Stock market tips and experiences

[Dr. G]

Originally Posted by nittany

good thing i got out of lvs in the morning. cmon pullback!

Nooo, I'm still in haha

MIDD is up approx 27% since my last post though

I didn't get a chance to read the thread, but did anyone have a good month with DDD?

[RandomHero]

Originally Posted by Vanity

I don't base my macro calls on technicals. I've stated in the past that my most successful trades (i.e, my most successful trade at the start of the New Year which brought in +70% in 3 weeks) are based on pure fundamentals. What are these fundamentals you ask? Look at Options pricing. Follow the money. The smart money.

Back in March we had a large buyer of $SPX long calls when SPX stood at 1550. 85,000 contracts were bought-up by one-single-buyer. The entire trade was worth billions. Right when talks came in around that time of a pullback, a correction, a crash, etc, we had a large buyer step-up to make a long call on the market. Very rare in size since the bulls in this market tend to sell puts to "be long", actually buying 85,000 call contracts meant the SPX actually had to "go up" to make money. Ergo, bam, we went up.

Well now, Options pricing for SPX Skew is looking ugly. Skew climbed 10%+ in 5 sessions. Just trading within the mindset frame of this bull-market since 08', 100% of the time this Options skew has led to a drop of 6-19%. Right now, it's pricing in a -13% drop, but I like to wrap that within 10-15%. Obviously this is not a "guarantee" the market will fall. But certainly it's not a buy-signal for all the bulls who've been in the game since 2008.

I do realize that this thread is supposed to be specifically about “technical analysis,” but new investors reading this need to understand that technical analysis is generally used for short term positions in equities. If you plan to hold your position for the long term (at least a year), fundamental analysis and the Peter Lynch method of investing will ultimately prevail.

While I agree with your statement of “following the smart money,” my definition of “smart money” may be different from yours. The majority of mutual fund managers are simply trying to match their benchmarks. When you account for fees/expenses, the majority of fund managers are LOSING to their benchmarks. They’re “Closet Indexers.” They claim to be active managers, but most have a very heavy “passive position” and a very small “active position.” Most aren’t taking any wild chances and as a result end up matching the S&P before fees and falling short after fees/expenses. I honestly believe that anyone with a basic amount of knowledge could run a top 50% mutual fund.

My reasoning: look at all the huge Large-Cap Growth Mutual Funds. They’re pretty much all doing the same things: Grossly over-weighted in Apple. Over-weighted in Amazon, Google, and VISA, under-weighted in Exxon and Microsoft.

The only group of fund managers beating their benchmarks is the active stock pickers. Even in those cases, they’re only beating their benchmarks on average by a couple percentage points.

Conclusion- If your version of “smart money” is following the big players then theoretically you should be heavily invested in long Apple and Google positions and heavily invested in short positions in Exxon and Microsoft.

I get what you’re saying and you’re obviously very knowledgeable on the subject, but I constantly question the idea of following others (even the most successful investors). I don’t believe in investing based on tracking high volume trades.

It's very easy to make money in a market like this. People are buying off emotion and everything is appreciating. However, I'm curious to know how many of you did in 2011 when the market was stagnant.

[mact3333]

Nobody should blindly follow any trade ideas from this thread...this thread is to throw out some ideas but everyone needs to do their own dd...only use ideas from this MB if it jives with your own thinking...nobody will take away your gains but they also wont cover your losses...its really up to you.

I do find it funny when some say you have to trade using fundamental analysis over the long run...where are the fundamentals when we enter a bear when every stock in every sector craters?...did their fundamentals all of a sudden implode all at the same time.

What keeps the stock mkt working over the long run is the continual expansion of the money supply creating inflation...without this, the mkts would crash severely....they keep interest rates low and inflation high so you are forced to seek out the equity mkts....The Fed's buy up the worthless MBS's at face value and guess who is paying the bill on that one? Certainly not the Fed Reserve, its us!. We pay through inflation.

But one prob is this, real inflation such as food, gas and rent(things the govt conveniently removes to calculate their official inflation rate) keeps going up but our wages go up at a much slower pace if at all...hence mom and pop both have to work to stay middle class now vs 50 years ago when only pop had to work...kinda started when they stopped backing the dollar with hard assets like gold during early 1970's.

Fundamentals work well during bull mkts when we are throwing darts at a board but you could just buy the momo stocks and probably do better as long as we are in a bull....so the key is to figure out when we enter intermediate and longterm bull or bear mkts...the critical inflection points are what we are after and seek!

This thread is abit odd now cause it started out as a technical analysis thread but it has morphed into something different now...I think part of it is due to the fact it takes alot of effort and time to post charts.

So lastly, I really hope nobody on here trades blindly following others who are perceived to be good/great traders...we are all the same here cause nobody is smarter than the mkts...the mkts can be manipulated by controlling the futures mkt overnight and this is something we must always contend with.

Money expansion--BULL
Money contraction--BEAR

Hope that was clear enough for everyone.....

[mact3333]

Nikkei down almost 6%....

[amanda hor$t]

^ nikkei closes down over 7% (and saved by the bell)... it's happening. get out now!

for a minute i thought i got out too early. not that i want to see a crash (was thinking about shorting the indexes but i didn't), but feeling good about my sell-all trade.

[Inspired]

TOAST...

[amanda hor$t]

Originally Posted by Inspired

TOAST...

what software is that? (etrade here, pretty much just eyeballing everything from watching cnbc)

[Inspired]

TC2000

[Hisam135i]

I'm currently looking for a slight pull back on USD as it seems a bit overbought. This should give SPX some breathing room before we something big happen. In the coming weeks as USD strengthens, we are going to see equities pull back. I don't want people to think that this post is falling for groupthink and going with the crowd. This is based on my FX trades with correlations to equities. Best of luck!

[mact3333]

Gap down...no gap fill...trend day down today....previously all gap downs bought up but it won't happen today IMHO...we shall see.

1. Got out of mkt 3 days ago...anyone follow me out?

2. Higher prices, volume low, price range contracting...bearish

3. Charts show we are at top of a important trend line, like Inspired showed

4. The momo stocks going exponential

5. The dumb money confidence level extremely high and needs to reset.

6. Dollar chart looks strong

[F1Venom]

mact3333, are you an investment manager or something? You sound like you know what you are doing.

[Inspired]

market might reverse here from home sales:

USA New Home Sales MoM for Apr 2.30% vs 1.90% Est; Prior Revised from 1.50% to 3.50%

[mact3333]

Originally Posted by F1Venom

mact3333, are you an investment manager or something? You sound like you know what you are doing.

No, but I did stay at a Holiday Inn last night...

If you guys were smart, you wouldnt listen to a word I say...seriously.

I just like to make predictions on the internetz...thats all.

Dont worry folks, the bull isnt over..we just need a temporary reset so we can make new highs again.

[amanda hor$t]

europe closed down overnight, nothing really going on in ny

so let's see how nikkei plays out tonight

[Hisam135i]

like I said last night dollar pulled back, which supported SPX today. But, I now believe the dollar has some strong support and should come back from here! So, we should see SPX fall with much more momentum later this week or early next week. I am now long USD/CAD so I have my money where my mouth is!

[RandomHero]

Originally Posted by mact3333

Nobody should blindly follow any trade ideas from this thread...this thread is to throw out some ideas but everyone needs to do their own dd...only use ideas from this MB if it jives with your own thinking...nobody will take away your gains but they also wont cover your losses...its really up to you.
We are in agreement on this part. No need to touch on it further.

I do find it funny when some say you have to trade using fundamental analysis over the long run...where are the fundamentals when we enter a bear when every stock in every sector craters?...did their fundamentals all of a sudden implode all at the same time.

To directly answer your question: yes as a whole their fundamentals imploded. People lost their jobs, cut back on spending, lost their houses, and most companies suffered heavily on the revenue/earnings side. Some were also forced to sell off assets in order to meet their short-term obligations which only further set them back.

What keeps the stock mkt working over the long run is the continual expansion of the money supply creating inflation...without this, the mkts would crash severely....they keep interest rates low and inflation high so you are forced to seek out the equity mkts....The Fed's buy up the worthless MBS's at face value and guess who is paying the bill on that one? Certainly not the Fed Reserve, its us!. We pay through inflation.

So you believe in Monetarist Theory? There’s nothing wrong with that, but it’s a theory and not a theorem. Controlling the money supply is a relatively small contributing factor in regards to the stock market. If you want to break the stock market down into one word, you could probably use “Velocity.” Velocity of money is what drives the stock market. The more times money changes hands the better.

In a perfectly uptopian market, your method of trading would be useless. The only reason why you’re able to buy on value is because we have an inefficient market. In theory, prices reflect any and all public information and should not fluctuate as rapidly as they do. With that said, the markets are inefficient and I am the first to agree that there is some benefit to value investing. Value investing to me involves both technical and fundamental analysis. It involves tracking the stock price, but also considering the potential profitability of the company.

But one prob is this, real inflation such as food, gas and rent(things the govt conveniently removes to calculate their official inflation rate) keeps going up but our wages go up at a much slower pace if at all...hence mom and pop both have to work to stay middle class now vs 50 years ago when only pop had to work...kinda started when they stopped backing the dollar with hard assets like gold during early 1970's.

Those are known as utilities and consumer staples. People flock to those sectors in bear markets because they are necessary for most people to live. Those sectors grow at a slow but steady pace, and that’s why your food and electric bill may seem expensive in a bear market. Consumer staples and Financials are the tortoise and the hare, respectively (at least over the past decade or so).

Fundamentals work well during bull mkts when we are throwing darts at a board but you could just buy the momo stocks and probably do better as long as we are in a bull....so the key is to figure out when we enter intermediate and longterm bull or bear mkts...the critical inflection points are what we are after and seek!
“Darts on a board” is the complete opposite of a fundamental approach. The whole point of fundamental analysis is to consider companies that have a strong potential to continue to grow or maintain their profitability.
This thread is abit odd now cause it started out as a technical analysis thread but it has morphed into something different now...I think part of it is due to the fact it takes alot of effort and time to post charts.


So lastly, I really hope nobody on here trades blindly following others who are perceived to be good/great traders...we are all the same here cause nobody is smarter than the mkts...the mkts can be manipulated by controlling the futures mkt overnight and this is something we must always contend with.

Money expansion--BULL
Money contraction--BEAR
Bull markets are largely influenced by an improving economy (fundamentals). Bull markets become aggressive bull markets after consumer confidence improves (technical to an extent).

Hope that was clear enough for everyone.....

Market timing is commonly used approach, but in most cases, it fails in the long run. The old saying goes “never try to catch a falling knife.” Dollar cost averaging is a much more proven approach to succeed long-term.

The stock market works around the idea that people want ownership in the most desirable companies. Prices fluctuate based on how desirable a company may be. Desirability could be viewed from a fundamental or technical standpoint and both should be at least considered in an inefficient market.

When a company becomes less desirable, it’s price drops. When a company becomes more desirable, it’s price increases. Desirability could be broken down at a very basic level into three groups.

From a value standpoint- Do I think this company’s stock should be trading at a higher level at this point in time? If I buy now, am I getting the stock on sale, or am I paying a premium over the retail price?

From a growth standpoint- Do I think this company is going to continue to expand and increase their profitability? This Rolex may be worth $5000retail right now, but is there a good chance it will be worth $10,000 in a few years?

From an income/dividend standpoint- Do I think this company has solid financials, is adequately priced, and will they continue to remain profitable in the future? Is this cow going to keep giving me milk for many years?

Let me give a couple examples of my point:
McDonalds: McDonalds is a consumer staple that is one of the best companies to own (in my opinion). People will eat McDonalds no matter if we're in an agressive bull market, or a serious recession. They have increased their dividend every year for the past 30 or so years. It's nearly impossible to use technical analysis on MCD because their volatility is so low.

Apple: Why was Apple trading at ~$9/share exactly 10 years ago, while it's now at $450? Was their rapid price growth due to technicals, or was it due to their innovation, marketing, and ever increasing revenue? The company's fundamentals improved, and their stock price appreciated.

Again, I am fully in support of technical analysis IN THE SHORT TERM. Apple's 52-week price range is ridiculous and their fundamentals really haven't changed as much as the price suggests.

Technicals work best when a company has a very high beta. To that extent I agree. If you're buying/selling penny stocks and trying to make a quick buck, technical analysis is the best approach. However, in the long run, fundamentals will always win. The companies that remain profitable will survive. The companies that cannot will die off.

[Inspired]

[amanda hor$t]

my portfolio's play-doh, real estate is where i'm really at (and cash... the modern equivalent of food stockpiling).

and you gotta admit, day-trading's pretty fun. for now i'm still hangin' out

[Hisam135i]

Originally Posted by Inspired

[Inspired]

I went 100% cash last night. Got cut up pretty bad from that sell of yesterday. Got back in today in the morning at a lower price.

BTW, anyone use Skype here? My friend have a chatroom with 5 other daytrade/swing trader

[RandomHero]

Originally Posted by R Grubba Balls

my portfolio's play-doh, real estate is where i'm really at (and cash... the modern equivalent of food stockpiling).

and you gotta admit, day-trading's pretty fun. for now i'm still hangin' out

All of your investments both tangible or not are part of your "portfolio,” at least in my opinion. By purchasing several homes and renting them out, you’re essentially creating your of REIT. I spoke with a man a while back who told me that he had no reason to invest in the stock market because real estate is doing so well right now. What he failed to realize is that he is most certainly invested in the market as a whole, but he has no diversification. It’s not necessarily a bad approach as long as it matches your risk tolerance and financial goals.

I consider many things I own to be part of my portfolio. Obviously, my mutual fund and equity positions are part of my portfolio. However, I also consider many tangible assets as part of my portfolio as well: Coins, Fountain Pens, Watches, Antiques, and even some of the vehicles I've owned in the past.

All these things can and should be considered part of your portfolio
-Classic Cars
-Watches/Jewelry
-Precious metals and stones
-Real estate
-Artwork
All of these things should be considered as part of your portfolio. They’re simply ways to further diversify your money. Your investment doesn’t necessarily have to have a ticker symbol. To me, an “investment” is anything that has the potential to be bought for less than you can sell it for.

[amanda hor$t]

^ the thing about real estate is that it's "real". no matter what it's worth on paper, you can live in it, sleep/party/work etc. renting (either rooms or in its entirety) is an obvious option. or grow tomatoes in your backyard and raise chickens in the garage: essentially an ecosystem. there will always be renters, and rent rates closely follow the cost of living. in ancient times, nobility was defined by land ownership. i can sell all my stocks with a few clicks, but to get out of my house you'll have to carry my bat and my lifeless body first.

hopefully the guy isn't all invested in detroit. you can't make land, so in a good city with constant population growth, there's only one direction real estate can go long term. of course, revolution (or something close enough like a really screwed gov) is possible, and that's why i'd prefer condos scattered all over the world over one mansion.

and cash, well that's food. in ancient china rice was traded like cash.