainties when it comes to human emotions and the markets are reflection of this. It gets insanely complex when you move from the long term to the short term. Jonny, note that around the 4th of December or so I stated that the easy trade was over. Now comes the harder part. Let's see what happens after today. Current action indicates also that this market has not really experienced a true selling climax, given the disorderly nature of this market. I would suspect that will be at least two selling waves. Rough projection for a multi-month bottom, March-April 2023. Today could mark a short-term low, but in general, the markets should not take out this low on Monday. If this objective can be met, then the odds favour a rally to the recent highs at least by the Dow and potentially a fast upward move by the Nasdaq before a rolling top formation starts to build.

Sol,

Thanks for your insight. I know there are no guarantees. I ask questions like I do to simply get insight I may be missing, and you consistently deliver. My short term portfolio has been turned upside down the last week or so, and that's just fine. I am going through a bizarro "opposite day" scenario where the markets does exactly the opposite of the way I think it will go, lol. This is why I am not a big fan of ST trading, but I do it to scratch my gambling itch (fortunately not a big itch).

This explains it (exchange "life" for "recent ST trades"): https://www.youtube.com/watch?v=1Y_6fZG ... hannel=TBS

[Tobeornot]

I think of short term trading along the lines of Arm candy. No money no honey, only in this case its no speed no lead (from the saying speed to lead). Can be fruitful but you have to go through a lot of thorns at times to get to the juicy fruit. Swing trading is better, Look for a high probability trade; the TA, sentiment, fundamentals and seasonality factors should more or less line up. My minimum requirement is extremely oversold on the weeklies if i am doing a short term swing and sentiment should be in my favor, bearish if i am going long and vice versa.

One important thing to remember after all that careful planning, short term trading comes down to a coin flip, unless one adds in a nice dose of luck

[Budge]

I think of short term trading along the lines of Arm candy. No money no honey, only in this case its no speed no lead (from the saying speed to lead). Can be fruitful but you have to go through a lot of thorns at times to get to the juicy fruit. Swing trading is better, Look for a high probability trade; the TA, sentiment, fundamentals and seasonality factors should more or less line up. My minimum requirement is extremely oversold on the weeklies if i am doing a short term swing and sentiment should be in my favor, bearish if i am going long and vice versa.

One important thing to remember after all that careful planning, short term trading comes down to a coin flip, unless one adds in a nice dose of luck

It's not about luck, it's about money management, discipline and knowing yourself. Been there, done that, didn't get a T-shirt but got the scars.

Best trade was about $9k in a couple of hours (Hamanaka and Sumitomo copper collapse). Quickest loss over $2k in 3 minutes (S&P500). Biggest loss about $8k (cattle). This was back in the 1990s when a $ was real money - kinda.

Talking about coin flip, I read of a gold trader back when they had the pits who'd flip a coin at the open, place his longs or shorts and then disappear until the close. Apparently, he made money until he decided to stay and watch the action and tried to force things. Lost everything quickly.

[jonnyfrank]

I think of short term trading along the lines of Arm candy. No money no honey, only in this case its no speed no lead (from the saying speed to lead). Can be fruitful but you have to go through a lot of thorns at times to get to the juicy fruit. Swing trading is better, Look for a high probability trade; the TA, sentiment, fundamentals and seasonality factors should more or less line up. My minimum requirement is extremely oversold on the weeklies if i am doing a short term swing and sentiment should be in my favor, bearish if i am going long and vice versa.

One important thing to remember after all that careful planning, short term trading comes down to a coin flip, unless one adds in a nice dose of luck

Funny thing about ST trading. I was having very good luck NOT holding overnight positions recently. Then, about two weeks ago I decided to hold overnight positions and the luck disappeared. Overnight markets have become more perilous than ever. I am shorting today but I will sell before day is out. I may, however load up my short term trades with a bullish bias for weekend markets. I worry (paranoia?) that if the PTB want to take us out financially they will do it with a black swan event over a weekend, so lately I am very careful with what I hold over the weekends in my ST trades.