Down goes the Dow

the idiot wrote:

Ghost of Igloi wrote:Rotation by institutions selling growth to retail then buying value.

Ahhhh... so I'm the sucker born this minute... Makes sense :-)

Clearly if you are buying growth you must believe in a V-shape recovery, vaccine, employment back to previous highs, and Trump re-election (no corporate tax increases). I find none of those to be very promising bets. Sure, Trump will throw everything at the problem to make it appear so. Doubt whether the timing works for him, more likely to bend toward my side of “the bet.”

Ghost of Igloi wrote:Clearly if you are buying growth you must believe in ... Trump re-election ... I find none of those to be very promising bets.

In fact I do think he will be re-elected. I don't like it, but I expect it...

Double or nothing? Trump re-elected with SP500 > 1500, you owe my twice your dignity, Biden elected and SP500 < 1500, you get twice mine.

Ghost of Igloi wrote:

the idiot wrote:

Ahhhh... so I'm the sucker born this minute... Makes sense :-)

Clearly if you are buying growth you must believe in a V-shape recovery, vaccine, employment back to previous highs, and Trump re-election (no corporate tax increases). I find none of those to be very promising bets. Sure, Trump will throw everything at the problem to make it appear so. Doubt whether the timing works for him, more likely to bend toward my side of “the bet.”

I wouldn't over-think it.

Small caps usually lead a recovery. Sell off of the big tech that has done so well up to now in favor of the more beaten up small caps, which still have a lot of ground to regain. Look at the S&P, too, also doing comparatively quite well today.

If you haven't noticed, this has happened a few times in the last couple of weeks.

I see it as a nod to the perception that we are emerging out of this.

Tomorrow could be exactly the opposite, and it seems that this kind of flip-flopping has been going on to some degree.

I buy a rotation into small caps by retail. I would assume most institutions would at this point be skeptical of small caps with rising bankruptcy risk and likely debt downgrades. I disagree with the assumption that there is a recovery or the market has any predictability on the subject. If that were true, if anything, over the past two years small caps would be telling you things were getting worse. Which on the other hand may be valid, since many of these companies only survive based on their ability to finance their debt. We’ll see how that works in a severe recession.

Equal weight S&P 500 +3.82% and NASDAQ 100 +0.40%....

When you see a spike like more than 3% or 4% in a day in small caps, you think that is retail? Funds rotating sectors comes to my mind.

OK, good point, but a lot less volume in small caps.

Changing the topic a bit. Broadening out of participation was likely necessary to get over 3,000 S&P 500. NASDAQ was stretched. So still see this as an institutional goosing of the market. Retail is just the lubricant.

Goosing as in a teaser? Create a FOMO initiated by institutions to pull in retail?

Okay.....

Idk. Do they do that? Too much guessing there for me.

All i can tell is that small caps have been the speculative play and large tech the safer bet. Small caps have been making very big moves to the upside and down. Seems like that with todays move, it may be starting to break out of a range they have been in for a couple of weeks or more.

Here’s what the Russians and B of A think:-)

https://www.zerohedge.com/markets/they-are-outperforming-hedge-funds-and-what-they-are-buying

Most significant move of the day is how we finished. Specifically NASDAQ 100 negative and S&P 500 under the 200 EMA.

If the market traded sideways for the remainder of the year, that would be just fine with me, given how far we have come off of the low. Frankly, wouldn't you think there would have been a much larger sell off as the market faded the open, after the inexplicable and sizable run-up we've had?

SP500 set to open 3030 as I type this. A close at that level would be a bullish signal. My work from home stocks are lagging now. I'm thinking about selling them and moving to something like Ford. I missed DAL. I had hoped to buy Monday at 23 but it's up to 27 already. Missed the move by one day.

Here we go, sliding down to 1500... today's the day!

Now, now....don’t be testy, tech is only down 2%, 63% to go..... :-(

fisky wrote:

SP500 set to open 3030 as I type this. A close at that level would be a bullish signal. My work from home stocks are lagging now. I'm thinking about selling them and moving to something like Ford. I missed DAL. I had hoped to buy Monday at 23 but it's up to 27 already. Missed the move by one day.

I sold most of my work at home stocks and some laggards yesterday once it appeared that the market would close above 3000. I think the next resistance will be the SP500 all time high. I anticipate the SP500 will approach that level in June. I'll be more comfortable with that forecast if the SP500 closes above 3000 today and tomorrow. I'm curious what other posters think will benefit in the next up move... if this is an up move.

My Tesla has been kind of flat this week.

UAL thru the roof though

agip wrote:

agip wrote:

interesting - I'll think about that

Racketo you might find this interesting.

its economic thesis: Covid is like a hurricane. Everything shuts down for a week. But little is ruined forever - businesses reopen, people are rehired quickly. So this will be the same - we'll have stunningly enormous job gains in July, August, September.

its political thesis: Great for trump. He'll be able to say that he presided over the biggest gain in jobs in the history of the united states. Just in time for the election.

https://www.politico.com/news/2020/05/26/2020-election-democrats-281470

I like it. I think this is a likely outcome, but it's going to really depend on how well the consumer held up over the past couple of months. We've heard countless stories over the past few years about how many Americans are living paycheck to paycheck, time to find out if that was legit or an exaggeration.

fisky wrote:I'm curious what other posters think will benefit in the next up move... if this is an up move.

I don't think anything we know today has any real bearing on the chance of a move up versus a move down, and as I've said before I think technical signals are akin to voodoo or maybe alchemy... :-)

Given that I believe today is no different than any other trading data (in the absence of more / better knowledge), I make the probabilities as follows:

decline - 46.3%

no change - 0.7%

gain - 53.0%

Or, with more granularity, I think the following changes have the associated probabilities today:

-12.3% or less (bigger drop) - 0.01%

-5.8% or less - 0.1%

-2.6% or less - 1%

-1% or less - 10%

-.6% or less - 20%

+0.05% or less (smaller gain, or a loss) - 50%

+0.6% or less - 80%

+1% or less - 90%

+2.6% or less - 99%

+5% or less - 99.9%

+11% or less - 99.99%

I'm virtually certain today's change will be less than an 11% gain.

$0.02 please. CAD will suffice. Euros better...

You really need to look into GBM and Levy processes