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Branchville, Alabama | WY Dave the points you make are very good and may be entirely correct. my trading timeframe is one that may make us both correct. Or both wrong.
It is interesting that you say you do not have patience to short, the very reason I prefer to short. The downside of markets are so rapid the returns are so quick in comparison to a bull market.
a 50% retracement from the 14000 high to low would be a 10500 to 11000 level. It also is a double bottom with th 2003 low, providing support. A 50% move in a market is a fantastic opportunity from my perspective.
The points you made concerning '29 movement are correct and factual.
But the structure of the world economy and the US economy is quite different now. The ag sector is not near as important. Consumers are 70% of the econ. Re-inflation may be much more achievable.
The point you made concerning Chinese stim versus buying our debt is worth consideration. The chinese savings rate is 25%. Will consumer stim work there? Infastructure spending- Yes, but consumption stimulation I don't know. Just read a AP article about the reduced spending for the chinese new year and how important that spending was to yearly restrurant and retail concerns there. Down 30-35%
And it is very important to remember the US retail drop will be felt in the chinese economy THIS YEAR.
my statement regarding price was probably incomplete. the word fact should have been factors. Factors include perception of buyers and sellers. As I said price is not necesaarily predictive of future price. But one must not deny price action in trading. Acct equity is determined by price----period. $100 oil seemed like a bubble until we went to 145. Traders profit from these excesses and they lose because of them.
I do believe after study and trading of many bull mkt tops that led to bear mkts, they last much longer on average than those we have seen in 2008. This support your position.
But someone must be holding the bag for markets to drop. The % of grains held by farmers concern me. The public money in IRA and 401K worry me. these people are holding. They are sick but they continue to hold.
I am a terrible bull trader. I am a poor long term trader. In too early out too early. I remember the day the stk mkt bottomed in the early 80's- that 100 pt day was memorable and it came at a point of extreme pessimism. a nearly 30 yr bull mkt followed. From 5000 to 14000 I thought we were too high. Gee I was only wrong 7000pts.
I think $4-$5 corn and $10 beans cannot last. But I do not fight price momentum (or I try noy to) and I pay close attention to seniment. And I have tons of experience at being wrong.
Could I see us trading higher through april in stks and grains and then the bear continue--absolutely.
the bottom will be a great buying op---and it will come--whether I can know it when I see it is the question. As in the early 80's it will come at the height pessimistic seniment, just as the bull died at the height of optimism.
But as for now I see advances in mkts. But while I am married to my positions an anulment is always close at hand!
Thanks for your response. Your understanding of macro is respected and and the opportunity to view your thoughts appreciated.
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recovery-when will it come?
