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Just a correction?
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mamasan
Member |
09-Jun-2006 08:49
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today should rebound 20 pts. |
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ten4one
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09-Jun-2006 07:04
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Hi T-coach, I do agree that human emotion mostly remain unchanged., but, with the fast life and competitions, the stress factors have definitely changed. This could directly affect the Market trading patterns! Sometimes, I think losing money is a good thing because it really hurt and that would make you more careful and learn from your mistakes - a real experience that no teacher could impart. Thanks for the recommendation of the book. |
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trading_coach
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08-Jun-2006 09:50
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Hi ten4one, yes definitely true that the accessibility of information is quite different today to what it was many years ago, but nevertheless we keep seeing that history has a strange way of repeating itself within the market cycles - we are now dealing with different volumes of activity, and perhaps therefore different volatility within small time periods (ie one day) but if you look at the broader movements within market cycles, they are no different now to what they were 50 years ago, or more. So on a macro level there seems to be no difference, and on a micro level, I doubt most traders are different today than what they were many years ago; the majority of traders still trade on emotion, still follow the masses on the market, and still trade without discipline; and mostly still loose money! But you're right in that maybe it happens that little bit more quickly these days. Accessibility to information has certainly changed, but the principles of the market have remained the same, and human emotion has largely remained the same... Check out some books by WD Gann, one of the greatest traders of all time - written many years ago but still 100% relevant to todays environment. Essential reading for the members of this forum who keep wondering why they keep loosing money. Cheers. |
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ten4one
Master |
08-Jun-2006 06:24
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Hi Trading-coach, I think when you digest the numbers and info of the 1920's and compare to that of today's one must also look at the environment then and now. The news or info took weeks if not months to reach the average Investors. Today, with just a click on your computer, info are easily available to all. Thus, it would take longer time to formulate decisions and confirm a trade-order in the 1920s; and I'm sure that will affect the Market Cycles. |
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mamasan
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07-Jun-2006 19:16
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singapore GDP growth not bad. hindsight is 20/20. |
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trading_coach
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07-Jun-2006 15:09
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Sorry, I accidentally hit is "post" button before completing my final sentence paragraph below. It should have said "But what we do know is that a fundamental part of economic and sharemarket activity is the rises and falls of the market cycles and if we have just had a cycle high in the US then there is a good probability before we hit the bottom and begin a new cycle that we have a fairly long way to go down first (but will that new 4 year cycle be bullish or bearish...??!) PS - the biggest retracement the S&P 500 has had in a 4 year bull cycle was 76% ending in March 1938, and the average retracement is about 50%, so far we've had 15% and the lowest previous was 25%....) |
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trading_coach
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07-Jun-2006 14:59
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All sharemarkets, and most established economies of the world operate in market cycles, meaning lowpoint, highpoint, then lowpoint again; before heading into a new cycle phase. For the S&P500 we have data which goes back to the 1920's, and what this shows is that the US sharemarkets (whether we like it or not, the most dominant in the global economy right now!) operate, like all other markets, on long and short term cycles. The most useful long cycle to look at (trough to trough on a monthly chart) is about 4 years. Since a 1928, there have been 12 bull cycles and 6 bear cycles of about 4 years each, as defined by whether the cycle low is higher or lower than the previous cycle low. We are now coming toward the end of a bull cycle, which started in July 02. Of all previous 12 bull cycles, the smallest retracement from it's peak to the new cycle low was 25% of its rise, and that was in the cycle ending in 1994. To take the best case scenario we would therefore expect for the S&P 500 to retrace at least 25% of its rise from it's high (maybe we've just had it in May06) to its new low/start of new cycle, coming some time in the next year or so. So far that retracement has been just 14.5%......Of course if we've not yet had the cycle high then it's a different matter. Why is this relevant to the STI? Well we don't have enough long term data for our own market to look at the very long term cycles in the STI, but we do know our market tends to react to large moves in the US markets as we have seen recently, and analysis other than what I have presented above also suggests that all sharemarkets operate in such cycles and similar rises and falls can be expected... So is what we are seeing right now a "correction" or something more major. Well no one can say for sure. But what we do know is that a fundamental part of economic and sharemarket activity is the rises and falls of the market cycles and if we have just had a cycle high in the US then there is a good probability before we hit the bottom and begin a new cycle (but will that new 4 year cycle be bullish or bearish...??!) |
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Nostradamus
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07-Jun-2006 14:46
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Why only talk now? Because the articles only appeared in the newspapers a few days ago. If they appeared one month ago, I would also post earlier. If you were in the markets the previous severe corrections, you would have known. |
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teeth53
Supreme |
07-Jun-2006 13:18
Yells: "don't learn through life, learn to grow with life " |
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Uncertainty is not over yet, fear of this and that is still on going and now world cup,two day away, even new FED chief oso got into d act to said interest is likely to rise. I think President Bush can get into more problem by getting the wrong man for this job. Greenspean is better. |
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jesnigel
Member |
07-Jun-2006 11:30
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If you need or feel like fishing for stocks at this stage which I think is a good level for buying some, go for those that you would not mind holding for the long term - ie fundamentally good stocks that has good profit track record and preferably those that pays good dividends. If you think long term, you will have the opportunity to sell it for a profit; if you think short term, you will most likely end up holding it for the long term and mostly for the wrong stocks. happy fishing! and good luck |
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Nostradamus
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07-Jun-2006 10:33
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The market always over-reacts, on the upside and downside. The volatility makes it interesting. Imagine if there's no volatility, the market would be be a straight line. |
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mamasan
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07-Jun-2006 10:02
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this correction appears to be overly correct !!! |
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travelbug
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07-Jun-2006 09:07
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if markets are efficient, there would not be so many terrible fluctuations |
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ten4one
Master |
07-Jun-2006 06:49
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Hi Nostradamus, Interesting material for reading. I tot that if the Market is efficient, all the info available should be reflected in the pricing of the Market. Being so, I must say that there is flaw in that report. Anyway, given any Market situation the Analsyts will have more than one view on the same subject - that's what makes the Market so interesting! |
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singaporegal
Supreme |
06-Jun-2006 21:32
Yells: "Female TA nut" |
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Good article by Nostradamus! I'm especially disturbed by this para - According to a Citigroup study, in 73% of instances when STI has fallen by more than 5% in a month, a slowdown in Singapore's economic growth followed. In some cases, this downturn followed a series of share price slides, as many as 8. |
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mamasan
Member |
06-Jun-2006 19:55
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why only talk now, why no talk earlier ? |
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Nostradamus
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06-Jun-2006 18:59
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According to a study by a major brokerage house, outflows from the market during a mild correction last 2 months, followed by 3 neutral months. Assuming what happened in the last 3 weeks is a mild correction, we have 5 more weeks of outflow to contend with. With the sharp market decline during the last 3 weeks, the market will need a further period of time to regain confidence. Risk appetite has also not returned to the market. |
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Nostradamus
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06-Jun-2006 16:57
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A new study has shown that more often than not, after share prices drop sharply, especially if there are at least 2 sharp monthly slides, an economic slowdown is around the corner. According to a Citigroup study, in 73% of instances when STI has fallen by more than 5% in a month, a slowdown in Singapore's economic growth followed. In some cases, this downturn followed a series of share price slides, as many as 8. The Citigroup report analysed episodes where STI dropped by more than 5% in a month, since 1985. A total of 22 of 30 such episodes preceded a recession or economic slowdown - a drop in GDP of 3% or more. Calling the STI plunges "distress signals", the analysts noted that there were 8 such signals before the 1998 Asian financial crisis, the first one occurring as early as Mar 1997. Markets are efficient. They don't reflect the current economic situation, but are usually the first to reflect global economic risks 12-18 months ahead. It's quite clear now that the US is headed for a slowdown, and despite that the Fed may still raise rates again, and China's policy tightening does not help. Citigroup predicted that Singapore's GDP growth could be 5% or less in the 2nd half of this year. It estimated that for every 1% slowdown in US growth would see Singapore's growth slow by 1.7%. However, there was 1 glaring "false signal". In the infamous October 1987 crash, STI lost more than 40%, but no downturn followed. The latest correction could be a false signal. Still, instead of thinking this is a great time to buy, hoping for a sharp rebound in 2-3 months time, it is prudent to adopt a defensive strategy until things clear up on the US and China fronts. |
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