Isn't is funny how the mantra from the late 1990s to 2008 was always buy and hold and never about trading the swings. I remember vividly how throughout that time period, the historical average of 11% annual returns were often mentioned and stocks were the best investment for those under 50. The Motley Fool thought they were geniuses for making money when they were just catching the up wave of a giant bubble. Then from the fall of 2008, when the S&P is around 850, the mantra changes back to trading the swings to avoid the downswings. Trade the swings is the new slogan that I hear. Instead most investors have avoided the upswings and are stuck earning next to nothing on their cash and bonds. Buy and hold is working again now that is has been abandoned by the masses. Very perverse how the market works. Now all those investors that sold lower "swing trading" are begging for a pullback to get back in after they traded out of their positions. The market is not that easy. When you take away the weak longs ("the new swing trading longs"), there isn't much urgent selling pressure anymore. That's why the market keeps floating higher with pullbacks that hardly last more than a few hours.
A lot of traders are confounded by this market, a market that goes up steadily and slowly with hardly a pullback. Now I am not bullish, but doesn't that action speak of a bull market? I have always believed that markets that give you a lot of pullbacks are weaker markets than those that don't. Strong markets don't let buyers in. That is why it's so important to maintain your position and not lose it by trying to trade every little squiggle and to avoid every little drawdown. We will go back down again, for more than 1 day, for more than 2 weeks, and have a more two sided market. I just think that probably ends up happening at higher levels than where we are now.
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8 comments:
You've been trying to short the market since 1117 I think. That was in late February. Besides the fact that you were on the wrong side of the market for a month give me one good reason that the market should keep going higher after you initially tried to short it for a pullback like 80 points ago from the high this week.
60 points excuse me.
Anyways recent intraday selloffs indicate markets are set to drop like right away. For two weeks we have not seen markets have inside reversal days like this week.
Anon, I agree 100%. We are very close to a decent pullback. More than 5%.
If it doesn't start next week, then it will after Easter.
I don't think this run is typical of a bull market. Bull markets usually take 2 steps forward and then a step back. This market just takes two steps forward and two steps more forward. We matched the record for most up days in a row. There were something of 17 out of 18 days up. This is unlike anything I have traded before.
I think late 99 has this market beat. Anyways so this market is nothing like you've ever seen. I agree, if this market were a man it would be one that is over 8 ft tall. So what will you do about it?
I want to catch the down move, but I want to be careful about it. The trend is very persistent but not overpowering in the daily moves. I think its a cyclical bull market, because after such a huge recession, a bounce back is very common. Also add in the ample liquidity and you have a strong market.
Among traders, I don't see the rip roaring bullishness that we saw in early January. That worries me because we were actually at lower levels back then.
I really can't picture a big pullback that lasts this year. I think this year, pullbacks will be buying opportunities. Next year is probably when the sh*t hits the fan.
Some very confused thinking here.
Projecting the immediate past into the indefinite future is not plan for success.
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