Friday, May 10, 2013

The Daily Note - $DJIA $SPX $NDX Feel Forgotten?

*****Today I got reminded about an article that I wrote about the importance of timing when in comes to success. I was once again reminded because while waiting and betting on a correction, or lower low in 2009, the market started to move relentlessly upward. At the same time, everyone, but mostly traders and analysts, and gurus, were opining about how we needed to drop lower for a true correction.  Of course we were only 2 months into the reversal, so who knew what was to come?

In this business, or any business to a large extent, it matters not what you think should happen, because it's the consensus that will bring the change and until then many more have to become aware and realize it before  the markets will change.

Take a look on my weekly outlook below to see the pattern, and you'll see  how we got to where we are today, where once again I'm hearing the increasing grumblings of a needed correction.


Forgotten Casualties 
Published   May 09, 2009

Placing ourselves into a situation because of a belief has always been risky business. People who do it can become heroes but more often they become forgotten casualties. It's because beliefs are emotional.

I have no doubt that many of those casualties were correct in their belief but unfortunately their timing was wrong. Looking at history I'm sure that there were many who railed against British rule, Stalin, and Hitler and who we've never heard of, all heroes for what they tried to achieve but were picked off one by one because they lacked one important factor.... consensus. People have to be ready for change in order for change to occur and therein lies the other factor.... timing.

Change takes time; well, not really. Change takes an instant; it's the preparation for change that takes time. Awareness and acceptance are the steps prior to change and are the ones that take the longest and where most get picked off. Awareness is where one notices that something is not in harmony, whether it be justice, science, or art, something does not work as well as it could. Philosophical in nature, it becomes a thought and a pattern that manifests slowly over time.

Voiced it becomes more real and becomes a belief or conviction; its where the campaigning begins and where most casualties occur. Shout it from the rooftop all you want; if people are not ready to hear it, you're shouting to the wind. But once someone does hear it and campaigns with you from another rooftop, the chain toward acceptance starts and unless there's weakness in the philosophy it won't fail but the battle has begun.

This is when those that want to stay with the status-quo, those with different beliefs and those that feel threatened will come into the fight. The battle continues until a leader emerges consensus is reached and when most are on board, action takes place and change occurs. Notice I did not at anytime say which side is right/wrong nor does hope ever enter it. It just is.

The best analogy I can recite about the above is the fall of the USSR; although many knew by the time Stalin emerged as a leader, that the Communist philosophy does not work, it took another 30 years of murderous battle, when millions died, and another 20 years war of acceptance before a leaders emerged and action took place for change. The pivot point of that battle was the 1956 Hungarian Revolution and the first support was the 1968 Czech Uprising, second support was when Reagan emerged in 1980 and third final support was when Gorbachev came on board leading to capitulation in 1989.

When we as traders become convinced of a philosophy about how the markets should or not be, and the market continues against us, we are in the awareness stage; right or wrong makes no difference, we are where the market is not. Although change may occur in an instant, we have to worry about where we are on the way to that instant. Has the battle begun, and where is the consensus is, should be always on the mind; but unless awash in unlimited supply of currency, we cannot stay in a trade against consensus without loss and becoming forgotten casualties.

Soon Forgotten (Mono) by Muddy Waters on Grooveshark

Happy Trading, Living and Dancing

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