Thursday, August 11, 2011

The Daily Note - Another Great Day

I was pondering @ppearlman 's straw poll about whether $SPY has bottomed, and the unusually great hits of my Subscriber PlayList this past weeks, when I recalled a previous "A Great Day" I wrote about nearly four years ago. Then I was exploring consensus thinking but especially negative thinking after listening, reading and reporting it through the Bush administration years.

As we all know by now, those years of pounding negativity finally came to fruition that year and continued to plague. Until quite recently, however, the opposite has been true. Most of the news media pumped positive outlooks even if they had to hold their noses, and eventually that too came to fruition until .. well, this past few days.

Consensus thinking is hard to be against, but if we are to survive as individuals, we must strive to keep thinking individually and to be careful about group think. The latter is much more difficult in today's world than even as recent as the last decade, for reasons stated in the original article and also state once more in this one. The availability and ability of spreading thought via the social media. Communication delivered in such a way is like with advertisement; if stated well it is more likely believed than if it's "just the facts, ma'am".

Looking at just the facts, things don't look so good. I think the market reflected it when many finally realized perhaps that 0% interest means "zero interest" as in available, and also means slow and little incremental growth. So, we tanked. Then, as I've mentioned often before, the only place we have left with for investing our money, if banks pay no interest on our deposits, is the markets , but particularly which market is important to note.

The EU was certainly a contender a few years back but look what has happened. Outlook being what markets are about, with more countries threatened by bankruptcy there, we here in the USA are the most likely to survive any major world depression. Not country but the markets. Reason, is we have the history. What many do not mention is that the great depression here in the USA back in the 30's was not limited to the USA. It was all over the world and especially in Europe and as we know, the consequence of which great monsters emerged: Hitler, Stalin, Mussolini, Mao and WWII. Of course if I really had more time or more of your attention, I would trace it back even further to be born out of a previous depression which wasn't as much felt in the USA as the rest of the world, and out of which Marxism took a strong foothold be they called Marxists, Progressives, Leninists, Socialists, Bolsheviks et al. Suffice to say they did not pay great interest on investments so the USA was the only place then too.

So it goes, history repeats, although we have yet to identify the monsters and hopefully we'll only have imaginary ones.

So, do I think the market has bottomed? No, because the fluctuations are too great. The Great Day article four years back spoke of it then too. Calling trades with 10 point moves was more difficult then and it was not over. The past four days I've had multiple trade calls with as much as 30+ point gains not just 10 point movers up and down. PlayList View Week81 Consensus thinking moves markets but it has to be consensus in one direction or another which, currently it is not, therefore market is on a bungee cord and predictable only so far as it allows before it bottoms on an ever slower fluctuation.

Happy Trading, Living and Dancing

The Daily Pick - DJIA

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