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Weakends Are Made For Labats Blue

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I would have but, My fathers Broker bought puts on the futures claiming there was no Nov contract at the time (there wasn't) I bought it a day or two before the TOP and covered becuase of the loss on the future was more than I wanted to spend on the option. But, I did see something bad coming.

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What a lot of folks who are leveraged don't see coming is that in 87 Gold Stocks got creamed with the market not the physical but Gold Stocks, there were a lot of reasons for that but as Gold stocks got sold along with the Broads, the same panic as in the Broads ensued, 3 days later they started to come back but it took a long time.

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One of my fears is the possibility of a sudden crash, which for some reason I am not participating in, or even worse, stuck on the wrong side. Isn't that partly what underlies this bull/bear long/short discussion that keeps returning to the thread?


Yet the more I look at charts and price behaviour, the more I realise this fear is probably not very rational.


Not too long ago I posted a chart of the 1987 crash, which showed distinctly how the market went into total meltdown the day it fell through the 200dma.


Along the same lines, and to illustrate what WH wrote earlier, I pulled up a daily $indu chart starting just before the 1929 crash and ending a couple of months later. Here too, the 50dma and the 200dma were instrumental in defining the tops and the breakdown points.


If one's trading system involved trading long above the 50dma and short below it, and steeled oneself to suffer a couple of whipsaws, there was plenty of time to get on the right side of the trend.


In my opinion the clearest lesson to be learned from both 1987 and 1929, is that the market is extremely vulnerable below the 200dma and anybody donging it at that point is like a bungee jumper with a dubious bungee cord that may or may not fail.

MWH - from the "things that make you go 'hmmm'" department, I notice quite a lot of similarities in your Dow daily chart surrounding the 1929 crash and the various Nasdaq proxies weekly charts since the July '02 bottom. The Comp in particular is now trying to yearn its way through the 200 week MA.


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I've followed this poster off and on at the Fu*ked Company website. He says he's an employee at Sun Microsystems. Most of what he has said in the past has come to pass. Here's his latest post. Interesting stuff.



unregistered Current Sun Employee with Inside Information Apr 03 2004 07:46PM EST




Late on Friday, I received word that I survived the layoff.


Is anyone interested in the information that I am providing? If you are not interested, then I will not provide any more.


Right now, there are many unhappy people in the Sunnyvale (California) campus of Sun. The vice-president fired 500 engineers, essentially terminating development of successors to the UltraSPARC V.


According to my manager buddy, the CEO and his first lieutenants were originally planning to fire 5000 people. Since only 3300 were fired in the current round, an additional 1700 will be fired in about 3 more months, pending the revenue situation. The injection of $1 billion bought some time for these 1700 lucksters.


Also, the server groups in Menlo Park (California) and Boston (Massachusetts) will be reorganized. Several senior managers are being fired. Sun is targetting future sales to be a mix of 50% UltraSPARC servers and 50% 80x86 servers by the end of the year.


To outside investors, Sun might look like a good investment. However, to employees within the company, Sun looks like a chamber of horrors where many souls feel hopeless.


Who destroyed this company?

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In between the 50-day and 200-day, it gets dicey.

Absolutely. After many hours of studying these, I came to the conclusion that below the 50dma is bearish; below the 200dma is superbearish. Inbetween, price action can't be trusted. In fact, one could make a good argument for staying in cash in that no-man's land, though I don't.



Of course, with billions of eyeballs gaming the same "support" lines, lots of fakeouts could occur.  In fact, its possible we go sideways for 3 more days, then gap back down under the 50-day, leaving a 4-day "Island Turd".


Same thing could happen in reverse, right below the 200-day.


Very difficult market to play..


I agree. It's almost impossible to predict what's going to happen at these lines. Personally, I think the best approach is to establish iron trading rules ("if it goes above x, then..") and be prepared to get whipsawed around.


My preferred bear market scenario would be a slow, grinding decline, where the VIX and the VXN actually go lower on the occasional bounces, getting even more dip buyers in.


Mine too, and the odds probably favour this one, just because cataclysmic crashes occur so seldom. On the other hand, powderkeg economic situations with out of control derivatives pyramids are also not normal occurrences, and likely increase the odds of a cataclysmic crash.

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...trading long above the 50dma and short below it,...

Agreed. Aren't the 50 and 200 ma slopes currently down?

The 200 has flattened out and the 50 is in a slight decline.

As much as I have tried, I have not been able to devise successful trading rules based on the direction of these moving averages, though it wouldn't surprise me if it works for others.

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Now with the World wired and everything instantaneous it could blow up in a millisecond setting off a chain reaction across the world. I believe when it happens there won't be a signal, I don't think the patient will get gradually more sick or sick enough for us to take notice of the impending implosion.

Those are wise words and the possibility of this happened shouldn't be ignored.

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My current read on the tech market here in Silllycon Valley, CA is that there isn't a whole lot of growth. We've lost 400,000 jobs in the greater bay area since 2001, and the pool of workers has actually decreased due to people moving out of the area....


That is not the sign of a recovering job market.


I recently took a drive through part of Santa Clara... never before have I seen so many abandoned office buildings. On one block every building was empty. It was creepy. Many buildings or complexes has space for lease, and the lease prices continue to fall.


Outsourcing also continues despite a glut of qualified programmers who would gladly take less money to be able to work in their fields again.


Real estate is still hot. There are no slowdowns anywhere so far.



Your observation is rite. the commute traffic flows in between CSCO, AMAT Intel ...alone the Great America Parkway says all. No traffic jam for 2 years....off the highway 101 ramp, the BurgerKing was closed a few months ago. ( MacD. still haning there.). Two BigK (MeKee st, & LwarenceExpress way) closed....


not long ago, I visited a nice building in San Jose where we have a solar energy converter installed, the entire building is empty.


I have about 20 school mates around this area (we completed our education in Texas about 24 years ago with MSEE MSCS MS Chemstry Civil Engineering..), almost every one got lay off expereince during the past few years.


many of my co-workes completed their last service on 03/31/2004, Our MFG facility was closed on that day and it is outsourced to Canada.

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MWH - from the "things that make you go 'hmmm'" department, I notice quite a lot of similarities in your Dow daily chart surrounding the 1929 crash and the various Nasdaq proxies weekly charts since the July '02 bottom. The Comp in particular is now trying to yearn its way through the 200 week MA.

Two things:


1. The shapes of two charts are eerily similar. Wouldn't this suggest a drop to ca. 1500-1750 in the very near future? Or would you see this most recent drop be the parallel decline to that one from May 1930?


Either way, it would be helpful to study what happened next, in 1930 - if that scenario could be guaranteed, stoolizens will do very well indeed. ;)


2. On the other hand, is it just one of those things that make you go "hmmmm" (like WH's Gann and Fib dates)? I've seen many so-called experts drawing attention to this or that fractal, and while I admire their ability to spot the similarities of prior price patterns, I eventually became disillusioned with their ability to predict price movement at all. Maybe these patterns are simply more impressive when seen in retrospect, but virtually impossible to profit from in real time.


All the same, if I could order up the 1930's decline, I would be very happy from a trading point of view. It would also fit in very well with the pi$$-poor fundamentals underpinning the world economy.


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The stock market can and will do whatever it wants, regardless of how the economy performs. Keep an open mind people.




Stanley Druckenmiller, one of the top traders of the 1980's, went broke trying to short the market in 1999 - 2000.


Ike Iossif has the best observation of the current Election Erection Rally:


The bulls didn't learn their lesson. They are still buying all dips.


The bears didn't learn either. They are still shorting into the rally.

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Here's another chart I've come across in my journey through cyberspace.


Source: http://www.marketswing.com/forum/attachmen...tachmentid=1975


Though I'm familiar with Marketswing, I actually found the chart as a link in a series of posts ridiculing the financial futility (up till now, of course) of the permabear stance - I must say the posters themselves are sufficiently competent technical traders IMO not to be ridiculed in turn by us. As TE said, keep an open mind, and I would add to that, keep your eyes open at all times too.


However, what the chart below doesn't show is the relationship of price to the 50dma, and it's worth mentioning that these look pretty similar too in 1987 vs. now.


I'll paste my own version with moving averages below - I think the similarities are obvious enough not to require any further comment.


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