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New York, New York
Experience: Intermediate
Platform: MetaTrader
Trading: ES
Posts: 142 since Feb 2016
Thanks Given: 20
Thanks Received: 42
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In my experience of tracking market behaviors I've come to find out that there's the outside world which is the underlying beneath every Wall St. market, and then there is the actual Wall St. Market, and these two have to be understood separately. Wall St. is an industry unto itself, and that industry implies many things that are completely irrational to the people who actually work in the underlying real world of business. But to be sound on Wall St. though, you have to understand not just the rationale of the real business world and industries, but you have to understand the rational of traders and investors, or you'll bomb your account.
The adage goes, "The market can remain irrational longer than you can remain right." Very true.
That should be obvious to most traders, but what may or may not be as obvious is what I call a Brave's market.
There's a bull market and a bear market, but the Brave's Market is something else. It is 100% Wall St. driven, so it is 100% irrational when considering real world business fundamentals. A brave's market is not right with the real world because the big money "braves" of Wall St. have taken it hostage like a hijacked commercial airliner.
I've noticed that when a market roll over is completely 100% predictable, and everyone on the street knows it, it does not sell off. For instance everyone thought that the FOMC meeting would cause a sell off. Nope. Not so. It didn't even sell off into the Brussels incident the other day. Cramer was noting on his hour that Nike and Five Below had sold off big because of bad earnings, and these things rallied many more percent in just one session that would have taken days or weeks to achieve after an earnings report like that in any era before. These are unusually brave buyers with HFT's street machines and what not.
I think what we are in is a momentary time of insanity in the market call the Brave's Market, and it has most people confused mostly because they don't understand politics and national security risks in regards to currency wars and foreign trade deficits. I see Tweetle Dees and Tweetle Dums getting air time on TV and in chat rooms all of the time spouting out what they THINK is going on, but they only show that they have never done the research on the way the world works. These are high rollers mind you, and they are getting there arses kicked in the markets. In fact, I believe I just heard this week that Hedge Funds are at a record worst as far as losing years go right now because they DON'T understand the macro fundamentals. They've been doing terrible for quite a while now.
With dummies with big money in the markets thinking market sell off, market sell off, advertising themselves as being short the market, is it any wonder the Braves are stampeding over them hoof to bear snout? Bears are trapped?
I think that what the Stock Market did during the .com boom was a Brave's market. It's when masses amounts of money are put on the markets to burn the bears until the short interest is dried up. At first it causes bears to scale into short position more and more. For instance there's one trillion dollars short interest in the stock market right now, and it's probably going to keep rising until bears are convinced they are in a bull market, and then it will sell off then.
You have to take everything into perspective when evaluating markets, but right now bears are getting boxed on.  
It's like a game of chicken, therefore a Brave's Market. It's like dancing on water, and just the action of dancing on water causes the water to become more and more solid putting a floor in the market for Braves to go long until bears start going long, and then they are left on the thin ice holding the bag.
Remember that HFT can pull money out quicker than human thoughts, and then go short, and front run the short sellers without thinking about it. So when I'm talking Brave's Market, these street machine heads are more and more likely to be very damn brave. In fact, we may be entering a new era where these machine heads really take the cake. HFT is relatively new, and we have been in a bull market for quite a while. We don't know what they are capable of at these levels and this kind of macro environment, and we won't know for many years from now. There's bound to be a surpriser coming straight at us.
You should already know that Algos run 70-80% of the stock market. I'm not sure how much of that is HFT. Imagine it though. You can't lose, and you can borrow virtually infinite amounts of money. There's no telling how high a bull market could go without any rationale.
The Fed cannot raise interest rates. It's a threat to national security to damage the export economy which is what a rate hike would do. The ECB is locked down on rates, so they are no more a threat. China's rates will keep coming in until it hits 0%. We are sure of that because they are anti capitalist dingo dogs from a primitive era who are not able to save themselves as far as their govt is concerned. They need a consumer economy to save themselves now, but they don't have one because they are commy kingdom horse drawn and quartered by authoritarians. Their system is economically cannibalistic, and without a big, booming oil market and western consumers to hold them up, they will break especially since their stock market and real estate market among many other things are bubbles. They will be another Venezuela who doesn't even have food on the shelves now in a matter of a decade unless they kick out the Kommy Kingdom Klan.
If the Fed rates are on lock down at least until the second half of the year when we are getting closer to a time when a new US regime will bring the US foreign trade deficits to equilibrium after many years in a currency war which will become a new economic boom (to what degree I don't know yet), then what we have here is a continuation of the bull market.
I believe we could have a few big sell offs this year, but big paper is just going to accumulate into that weakness ahead of the new global economic structure starting next year. I think overall the year could be just one big sideways range, but it won't be a down year simply for the fact that the new economic order is coming on starting in 2017.
The Congress is right wing majority, and the White House will be right wing conservative with a Maker Industry Chief as President. This is immensely bullish contrary to what people would have you believe because they DON'T understand the basic premises of global socio-economic structures. They think we are dependent on emerging markets like China and Mexico. If they were my children, I'd spank them for spouting the jibberish gobbledy thoop that they do on TV. They mislead the people as far as investing and voting goes.   They are trying to direct what they don't understand from the News Network.
I personally am Neutral about this week before earnings starting in April, and I would not be surprised if there isn't any profit taking into the earnings as usual. Mark my word though. If the market does rally a few times before April, we're in a very Bull Market even if the rallies are sold off, and the week closes flat.
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Just in case you need a caffeine boost to get through that article. Hehe
