The path of maximum frustration.
Robert, a few days ago, I wrote to a friend, or somewhere, saying that I thought that the market consisted of two groups.
i) The Bulls praying for a bounce. -
"Father in heaven, please let me get out flat and I promise I wont spend the childrens' school fees on tech stock, and I will be in church every week."
ii) The Bears praying for a bounce. -
"Father in heaven, please let this market rally so that I can short more stock. I spent 2 years being derided by the bulls, and I am sure you would agree my time has come. I will even give some of the money to good causes."
There is a third group that I have forgotten. A group that I, and you Robert, belong to - The capitulation junkies.
"Father in Heaven, please scare the hell out of these bulls, especially those #@$£4 A-Merry-Traders. ORCL at 10 bucks is an absolute purchase. It will have to double in a year. Heck I will even buy 50 shares for the earthquake victims."
If the market is true to form it will continue to fool all 3 groups. I reckon it will continue to grind down with a few +/- 5% days, a few island reversals to fool the hell out of us all. Bear markets can gore or bore you to death. Take your pick.
If an Ameritrader bought SUNW at 20 I am pretty certain s/he has no stop. "Heck, how low can it go, Martha?"
S/he will only sell when they need the cash in their pockets, by which stage the stock could be anywhere, they have lost their jobs, and the economy is obviously in recession. Capitulation would result in a shorter bear market, something that everyone wants.
Remember capitulation occured in April2000 because Soros' Quantum Fund capitulated. I.e. disciplined traders, if you want a example of what happens when undisciplined longs refuse to sell, go look at the Japanese Financial system and the Nikkei225.
This is why you just have to go with the trend, until it changes, buy at supports and sell at resistance. I would love a home run now, but I reckon that I will just have to play for a couple of singles.
(I have no clue if this is what happens in baseball).
- macavity |
