Investing General Discussion

nothing but rally since they were released. Clearly market was expecting worse. Should be an interesting day.

This is a chart of the S&P 500. The red trend line is the 200 week average that acted as support for the last decade. To reiterate Pops, we are now in a bear market by definition. We can have very sharp rallies but until we can clear and close above the trend line we are not out of the woods. In longer bear markets that red trend line will roll over and start to decline. While this recession is likely to be rather deep we may recover fast enough to get on top of a flattening 200 wk average prior to it fully rolling over.

There is a lot of institutional rebalancing going on right now and it could continue till the end of the month. Also as a concept to understand, after large declines like this you now have investors who held through the decline and as we recover a sizable chunk of that decline some will choose to get off the ride, you will also have people who went long and with sizable gains that they will want to book. That is why support levels turn into resistance once they are broken. It can take some time for these dynamics to work their way through the system.

sadris said:

People who talk about support and resistance are the equivalent of witch doctors in Africa throwing bones.

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Nonsense. Technicals are not magical pixy dust but they matter because they matter to humans. Humans are consistent in how they emotionally respond with fear and greed. This behavior shows itself in patterns. Some are meaningless some are not. Simple concepts of understanding, are many stock holders currently green, are they red? and how does that effect their future decision making. The choices of past investors sheds light on the choices of future traders.

People who aren't smart enough to understand complex ideas sometimes find solace in dismissing them entirely.

a_skeleton_03 said:

Even if they were magic fairy dust terms they are how the professionals base their decisions and as a result are worth paying attention to.

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thats what I mean by they matter because they matter to people. From some truly logical standpoint taking people out of it, who gives a shit about a 200wk avg. but because enough people believe it's relevant it becomes relevant. We now have 1000s of machines that have their entire programmed trading running off of technicals.

Simpletons get confused because they want something to be a guarantee or it is no value. Technicals often get blown the fuck out, but clearly as shown below it mattered. I enjoy seeing the stumbling blocks for why people have trouble finding success. These things are guide posts, just another tool in the chest to try to make good decisions. And there are numerous tools to be employed to consistently perform. Many people learn about investing and trading and lock in on one particular tool and become so laser focused on that one thing they fail to look at all available information and keep an open mind.