Sanrith Descartes
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Investing General Discussion
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For better or worse, I sold it. hogs and pigs right?
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Blazin
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Thought I might share a snippet of process for anyone interested. Today's project was studying periods of time when the market has been extended over it's 200 day average by more than 10%. I went back about 25 years.
The current period. Today we are ~17% over the 200d pretty rare territory. You can see two prior periods the Sept 2nd peak and the Late Feb peak (both periods resulted in giveback.)
Below is the Feb'18 peak where we topped out at 13.8% over the 200d. This was followed by a correction and a period of consolidation that lasted quite some time.
2013-2014 Bull run saw several over extended periods. Each resulting in some correcting. This chart is a good example of the difficulty of going from point A to point B, several areas on there it would have been easy to think the run was over. Notice during the whole period there was no real challenge to the 200d, with pullbacks being less than 10%.
2011-2012 In Early 2011 the market was still running hard off the 09 spring low. These overbought conditions resulted in a prolonged consolidation and pretty ugly correction before moving higher.
This is the rally off the 09 lows, it's one of only 2 periods that was more extended than the current market, while those first two peaks noted weren't good buying opportunities in the short term the pullbacks were shallow, but ultimately the market again entered a period of consolidation that lasted months.
Again following a bear market a strong rally ran up the S&P to over 13% over it's 200d. Repeating theme...The market then consolidated for an extended period, while the 200d caught up.
This is the very end of a 20yr previous secular bull market. Both in 99 and 2000 the market would extended beyond 10% over it's 200d. Unlike many of the charts above notice that volatility increased and pullbacks were testing the 200d repeatedly.
1997 more typical to most of the charts, following an strong bull run the market found itself overextended and entered a period of consolidation that would last many months.
1995-1996 The secular bull market began in 1982 and by 1995 was rather long in the tooth and fears of exuberance abound. It was during this period that the last leg of that secular trend began in earnest. We see a market that is overextended and stays that way. Certainly some give back, but that give back is shallow.
Now past is not prologue, but studying how traders in the past behaved in different situations can give us insight into how traders might behave in the future. It tells us something about probabilistic outcomes and helps set our expectations. Are we at the end of the secular cycle? Are we beginning a new leg of that cycle? How will the market behave differently depending on which of those two things is true? We don't have to guess, the market is going to show its hand.
Most investors who are bullish right now feel this period is most analogous to 1995-1996 and 2009-2010. If it is, pullbacks should be shallow, the market should show pretty strong support at the 50d (blue line) and deeper corrections should rally sharply.
Below is the Feb'18 peak where we topped out at 13.8% over the 200d. This was followed by a correction and a period of consolidation that lasted quite some time.
2013-2014 Bull run saw several over extended periods. Each resulting in some correcting. This chart is a good example of the difficulty of going from point A to point B, several areas on there it would have been easy to think the run was over. Notice during the whole period there was no real challenge to the 200d, with pullbacks being less than 10%.
2011-2012 In Early 2011 the market was still running hard off the 09 spring low. These overbought conditions resulted in a prolonged consolidation and pretty ugly correction before moving higher.
This is the rally off the 09 lows, it's one of only 2 periods that was more extended than the current market, while those first two peaks noted weren't good buying opportunities in the short term the pullbacks were shallow, but ultimately the market again entered a period of consolidation that lasted months.
Again following a bear market a strong rally ran up the S&P to over 13% over it's 200d. Repeating theme...The market then consolidated for an extended period, while the 200d caught up.
This is the very end of a 20yr previous secular bull market. Both in 99 and 2000 the market would extended beyond 10% over it's 200d. Unlike many of the charts above notice that volatility increased and pullbacks were testing the 200d repeatedly.
1997 more typical to most of the charts, following an strong bull run the market found itself overextended and entered a period of consolidation that would last many months.
1995-1996 The secular bull market began in 1982 and by 1995 was rather long in the tooth and fears of exuberance abound. It was during this period that the last leg of that secular trend began in earnest. We see a market that is overextended and stays that way. Certainly some give back, but that give back is shallow.
Now past is not prologue, but studying how traders in the past behaved in different situations can give us insight into how traders might behave in the future. It tells us something about probabilistic outcomes and helps set our expectations. Are we at the end of the secular cycle? Are we beginning a new leg of that cycle? How will the market behave differently depending on which of those two things is true? We don't have to guess, the market is going to show its hand.
Most investors who are bullish right now feel this period is most analogous to 1995-1996 and 2009-2010. If it is, pullbacks should be shallow, the market should show pretty strong support at the 50d (blue line) and deeper corrections should rally sharply.
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Sanrith Descartes
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Great data. Thank you. I am curious to see what money was sitting in money market accounts during each of these periods and compare it to now. That is one of the big variables I think driving what's going on. That and near interest free money.
Sanrith Descartes
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karma
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Thanks for sharing Blazin, interesting information there.
Been a decent enough year for me so far, my "learn the market and trading/investing" account is not quite double what I put in it when I started in Feb. I am a fairly conservative and cautious trader so someone smarter and more skilled certainly would be way better off, but I have learned a bunch so far. Getting ready to cash out my T Rowe Price 401k and move it to my TdA account. Its not averaging as well as my Vanguard 401k, and looks to be underperforming the major indexes as well, so I figure I'll just take it, split it up between some of the major ETFs and not worry about it.. Be much easier to add to it as well since accounts are already linked. It is no huge amount of money, and it isnt money I am going to need later more than likely so if I blow it up, I'll survive!
Been a decent enough year for me so far, my "learn the market and trading/investing" account is not quite double what I put in it when I started in Feb. I am a fairly conservative and cautious trader so someone smarter and more skilled certainly would be way better off, but I have learned a bunch so far. Getting ready to cash out my T Rowe Price 401k and move it to my TdA account. Its not averaging as well as my Vanguard 401k, and looks to be underperforming the major indexes as well, so I figure I'll just take it, split it up between some of the major ETFs and not worry about it.. Be much easier to add to it as well since accounts are already linked. It is no huge amount of money, and it isnt money I am going to need later more than likely so if I blow it up, I'll survive!
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Sanrith Descartes
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Finally found a profitable roll on my DAL call. Went out to next week and up 1$ strike. Made the whopping 2 cents but got the strike up a dollar. Still deep in the money so we shall see what next week brings.
Sanrith Descartes
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Had second thoughts and decided to close out my DAL position. Made an extra 20 cents on the downward movement. All-in-all I booked about a 30% profit from Feb to now. I am satisfied.
Blazin
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Took some of my profits and bought KMI.
Blazin should be proud.
Also, can anyone translate his work to WSB terms? All in on QQQ puts?
Sorry TLDR: Go all in on deep in the money puts, and also buy every SPAC and IPO that trends on RH. Print tendies like a Dominion machine recording Biden votes.
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Sanrith Descartes
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Sanrith Descartes
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Blazin
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Can you point to the spot where the SPAC touched you?
Let me tell you a little story about a company called 3DFX. It was 2000 and young Blazin had hopes and dreams of striking it big ...
Sorry I can't go on the wound is still too fresh and cut too deep
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LachiusTZ
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Lol, giving shit is just who I am.
I did think it was pretty neat, if I was more informed and smarter person than an I am, I'd look for the similarities and differences between now and the rallies off of the 09 lows.
Present day might be a complete one off tho... So much strange shit going on.
Not really sure how to make money off the great reset. Not sure anyone at my level can.
LachiusTZ
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That's being said the temptation to pull back some has been there for a while, but everything just stays green...
I've accomplished what I set out to do after selling our rent house in April, but damn it just keeps printing money so...
This reminds me of how I got my wife pregnant
I've accomplished what I set out to do after selling our rent house in April, but damn it just keeps printing money so...
This reminds me of how I got my wife pregnant
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Sanrith Descartes
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Weren't they a graphics card company or something? I think I had one of their video cards in my leet Compaq Desktop.
Blazin
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There is one major factor that is true in all the past charts that applies to those in the future...HUMANS. Though our methods may change how we react as a group to fear and greed has not changed.
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Sanrith Descartes
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Fucking TRIT. I was one of the original investors back in June. It basically flatlined for 6 straight months so two weeks ago I decide to make a little scratch and sell some covered calls. Bang, up 16% today on no news and 10x normal volume. And here I was thinking i was gonna coast into the 12/18 expiry on what options I hadnt closed out yet.