Tuesday, February 05, 2008 10:15:07 PM
Anyone long or of the "buy and hope" mentality better hope that this lower support line holds. Judging by the extreme outliers we have been witnessing over the past several weeks and the implosion of TMG, I believe it is very possible. I think there could be a lot of timing systems imploding over the next several months because the data sets that they use have never witnessed extremes like this.
How many people out there have backtested their systems using daily data from the 1930s... my guess is nobody because this data would be very hard to find, which means almost ALL timing systems are not prepared for a 1930s scenario... this year could be the classic flush that occurs once a millenium given the excesses that we live in today. Most systems are using data only from the bear market years 2000-2002 and have "their fingers crossed" that a similar scenario would play out... this is a MAJOR VULNERABILITY in my mind. My guess is it will be different, more similar to the 1970s or the 1930s. We've already witnessed some extremes that NEVER occurred during 2000-2002 and I think more extremes are on the way.
The pendulum always has to swing back the other way at some point. Will 2008 be this major turning point? Right now, it is showing all indications that it could be.
How many people out there have backtested their systems using daily data from the 1930s... my guess is nobody because this data would be very hard to find, which means almost ALL timing systems are not prepared for a 1930s scenario... this year could be the classic flush that occurs once a millenium given the excesses that we live in today. Most systems are using data only from the bear market years 2000-2002 and have "their fingers crossed" that a similar scenario would play out... this is a MAJOR VULNERABILITY in my mind. My guess is it will be different, more similar to the 1970s or the 1930s. We've already witnessed some extremes that NEVER occurred during 2000-2002 and I think more extremes are on the way.
The pendulum always has to swing back the other way at some point. Will 2008 be this major turning point? Right now, it is showing all indications that it could be.
Jan 4 - We have transitioned into a bear market. Completely different rules apply.
May 23 - IMO, any price at/above this close makes a great Nasdaq/SP500 short.
Trade Smarter with Thousands
Leverage decades of market experience shared openly.
