Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Friday, October 16, 2009

Earlier today I posted about game theory

and that one of the things that we do is only thing about the last time, or about yesterday..

what happened last time will happen again!

so here is an example from the reformed broker:

Remember the Last Time Intel Reported?

The last time Intel reported, on July 14th, the NASDAQ exploded, with a gap up and 3.5% gain for the composite the following day.
but I think it is important to keep in mind how big the reaction can be for the rest of the market

but it talks to the expectations... not mentioned is that Intel IS THREE TIMES THE PRICE!!! THREE TIMES!!!!
so they had to have 3X the blow out earnings they had 3 months ago... to have the same reaction....HOW THE FUCK WAS THAT GOING TO HAPPEN!!!

the only rewarded stocks were the ones that not only hit homers but hit it out of the park!... and still they have been sold... To be honest I haven't looked at JPM.. but I'll bet it's lower.

my point is that for some reason the expectation is for it to happen again!! and that is one high bar to hit!

but especially since it's expected!!!

1 comment:

Tony said...

Agree. The market was quite a bit different 3 months ago and INTC provided a catalyst for the next leg up.

I'll throw another thesis out there: this fall is much different than a year ago... now we have fresh in our minds the horrific decline, the abyss, talk of Depression, yada yada yada.

None of that happened, nor will it, but the sentiment still reflects this as a possibility. The fact is that we are NOT going to have *another crash* if only because there are enough people who still have that memory fresh in their noggins.

Crashes like that only come about when nobody expects it. Sixteen months ago there were a lot of people bemoaning the housing market, CDS', derivatives, etc, and calling for a correction or a market crash... but there was nobody seriously predicting the SPY going to S&P going to 666. Nobody. Maybe some in the back of their heads saw us going from 1400 down to 1000... well, here we are.

The point is that the most cruel scenario going forward is for bears to keep looking for the *next big crash*--- and it never comes because we had that already. So what happens? We trade sideways at around these levels for a year or more until debt gets worked off and earnings increase and employment creeps up.

Sure, there will be fits and starts, up to 1120 and down to 930, but nothing huge and the market limps along burning everyone out. From a diabolical standpoint, this would be tedious and painful for everyone, trader and investor alike.

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