Trading Blogers

On October 26 2008, I wrote the following about Market Fundamentalism that sounded quite offending to many type-two suckers who manage multi-billion funds based on valuations and market fundamentalism.br /br /a href=”http://xtrends.blogspot.com/2008/10/collapse-of-market-fundamentalism.html”Collapse of Market Fundamentalism/abr /br /Did you read the 5th paragraph? br /br /This morning, Berkshire Hathaway Inc. reported a 96 percent drop in its fourth quarter profit because of largely unrealized losses of $3.25 billion on investments and derivative contracts. In the report, Mr Buffet confesses that it is all his mistake. This alone makes me rethink about his ability to learn despite his age and honestly I might have been underestimating his adaptive skills. br /br /However there is still an army of thick headed fund managers in the business that will not understand what has really changed and why it is different this time, until the grand day of reckoning. Until then the wealth transfer from this army of suckers to the minority at the top of the pyramid will continue like a fight between dinosaurs and their predators… lengthy and bloody.

Markets may accelerate to the downside into the close before the announcements by several European banks this weekend, I wish all xTrenders best of luck.

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a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SaYht8EuHpI/AAAAAAAABfY/qSEMP2fovBo/s1600-h/DC_Capital_01+Feb.+25+21.20.gif”img style=”cursor:pointer; cursor:hand;width: 400px; height: 239px;” src=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SaYht8EuHpI/AAAAAAAABfY/qSEMP2fovBo/s400/DC_Capital_01+Feb.+25+21.20.gif” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5306966284006465170″ //abr /br /I have readings similar to those I got in August / September 2008. As you know, I have been talking about this terminal sell off since SPX 900-950 level but instead we got a slow motion sell off (only 200 SP points so far). In the last few weeks, several significant developments took place in major world markets including US. We have been consolidating under the important trends that will likely push prices lower over the intermediate term. br /However, from here on, markets will likely accelerate to the downside at very fast fashion. It will have to be somehow faster than October 08 event by nature… unfortunately.br /This may all take, unlike October 2008 sell off, one or two days, or it may be something like October 1987 event.br /br /There is an intermediate term trend line passing through 750-755 on SPX and obviously it can not be taken out intra-week. What is most likely to happen is that , we will probably close around 750 on one of Fridays to open below that trend line with a sizable gap, probably on the following Monday. It may trigger the event or it may not. Hard to fine tune the timing at this moment. BUT dont forget that it gets darker before the dawn. For a healthier market, perhaps for another bull market, this has to happen.br /br /Since this will likely be a terminal move, since it will be harder to predict the exact moment, I insistently stay short SP from 757 and higher. Plus several domestic and European banks.

That is Newton’s second law. You know what I mean.

What I see is a cause building on short squeeze, not a double bottom. br /br /The cause for the inevitable selling climax into the oblivion. br /br /Staying short SP from 757 and higher, also shorted banks and brokers, expecting SPX to take out 700 this week.

We have not seen the bottom. We have not even approached the bottom. In my opinion, we are 100s of SP points away from the bottom that may lead to a cyclical bull market. You know my target for SP500: 400-450: Almost 50% from here. br /br /But in trading, you have to capitalize on the moves that are highly probable, that is why I got out of the shorts at 755. I will continue to trade this market on the bear side.

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If you believed Mr Nassim Nicholas Taleb’s Black Swan Theory, then in late summer 2008, you were thinking I was an insane person when I repeatedly said 10s of thousands that the market would crash in early October, in fact, 4-sigma portion of it 2 hours before it took place on October 9, 2008. br /br /For centuries, humans tend to call unexplainable events unpredictable, illogical or chaotic because it is the human psychology that forces man to cheat. Less uncertainty gives man more confidence and inner peace, sometimes at the expense of truth.br /br /I think the market will make another example out of it in near future. Whether you call it Black Swan or not, it is once again all over the charts !br /br /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZonOhFye5I/AAAAAAAABeQ/fOzMUjavws0/s1600-h/DC_Capital_03+Feb.+16+20.52.JPG”img style=”cursor:pointer; cursor:hand;width: 400px; height: 239px;” src=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZonOhFye5I/AAAAAAAABeQ/fOzMUjavws0/s400/DC_Capital_03+Feb.+16+20.52.JPG” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594641536482194″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonOcKcgeI/AAAAAAAABeI/75zKRHYlEfY/s1600-h/DC_Capital_02+Feb.+16+20.52.JPG”img style=”cursor:pointer; cursor:hand;width: 400px; height: 236px;” src=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonOcKcgeI/AAAAAAAABeI/75zKRHYlEfY/s400/DC_Capital_02+Feb.+16+20.52.JPG” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594640213836258″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonOBIx6ZI/AAAAAAAABeA/PVi-qQrfG7I/s1600-h/DC_Capital_01+Feb.+16+20.50.JPG”img style=”cursor:pointer; cursor:hand;width: 400px; height: 240px;” src=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonOBIx6ZI/AAAAAAAABeA/PVi-qQrfG7I/s400/DC_Capital_01+Feb.+16+20.50.JPG” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594632959093138″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://4.bp.blogspot.com/_ZdctlOEsqMQ/SZonHJbfRvI/AAAAAAAABd4/P9hmYxvf_TY/s1600-h/SharpChartv05.ServletDriver.png”img style=”cursor:pointer; cursor:hand;width: 400px; height: 168px;” src=”http://4.bp.blogspot.com/_ZdctlOEsqMQ/SZonHJbfRvI/AAAAAAAABd4/P9hmYxvf_TY/s400/SharpChartv05.ServletDriver.png” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594514925962994″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZonGBrU3sI/AAAAAAAABdY/AMeGZr5OYZc/s1600-h/SharpChartv05.ServletDriver2.png”img style=”cursor:pointer; cursor:hand;width: 400px; height: 168px;” src=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZonGBrU3sI/AAAAAAAABdY/AMeGZr5OYZc/s400/SharpChartv05.ServletDriver2.png” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594495665036994″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZqaarJeytI/AAAAAAAABeY/QtwmngtGWJc/s1600-h/untitled.JPG”img style=”cursor:pointer; cursor:hand;width: 400px; height: 168px;” src=”http://1.bp.blogspot.com/_ZdctlOEsqMQ/SZqaarJeytI/AAAAAAAABeY/QtwmngtGWJc/s400/untitled.JPG” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303721294231947986″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonGlTLrYI/AAAAAAAABdo/Oy6gUHj2Hd8/s1600-h/SharpChartv05.ServletDriver4.png”img style=”cursor:pointer; cursor:hand;width: 400px; height: 168px;” src=”http://2.bp.blogspot.com/_ZdctlOEsqMQ/SZonGlTLrYI/AAAAAAAABdo/Oy6gUHj2Hd8/s400/SharpChartv05.ServletDriver4.png” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594505227447682″ //abr /a onblur=”try {parent.deselectBloggerImageGracefully();} catch(e) {}” href=”http://3.bp.blogspot.com/_ZdctlOEsqMQ/SZonGVCByFI/AAAAAAAABdg/5qk06T0Om-0/s1600-h/SharpChartv05.ServletDriver3.png”img style=”cursor:pointer; cursor:hand;width: 400px; height: 168px;” src=”http://3.bp.blogspot.com/_ZdctlOEsqMQ/SZonGVCByFI/AAAAAAAABdg/5qk06T0Om-0/s400/SharpChartv05.ServletDriver3.png” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5303594500860528722″ //a

During the last few weeks, the markets showed that 600 level on SP500 could no longer be an important support for this bear market. I expect the benchmark to stabilize between 400-450 before the next possible cyclical bull market. Not only several major indices but many heavily weighted components are somehow giving similar implications on long term charts.