Monday, February 8, 2010

Where's the bounce?

I read in one of the many chat rooms that I follow that Friday's afternoon recovery was due to short covering ahead of the weekend. After all, what would happen if they decided to bail out Greece? A stocks rally? Perhaps.

Today's column talked about a candlestick pattern called a falling three methods. I usually confuse the rising and falling names as the "methods" are the little candles in the patterns middle that are rising or falling. In a falling-3 pattern, the little candles rise (for real!) but the entire pattern is a bearish continuation pattern if found in a declining trend.

Check out the QQQQ chart. It's better than the Nasdaq's.

Hammer Friday? Hammer Schmammer. Where is the spirit of the pattern that is supposed to have a tide rushing out and then tide rushing back in feel? It was like the tide rushed out then it rained. Sure, the water level was unchanged but the source was not the bulls.

8 comments:

paulocuana said...

Where's the bounce, indeed?
Ok, I'm a Bear but I prefer to see an orderly decline. This market seems sick.
It feels eerily like 1987, and I don't mean the Spring.

Paul O'Cuana

傷害 said...

If you can not be kind, at least have the decency to be vague.............................................

Quick Takes Pro said...

Paul, my sentiments exactly. "Everyone" sees value now as they buy good stocks at cheap prices in a correction

Quick Takes Pro said...

傷害, what are you talking about?

Rooney said...

This is clearly a bull market, but whilst the bull market rages on, the bearish commentary/crash calls/end of bear market rally will appear on every correction and persist for many years. BTY, below are some good lines from another blog:

1. You CANNOT know with any reliability that the stock market is going to crash until AFTER it has actually peaked and entered a downtrend. Anyone that tells you a bull market pushing to new highs is going to crash is going to lose you all your money, as the market rallying significantly from the crash call NEGATES THAT CALL where trading is concerned, because any short positions enacted upon the call are stopped out!

2. You can only enter a Crash TRADE barely a day or hours before the crash event. Crash calls made weeks, months or years in advance are WORTHLESS where trading is concerned, and where investing is concerned, all investors should have stops on their positions based on technical considerations of where they would admit their analysis is wrong on a particular stock.

Crash calls are dangerous in that bring emotions into play which instead of staying focused on reacting to price action, adrenaline gets traders to commit to positions that will soon most probably bust their accounts where EVEN if the market eventually does CRASH, they will have been wiped out by the intervening rally SINCE the crash call! It is this fact that that is always forgotten.

Quick Takes Pro said...

Rooney,
A wise trader friend told me you can go broke being right and early. So I agree. But "clearly" a bull market?

Rooney said...

I am trading in Hong Kong, and it is clearly a bull market over here and else where in Asia, it is hard not to believe the same is happening in the US/Europe, since nowadays, the stock markets are synchronized, although I know the US/Europe economy are still in deep sxxt!!!

In 1998, after the Asia financial crisis, Hong Kong was still in recession, somehow a new bull market was born, I think a lot of people got caught, and I certainly learnt a valuable lesson back then.
I think that as far as trading is concerned, we should pay more attention to price movement rather than fundamental analysis, I am not saying we should completely ignore it, maybe as a trader, I would only take 20% of it into account, but at market junction like last year, better to forget it, as fundamental was a trap.

Everyone knows we are in a "money printing" bubble, but like Soros who has just opened his base in Hong Kong said in a seminar that I attended 2 weeks ago, he only enters the market when he finds a bubble is forming and will only get out only when the peak is confirmed, and he also mentioned that got caught badly in the tech bubble cos he went short too early. As a trader,trending is paramount isn't it?

William said...

This post isn't even about a "crash call." It's about the mounting bearish technical evidence.

And you are wrong. There are no bears; looking at a variety of sentiment surveys, there are very few bears compared to a historical mean.