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Thanks for the details. Nobody can say what the future is to bring really, but
it is nice to preplan various outcomes, so as to be ready to act. Scenarios in
itself don't make money, correctly reacting to unfolding events does.
I'll keep this in store as one of the plan Bs, just in case... I agree that if
and once things go sour, the down spiral could be tough to break, however the
key factor in this scenario is really the IF. So far there has been no loss of
faith in the US markets, and outside of dismal breadth indicators and a really
bad bond year, there are no evident signs of further deterioration conditions:
equities still appear as the best alternative, even if a little less so this
year.
Betwenn those who remain staunchely bullish and those who fear a larger
drawdown, maybe we'll have just another bs year, just ranging in a +/- 25%
range from current levels maximum in a somewhat erratic way, and further awful
breadth...
FWIW
Gwenn
| -----Ursprungliche Nachricht-----
| Von: James Taylor [SMTP:jptaylor@xxxxxxxxxxxxxxx]
| Gesendet am: Saturday, October 09, 1999 8:15 AM
| An: ggautier@xxxxxxxxxxx; realtraders@xxxxxxxxxxxx
| Betreff: Re: AW: Spinning Financial Illusions - The Story of Bubblenomics
|
| My strategy is as follows:
|
| 1) Short-term trade the nasdaq futures short on trend line breaks
| accompanied by momentum crossovers of the zero line, with tight stops (high
| of bar just before trend line break).
| 2) Work to improve my long term trading systems to be as profitable as
| possible on the short side. Would be willing to exchange research on this
| system on a one on one basis.
| 3) Look for a upside break of $350 on gold futures (which is major longterm
| resistance), a pullback, then look to go long.
| 4) Sold ALL stocks and majority of real estate. Liquidated all IRAS,
| Keogh, and SEP accounts.
| 5) Recommend same to all clients we manage money for, with exceptions based
| on their profile, place them in high grade corporate bonds, municipal
| bonds, and money market funds.
| 6) Look to sell the rallies in the treasury bond market, which will likely
| rally when the market tanks, then will tank itself as foreignors unload the
| TRILLIONS they hold in bonds and the US government sells even more bonds in
| an effort to generate income for stimulus programs and to pay the rising
| interest on the massive debt.
| 7) Short sell the US dollar index, the US dollar will be worth the confetti
| that it is. When the confidence is lost in the officials, when it is
| proven that they really can't control the markets long-term, the dollar
| will fall.
| 8) Read all I can on the 1920-1930's. Many books on the market and
| a good free publication is at:
| http://www.pei-intl.com/Research/GBM/GBM-MAST.HTM
| 9) Look to pick-up some foreclosed real estate, and property (cars, etc)
| and the many auctions, desperation and going-out-of business sales that are
| coming.
|
| Based on past market history, the market meltdown will happen in stages.
| Phase 1) Sharp plunge (20-25%), sharp pullback of 38 to 62% of initial drop
| (depending on the level of bs that the government dishes out and how
| gullible the masses are). 2) a second sharp plunge (20%) followed by a
| lackluster/cautious trend upward which will be met by selling at all prior
| support levels. 3) a long slow bleed lower, with intermittent large one day
| volitility swings. The 1929 crash took until July 1932 to hit rock bottom
| at 40 (with market losing 90% of its value.)
|
| The Fed (the ones whose irresponsible actions helped us get into this mess)
| will likely do the following:
| 1) Cut interest rates to zero, a quarter or half at a time. It will make
| no difference how low the rates are, classic example Japan, where the
| ratres are .15% and still few takers (and few that qualify for the loans.)
| 2) Print more money to add liquidity. The dollar will crumble.
| 3) Cut taxes for poorest citizens, and raise taxes on others. Local
| governments will raise property taxes on homes to make up for lost
| corporate taxes after thousands go out of business. The massive debt that
| has been amassed may (according to the following web site) result in tax
| rates approaching 60%. This would likely result in another Boston tea
| party and revolution if it were forced down the throats of the citizenry.
| http://www.concordcoalition.org/facing_facts/ff_fax40.html
|
| 4) Fed officials will band together the large investment houses, as they
| did in 1929 and to save LTCM just last year, to parade out their
| "so-called" experts to tell us that they are buying and we should too.
| 5) The government will trade the markets (manipulate them) buying large
| blocks of stock (as they did in Hong Kong) to try to deter short selling.
|
| Meanwhile the public will suffer as the layoffs/foreclosures/bancruptcies
| will mount. Many millionaires were made in the 30's, many fortunes were
| also lost, and countless lives ruined. An indepth understanding of past
| history can only help.
|
|
| ---------
|
| At 10:46 AM 10/8/99 +0100, Gwenael Gautier wrote:
| >OK OK , any scenario may have merits. But they are only scenarios, and
| this one
| >has been around for ten years now. Eventually it could happen yes, but
| what is
| >worse go short at DJ 5000 and see 10000 or go long at 10000 and see 5000?
| >
| >In essence, what is it you advocate?
| >- Please be specific: What is to be traded?
| >- Go long, flat, or go short?
| >- If so, at what level, with which stop?
| >- And once in the trade what's the exit plan?
| >
| >Gwenn
| >
| >PS. I usually buy my umbrella when it rains yes, not in the summer... :-))
| >
| >
| >
| >
| >| -----Ursprungliche Nachricht-----
| >| Von: James Taylor [SMTP:jptaylor@xxxxxxxxxxxxxxx]
| >| Gesendet am: Friday, October 08, 1999 7:52 AM
| >| An: BruceB; realtraders@xxxxxxxxxxxx
| >| Betreff: Re: Spinning Financial Illusions - The Story of Bubblenomics
| >|
| >| Did I say that you should have gone short when Fleck did ?
| >|
| >| Fleck is not a technical trader. He is well informed of the fundamentals.
| >| The fact is, the upward bias in the market makes short selling a
| >| challenging venture. The most profitable period for shorts were 1973-74,
| >| and 1930s.
| >|
| >| A good project and challenge for this board is to develop a trading system
| >| that is profitable on the short side, as well as long. A good test of the
| >| system is to run it from the 1920s thru present day for the Dow, to allow
| >| the most data points, and challenge of a market which has been going up
| >| the
| >| majority of that period.
| >|
| >| The fact is, market breadth is horrible and worsening, fewer and fewer
| >| stocks are going up, earnings are punk at best, and valuations are insane.
| >| When will the bubble finally burst ? I agree with Fleck's theory, the
| >| techs must breakdown first. Since that is the area of the most froth
| >| (Nasdaq at over 120 times earnings).
| >|
| >| Do you wait for the rain to start before you buy your umbrella ?
| >| Can the bubble get larger before it blows ? Sure, but I would consider
| >| risk/reward before blindly going long, hoping the long line of greater
| >| fools keeps coming.
| >|
| >| Do yourself a favor and read all you can on this tragety waiting to
happen.
| >|
| >| http://www.stern.nyu.edu/%7Enroubini/asia/AsiaHomepage.html
| >|
| >| and for god's sake, prepare yourself.
| >| http://www.advsoftware.com/summary.htm
| >|
| >| ---------
| >|
| >| At 08:40 AM 10/7/99 -0400, BruceB wrote:
| >| >James, just out of curiosity, how much would my account be down right
| now if
| >| >I had gone short when Fleckenstein first became bearish? How much does
| the
| >| >market have to fall before I even get back to break-even on his wonderful
| >| >advice?
| >| >
| >| >Bruce
| >| >
| >| >
| >| >From ???@??? Mon Oct 11 06:23:33 1999
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Message-ID: <00fb01bf13c6$cf895700$3f33fea9@xxx>
From: "ROBERT ROESKE" <bobrabcd@xxxxxxxxxxxxx>
To: <Intel55@xxxxxxx>, <realtraders@xxxxxxxxxxxx>
References: <0.7897a248.2532c596@xxxxxxx>
Subject: Re: ADX in SPZ9
Date: Mon, 11 Oct 1999 01:58:38 -0700
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Status:
Rising ADX implies trend strength(up or down). Falling ADX implies mode
change from trend to oscillatory or range bound, or say consolidation. The
TASC article in the October 1999 isssue discussess three different
professional's approaches to use of ADX. The idea of using a combination of
ADX with a moving average on price appears to be a good one. I.e., if price
is above MA and ADX > ref level then buy, or if price is below MA and ADX >
ref level then sell. If ADX < ref level then use oscillator system.
BobRoeske
----- Original Message -----
From: <Intel55@xxxxxxx>
To: <bobrabcd@xxxxxxxxxxxxx>; <realtraders@xxxxxxxxxxxx>
Sent: Sunday, October 10, 1999 9:46 PM
Subject: ADX in SPZ9
> Anybody have any opinions on the 60 min ADX line of the SPZ9? It has been
> trending down during the entire rally form 1267 and 1280 swing lows. New
to
> ADX and not quite sure its implications. coud it be considered a negative
> divergence? The 1355 area looks to offer some good resistence in the SPZ.
A
> trend line from the highs crosses there tomorrow and the 50% retrace fom
the
> all time highs to the 1267 swing low is there also. The Nasdaq comp looks
> like to pop, but the stochs do not look all that great. opinions??
>
|