Is the next stock market crash imminent?

Trading Discussion
20

Interesting discussion, and strangely the very subject that I was discussing with trader coach friend this weekend.

I know, from analysing my trades, that I tend to see the buy side. This reflects my general attitude to life, always the positive.

This is not necessarily a bad thing, it’s just that I am aware that my trading fits around this part of my phycology, it’s therefore likely that I could improve even more by adjusting.

The old masters countenanced against this normal human behaviour, it may sound easy but the reality that it seems that we are hard wired to look for the positive, apparently negative guys would shun the trading world in the first place.

My friend noted that he too sees this in many of his students, often they are on the buy side, more difficult to see the sell.

I remember a few years ago a discussion on similar lines, the author pointed out that on stocks the pull backs are often fast and furious because they are fuelled by fear, he figured that investors are usually optimists and that fear is optimism’s opposite.

21

Interesting, peterma…

I always heard that short-selling stocks is not as ‘easy’ as buying them, due to possible restrictions…

I sniffed around for a good, general article on the topic and found myself reading this, which offers a

decent explanations of reasons putting off short-sellers in stocks:
https://www.tradeking.com/education/stocks/short-selling-explained

22

Pipme,

The un-American thing precedes the most recent crisis wherein they brought in the restrictions on firstly bank stocks. (total stupidity, the blame was laid on the ‘speculator’, a description that became synonymous with the big bad wolf).

Back before (slightly) my time there was a bear, he was blamed for the great depression of the 1920’s - all because he was short stock, a totally un American thing.

The Bear of Wall Street - WSJ

And then the Fed stepped in (JP Morgan) and asked him politely to do the American thing.

And from there lies the approach to this day :slight_smile:

Jesse Livermore | Traders Log

23

Yes, I remember reading the Jesse Livermore unofficial biography

( http://www.nowandfutures.com/large/Reminiscences_of_a_Stock_Operator_Jesse_Livermore.pdf )

and reading about how he was blamed for 'breaking the market' when he went short by millions...

Like the 2010 'Flash Crash' was blamed on a single trader in England, so always will corporations

take a small fish take the blame!

Thank you for those links, Peterma!

Certainly, in the case of a market 'clear-out', Forex traders should be more than able to make

money from it... Yen crosses be my guest... :wink:

24

Yeah, I suppose sometimes I apply too much to the old guys, things have moved on.

Many times when reading Livermore’s last book, only written at the exhortation of his family as a means to bring him from illness, I can sense the disparity between TA and FA.

Long story, he created a ‘system’ of ‘pivotal points’, not unlike S/R on modern computers. He had no such technology at his disposal, so he chose red ink and pencil to enter these ‘levels’ on a chart (a page of price levels)

Yet despite this ‘technical’ (there lies the name) approach he incorporated the fundamental.

He tells the story of steel at that time. A truly great, yet there existed another, even greater, different story.

25

It is true that short stop orders can be triggered during a quick move but filled much lower than their trigger level or passed over entirely because of uptick rules. Worse than that is the fact that shorts on equities lose their punch as they progress. Short a stock at 100 and after moving 20% in your favor to 80 an additional 10% is only worth 8 whereas a long position entered at 100 after moving 20% in your favor to 120 gives you 12 on an additional 10%. Add to this the fact that corporations grow with the economy and add to earnings over time thus making shorts over the long term a no-win endeavor and shorting equities seems pretty worthless. If you think so you are sharing that view with many others including Warren Buffett.

An option is to simply go long in markets that will benefit from declines in equity prices.

-Adrian

26

Interesting all the info, but doesnt it seems like too overblown?

27

Mark Thornton presents the ‘Murray N. Rothbard Memorial Lecture’ at the 2010 Austrian Scholars Conference. Includes an introduction by Joseph T. Salerno. The ASC is the international, interdisciplinary meeting of the Austrian School, and is for scholars interested or working in this intellectual tradition. Held at the Mises Institute, Auburn, Alabama, March 11-13, 2010.

Title of the lecture:

[B]The Austrian School on Business Cycles: 100 Years of Being Right.[/B]

[B]
https://www.youtube.com/watch?v=HegiGuJlzTQ[/B]

28

Are there many Misesians in the U.K.? Perhaps there is a few chaps that have had enough Fabianism? Here in the States, just about everyone likes freedom, but a whole bunch are like “yeah but free shix”.

-Adrian

29

I am not sure, Adrian…

but there is an institute branch in England:

Ludwig von Mises - A Primer | Institute of Economic Affairs

I assume there must be a few Meses economists here too…

but I think they are not the prevailing voice…

30

For bears, this chart is worth (at least) 500 words: [B]For bears, this chart is worth 500 words - MarketWatch[/B]

31

Thank you for posting this, it just ticks all my boxes :))

:))

I agree 100%…

We are all waiting for the dancing bears to get started…

…we just haven’t seen the musicians yet :slight_smile:

F

32

Stock Market Crash in 2015 is Coming, Despite Widespread Bullishness

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Another 2.2% up and the S&P hits a new all time high. This rally is very close to killing the bears. But if it fails to get there before dropping the 10.5% required to get back under the August low, the bears have it. This is almost as exciting as the F@&KING ROYALS vs the mets in the World Series.

-Adrian

34

The next crash will happen eventually, but those who can identify it in time will make the big bucks. For the rest of us, well…

35

Well, peeps…well!

Over six months after posting this thread, we are

all still wondering why last year’s August corrections

did not spark an eventual rinsing out of all the bad debt

and inflated equity prices…

I have been interested in the seven-year

cycle theory, which made 2001 and 2008

due to be followed by a 2015 crash/risk-off

move across markets; some may also

associate this with the Jewish “Shemitah”,

as explained in this article:

As the article asks, and as many of us here may

also ask, why was it different this time round?

Are we just delaying the inevitable, and how many

more weeks or months do equities and other risky

assets need before finally giving up the ghost?

I do not subscribe to the biblical overtones of

the article, but I am of course worried that if

a cycle of approximately(!) seven years is

artificially contained, its arrival, because of

an artificial delay, may be even more catastrophic.

In the end, we all know from watching the ‘Big Short’,

that letting go of big profits in a ‘bull market’ does not

happen overnight…but when everyone is aware of the

problem and subsequent aftermath,

and yet nothing follows, it is quite unnerving…

And the question remains still:

what will the spark be and where will it

come from?

Another housing bubble?

Chinese financial derivatives?

Will we have eyes to see the threat in time?

What do you think?

36

The world equities are beginnig to keel over…

Just look at the S&P500, Nikkei225, and FTSE100:

three countries, three indices, all struggling either

to reach new heights or to stem capital bleeding

out of them…

Post-FOMC rate hold yesterday, you would

have thought that this would have read as

a risk-positive scenario and pushed equities

higher, but although it did so initially it then

failed to drive that move, and the renewed threat

of tightening/rate-hiking by the Fed added to

investors’ nervousness, resulting in this

S&P500 losing, for example, 250 pips

in the last 2.5 hours alone:

Screenshot_2016-04-28-20-31-10.jpg394×700 27.7 KB

37

yes. and i love it. been waiting for the crowds to finally see the downwards trend for weeks now. i nearly ran out of patience.

nice trade Francis, we think alike asi see :slight_smile: gonna stick to this a few more hundret points.

20160428_230123.jpg394×700 22.3 KB

38

I cannot believe it, we shorted the S&P500 at the same level?

Uncanny!

Great minds think alike, indeed!

Good luck to us!!

39

i shorted dow, u s&p but they move in pairs and r both stock indexes so its the sane thing :smiley: yes i was aswell like “huh i know that trade from somewhere! :D”

no need for luck for both of us were both on the right side for the next few days, luck is only fpr beginners, we are no beginners :smiley: