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Author Topic: Stock Market breaking key resistance levels...  (Read 4438 times)

gonealookin

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Re: Stock Market breaking key resistance levels...
« Reply #25 on: December 25, 2018, 02:16:36 PM »

FWIW here's a look at forward performance of common stocks after severe down quarters such as the current one.  The returns are usually pretty decent.

https://awealthofcommonsense.com/2018/12/buying-when-stocks-are-down-big/

I choose a target asset allocation suitable for age and risk tolerance; it's about 65% stocks and 35% bonds right now.  With the drop in stock prices that means the bond portion has risen a few points above 35%.  At some point in the next week or so I plan on doing a little rebalancing, selling bonds and buying stocks to bring it back to around 65/35.  I have no idea whether stocks are at or even close to the bottom, but they sure are cheaper than they were three months ago.
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tradephoric

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Re: Stock Market breaking key resistance levels...
« Reply #26 on: December 25, 2018, 03:39:30 PM »

Since the great depression, bull and bear markets have seemed to last about 18 years.  But since 2000 there looks to be a paradigm shift in how long these bull/bear markets run.  After only a 9 year bear market (2000-2009) does the current bull market have any more legs to run?  It's as if the markets never got a long enough breather like it has in the past.



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Scott5114

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Re: Stock Market breaking key resistance levels...
« Reply #27 on: December 25, 2018, 04:22:50 PM »

Why don't you do something about it, then?
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tradephoric

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Re: Stock Market breaking key resistance levels...
« Reply #28 on: December 25, 2018, 06:05:15 PM »

I get the feeling tomorrow is going to be the base in the market short term.  Perhaps a low of 21300 in the DOW around 11:00AM before it turns around and closes near the green.  A V shape trading day.  Who knows what will happen but that's my best guess.
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hbelkins

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Re: Stock Market breaking key resistance levels...
« Reply #29 on: December 26, 2018, 01:29:12 PM »

If the Fed would quit raising interest rates, we'd be OK.
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US71

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Re: Stock Market breaking key resistance levels...
« Reply #30 on: December 26, 2018, 01:37:00 PM »

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tradephoric

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Re: Stock Market breaking key resistance levels...
« Reply #31 on: December 26, 2018, 02:40:47 PM »

I get the feeling tomorrow is going to be the base in the market short term.  Perhaps a low of 21300 in the DOW around 11:00AM before it turns around and closes near the green.  A V shape trading day.  Who knows what will happen but that's my best guess.

The DOW hit a low of 21,717 at 10:54AM today before rocketing over 600 points.  This is definitely the "V shaped" recovery day i was expecting even though it didn't hit my 21,300 target.  Regardless, the price action of today definitely suggests we have hit a short term bottom in the market (there is decent support levels at 21,717... close enough for me) and I doubt the DOW drops below 21,717 again until at least after Valentine's Day.  The crash may be over for the time-being.

« Last Edit: December 26, 2018, 02:46:48 PM by tradephoric »
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wxfree

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Re: Stock Market breaking key resistance levels...
« Reply #32 on: December 26, 2018, 04:54:13 PM »

If the Fed would quit raising interest rates, we'd be OK.

We are okay.  A 2.5% fed funds rate won't strangle a strong economy.  What it might do is slow the stock market.  The stock market really isn't a reflection of the current state of the economy, but a reflection of bets made about the future state of the economy.  It's also influenced by things like bond rates and availability of money.  Drying up the money supply, which I thought was left at excessive levels for too long, will make investors nervous.  The Fed seems to believe that the rate is slightly accommodative and near neutral, which is probably about where it should be (not the number, but the near-neutral status).

The stock market is not the economy; it's what happens when a bunch of investors are all trying to outsmart each other and get ahead of everyone else in profiting from whatever is about to happen.  I don't think we should judge the economy by the markets, and certainly not on the basis of a few days or a few months.  On such short terms, there's a lot more psychology than fundamental economic principle at play.  And with all the electronic trading we have these days, small ups and downs turn into big ones.  The worldwide economy is slowing, something that has nothing to do with the Fed, and if that continues it will weigh on the American economy.  For right now, these huge stock market moves don't really reflect anything except the nervousness of investors.
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oscar

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Re: Stock Market breaking key resistance levels...
« Reply #33 on: December 26, 2018, 05:22:06 PM »

The stock market is not the economy; it's what happens when a bunch of investors are all trying to outsmart each other and get ahead of everyone else in profiting from whatever is about to happen.  I don't think we should judge the economy by the markets, and certainly not on the basis of a few days or a few months.

I completely agree. I would also add that if we're going to obsess about economic statistics, why the stock market rather than employment or wage growth? Some of us have a stake in the stock market, such as through 401(k) or other retirement investments. For many of us, though, the more immediate concern is about keeping our jobs, or getting (better) jobs, or wage/salary levels.
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wxfree

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Re: Stock Market breaking key resistance levels...
« Reply #34 on: December 26, 2018, 05:36:54 PM »

The stock market is not the economy; it's what happens when a bunch of investors are all trying to outsmart each other and get ahead of everyone else in profiting from whatever is about to happen.  I don't think we should judge the economy by the markets, and certainly not on the basis of a few days or a few months.

I completely agree. I would also add that if we're going to obsess about economic statistics, why the stock market rather than employment or wage growth? Some of us have a stake in the stock market, such as through 401(k) or other retirement investments. For many of us, though, the more immediate concern is about keeping our jobs, or getting (better) jobs, or wage/salary levels.

I believe home investors should see the stock market in terms of long-term results.  Short-term practices like day trading and short selling should be left to sophisticated investors.  (To me, a big part of being a "sophisticated investor" is having lots of money so that when you make a bad decision you can afford to take the hit, and that gives you room to call it a "calculated risk" instead of using the more accurate term, "bad investment.")  Jobs and wages are immediate concerns, but retirement investments mostly take care of themselves if they're automated.  If you're decades from retirement, the state of the market shouldn't be an immediate concern.  The state of the economy is always an immediate concern, because that's what relates to jobs and wages.  People need to learn to see that difference.
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Scott5114

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Re: Stock Market breaking key resistance levels...
« Reply #35 on: December 27, 2018, 05:55:50 AM »

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tradephoric

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Re: Stock Market breaking key resistance levels...
« Reply #36 on: December 27, 2018, 02:10:07 PM »

^That's how i feel every day trying to figure out this market!  After a 1086 point rise yesterday and a huge push higher into the close, i wasn't expecting to see the market open 400 points down this morning.  Unfortunately, that puts us in target to make a fresh new low again.  In the middle of a bear market, it's not a great thing for the market to get accustomed to 1000 point trading days (to the green or red).  I thought a 1000 point upswing would give the market enough breathing room to form a base but after the price action today i'm not so sure.  Friday could seriously be a blood bath (ie. down 1200 points) if today's trading is any indication.  On October 13, 2008 the market was up about 11%.. the next day it was flat... and the day after it crashed back down 7%.  Well we aren't trading flat today (not a good sign for tomorrow IMO). 

EDIT:  And 10/15/08 was on a Wednesday, tomorrow is a Friday where nobody seemingly wants to be holding trades over the weekend.
« Last Edit: December 27, 2018, 02:13:25 PM by tradephoric »
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wxfree

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Re: Stock Market breaking key resistance levels...
« Reply #37 on: December 27, 2018, 02:36:13 PM »

Yesterday I assumed that the big fall and rise this week were made on thin volume, but what I've heard on television is that the volume was abnormally high for a holiday week.  I really don't know what to make of that.  My guess is that the rise yesterday was due to short covering.  Some of the experts on television also say that.  I foresaw a drop today for the same reason in the opposite direction.  A huge fall is a good opportunity to cover shorts, and a big rise is a good opportunity for profit taking or unloading uncertain positions.

I really don't know what to make of this period overall.  The market seems to be diverging from economic reality.  This happens because the market is driven by psychology, and sometimes it just goes crazy.  I like to think about why this is happening, but at my age I'm not concerned with whether the market goes crazy over the next year.  At my time horizon, it's still a good investment.
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jeffandnicole

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Re: Stock Market breaking key resistance levels...
« Reply #38 on: December 27, 2018, 02:44:07 PM »

Yesterday I assumed that the big fall and rise this week were made on thin volume, but what I've heard on television is that the volume was abnormally high for a holiday week.  I really don't know what to make of that.  My guess is that the rise yesterday was due to short covering.  Some of the experts on television also say that.  I foresaw a drop today for the same reason in the opposite direction.  A huge fall is a good opportunity to cover shorts, and a big rise is a good opportunity for profit taking or unloading uncertain positions.

I really don't know what to make of this period overall.  The market seems to be diverging from economic reality.  This happens because the market is driven by psychology, and sometimes it just goes crazy.  I like to think about why this is happening, but at my age I'm not concerned with whether the market goes crazy over the next year.  At my time horizon, it's still a good investment.

The WSJ has a good story that I'll cover real briefly: So much trading is automated in today's world that most traders have simply programmed their trading systems to automatically do something based on something else.
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Brandon

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Re: Stock Market breaking key resistance levels...
« Reply #39 on: December 27, 2018, 03:59:21 PM »

The market seems to be diverging from economic reality.

I've thought that for quite some time now, observing the stock and "value" for Tesla and Amazon, two of the biggest corporate welfare queens in existence.  If not for tax breaks, Amazon would be deep in the red, and Tesla's never made any sort of real, consistent profit.
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wxfree

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Re: Stock Market breaking key resistance levels...
« Reply #40 on: December 27, 2018, 04:26:07 PM »

There are reasons for apprehension.  Things like the worldwide slowdown and the likely reduction in domestic growth change the outlook for future profitability.  In an environment in which everyone's goal is to be ahead of everyone else, uncertainty can bring a lot of instability.  With the computer trades reacting to what's happening before the people even realize it's happened, everything is amplified.  Today we couldn't even decide if the Dow should be 600 points down or 250 points up.  Maybe this is just the way things are now.  If the direction isn't strongly up or down for nice solid reasons, maybe instead of boring steady days we end up with flailing back and forth so that the average means a lot more than any day's result.  Maybe a slow and steady decline is what's indicated in classical terms, with future earnings potentially falling (but staying positive) or growing more slowly, but the way the market is now, with more participants, include more participants with less experience, and heavy activity controlled by electronic psychology, a slow and steady decline is accomplished by a precipitous drop followed by a huge increase.

In short, maybe it's time to start watching something like a 20 or 50 day moving average instead of daily results.
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tradephoric

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Re: Stock Market breaking key resistance levels...
« Reply #41 on: December 27, 2018, 04:34:25 PM »

I was expecting the DOW to be up a few hundred points today but i wasn't expecting it to get there by swinging 850 points in the last 90 minutes of trading!  There is something bigger at play than algo's going haywire.  I'm not confident in Friday at all.  It's setting up to be the largest point decline day in the history of the markets.
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paulthemapguy

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Re: Stock Market breaking key resistance levels...
« Reply #42 on: December 27, 2018, 05:00:17 PM »

The stock index values respond to investor trading activity, and investors trade based on their feelings about investing.  Their feelings on investing are based on their goal to turn a profit in the short-term.  Long-term considerations don't matter as much to an investor, because investors are as visceral in their considerations as the average person.  When I say "visceral," I mean something along the lines of "more impulsive and less scientific than they ought to be."  It's visceral in the manner of people who refuse to believe in global warming because they can't feel the increased heat on their own skin.  This is why people falsely believe in the long-term benefits of tax cuts for the rich.

Tax cuts for the rich create a little bubble that boosts the stock market for the short term, but it never lasts.  The gains of the last year or so will become losses soon.  But I worry if another crash will accompany the bursting of that bubble.
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Re: Stock Market breaking key resistance levels...
« Reply #43 on: December 27, 2018, 06:41:57 PM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

Rick

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Re: Stock Market breaking key resistance levels...
« Reply #44 on: December 27, 2018, 07:31:31 PM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.
Socialism.
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Re: Stock Market breaking key resistance levels...
« Reply #45 on: December 27, 2018, 07:32:43 PM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

And yet, if you look at the lists of countries ranked by happiness, you have Finland, Norway, Denmark and Iceland in the top four. Maybe the Finnish like their Linux and the Norwegians like their Trafikkalfabetet so much, it cancels out how despondent the socialism makes them?
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wxfree

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Re: Stock Market breaking key resistance levels...
« Reply #46 on: December 27, 2018, 07:37:28 PM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

Rick

"-Isms in my opinion are not good. A person should not believe in an -ism, he should believe in himself."  quoth Ferris Bueller

I think there's some truth in this.  Instead of picking a system that has good and bad characteristics, and hoping we pick the right one, we should look for how to get the most good and the least bad.  There are not two options, there are as many as we can come up with.
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Rothman

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Re: Stock Market breaking key resistance levels...
« Reply #47 on: December 28, 2018, 09:06:14 AM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

Rick
Monarchy
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Re: Stock Market breaking key resistance levels...
« Reply #48 on: December 28, 2018, 09:08:17 AM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

Rick
If I can only choose one of the two, socialism. ”I got mine, fuck you” is a terrible way to live, in my opinion.
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Re: Stock Market breaking key resistance levels...
« Reply #49 on: December 28, 2018, 09:09:08 AM »

Capitalism is not about making everyone happy.  Socialism tries and makes very few happy.  Choose one.

Rick
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