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Not applicable
Thought Id share the love today :P

Something interesting I picked up. The average bull run on the ALSI makes around 130 new ATH, currently weve made 109.
Im sure both bulls and bears want to run off and use this as an argument though but one needs to be careful though how a person takes the information in cause just because the average is 130 doesnt mean it will go over, or necessarily be less either.
One of the counts was 178 for instance.
Theres obviously more to a trade than just 1 statistic.

I think if a person really had to look at this information, what I would take from it is next time I see new ATH, personally I would be going long for a long time rather than trying to short any new momentum.

/me runs away before the criticism brigade comes.
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23 REPLIES 23
Not applicable
Though must say, the complacency in this market is practically unprecedented, with the VIX at all time lows.

http://www.investing.com/analysis/volatility-is-cyclical-too-214999
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Super Contributor
I will always respect an individual who has an "opinion" , and who is willing to think outside the box. BC01, there may be some validity to your findings , now you need to adopt that findings into a strategy...
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Not applicable
thanks.

but I dont get your 2nd point, the strategy is simple isnt it, just go long and pray?? :P
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Super Contributor
BC01, maybe as the ATH come closer to 130, you may want to open a few short positions? **just a strategy, i will adopt to add conviction to my findings****
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Super Contributor
BC01, maybe as the ATH come closer to 130, you may want to open a few short positions? **just a strategy, i will adopt to add conviction to my findings****
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Valued Contributor
an if this bull has 178 ATH ?? your shorts will bust you out long before the correction .. you short falling markets, not rising ATH markets ..
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Super Contributor
Firstly, that was just a suggestion. Good money/risk management will prevent further losses and then you disregard that findings. @simon. Why did you not incorporate Volatile stock in your building of your portfolio?
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Valued Contributor
in my trading I do consider volatility, but in the sense I don't trade shares only indices as they less volatile .. on the other hand I trade momentum which is volatility of a sort .. in investing I didn't find it added any edge
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Super Contributor
@ Simon, Can i send you some stuff via e-mail? What is your e-mail address?
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Valued Contributor
[email protected] but simple stuff neh .. no head hurting formula :)
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Valued Contributor
I wrote about this for my FinWeek column tomorrow, the investor clinic ..

short version is that at 109 highs (or whatever number) every previous high has resulted in another ath .. every single one, and there is a lot of powerful psychology behind that .. only one ath does not result in another ath, but which one? yes as the number of ath advances we are closer to the one that will not result in another ath, but again - which one ? we have zero way of knowing which one, so we roll the odds in our favour and buy (or hold) the ath as the previous 109 resulted in another ath that would result in profit .. even with great risk management shorting all the ath after #130 if it continues to say 178 ath will result in serious damage to the portfolio, you going against the trend ..
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Regular Contributor
Did you recieve the email? Simon
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Super Contributor
sent from wrong account. That e-mail is from me!!!.
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Not applicable
I dont think any 1 statistic can really call a crash, and I know we all love to pinpoint 1 thing to understand a crash (subprime mortgage, IT crisis, asian crisis, etc) but reading more on these crashes it seems its when a *****tail of goods seem to happen at the same time, eventually 1 day the music just stops.

Ever noticed how crashes really only tend to happen with PEs are at abnormal levels? Why didnt we have the 2008 crisis in 2006?
Bernanke already knew about the housing bubble with infamous quote, "All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system "
Stimulus is another factor that plays big in the role, its the fuel in the jet engine, take it out of the airplane and all youve got is a big brick.

Currently though this house of cards is built on:
ATH on PE ratios
Tapering
DCFs looking forward using stimulus assumptions. (past growth)
Margin debt at ATH
VIX and Complacency at ATL
Slowing growth worldwide (US, China, Euro) - hence why we looking at Draghi today
Interest rates already hiked in SA
Recession looming in the resource sector (and possibly electricity)
Petrol and Inflation at ATH.
etc, etc, etc

When will the music stop? Who knows
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Super Contributor
Can i just add a something simple: If you can call the crash with the exact time and date, then lets worry about it. otherwise lets worry about it when it happens...
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Super Contributor
This is how you surf this market...you have a system, if you get a buy or sell signal, then buy or sell, place your targets and stops. If you investing, then wait for the correction, it will come( 320 on SOL is coming, i been waiting long time). If you nervous, go fishing or, put your money into a bank account fixed deposit....and thats the end of your appetite for the market.
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Not applicable
What I find interesting is that while the market is making all time highs, it seems the majority of stocks on the top 40 are not. So while the market ticks up, we seem to be experiencing a lot of sector rotation - with good news generally not resulting in a push into new high territory. My system tells me to get out now, markets may still go up - but I won't get my 30% return that I am looking for on my position. My trading position is down to 1/3rd of my normal exposure. I am offloading each of my stocks into their respective rallies
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Not applicable
What I find interesting is that while the market is making all time highs, it seems the majority of stocks on the top 40 are not. So while the market ticks up, we seem to be experiencing a lot of sector rotation - with good news generally not resulting in a push into new high territory. My system tells me to get out now, markets may still go up - but I won't get my 30% return that I am looking for on my position. My trading position is down to 1/3rd of my normal exposure. I am offloading each of my stocks into their respective rallies
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Super Contributor
It is like a commentator said last night on stock watch, this bubble is only going to be burst by rising interest rates, until that happens the bull market will continue.
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