No-Reason-Rally: Likely to Unwind

Roger Nusbaum submits: I do not know whether the rally today is the Fed, some sort of short being stopped out, or something else -- but if there is no real reason for the rally you should not be surprised to see it unwind tomorrow.

Don't take this as talking my book: believe me I will be thrilled if the market goes higher and stays higher -- thrilled.

Rationally speaking I can't imagine cycles have been repealed, but shorter term the trends have been favorable overall regardless of today or tomorrow. I hope it sticks, I'm just not sure it can.

Comments

[irondoor91:]

Can you really be SURE about anything/everything regarding the stock market? I mean, seriously, is it not just impossible? I suppose that some day this trend, like all others will end and then you can be SURE that it is over. My question to you is what will you do then?

I know what I am going to do, which is just the opposite of what I have been doing since August 16th, but which also is the same thing I did on May 12th. I will be going short, on maximum margin, with appropriate stops of course.

It is so easy just to follow the trend, with no bias and no need to have my so-called "fundamentals" or market forecast validated. For example, I notice on this webpage under the heading "In this sector: Al eyes on this mornings PPI report". I ask you, is there any trade you would have actually done in your account either before or after this report? So what possible difference would it have made to you? Let's say the market dropped 100 points on the news. What then do you do? If it goes up 100 points, what trade do you make?

Its all noise, but guys get paid millions to comment on it.

Respectfully,

Max Corder
Bigfork, MT

2006 Nov 14 09:19 PM

[Roger Nusbaum:]

Well I don't get paid millions for anything; lmao. I don't trade around reports but I think there is value in understanding what moves the market short term even if you don't trade short term.

2006 Nov 16 08:54 PM

[Daniel Houston:]

The old "there is value" defense. Snore...

My mother uses that one when she wants to justify something she can't come up with a reason for justifying.

2006 Nov 16 09:55 PM

[irondoor91:]

Sorry, didn't mean to imply regarding your personal situation. More of a comment on the talking heads that have to fill the airtime or sell the company line.

IMHO, here is my understand of what moves the market short term or long term: seems to me that when you have more buyers willing to pay a higher price than there are sellers at the current price, the market price goes up. When the opposite condition exists, the market price goes down. When the market is going up, you want to be long. When it is going down, you want to be short. In either case, use a stop because you will be wrong about half the time. The best indicator of where the market has been is price, but it doesn't tell you anything about tomorrow.

2006 Nov 23 10:03 PM