Will the "Other Shoe" EVER Drop?

[24601NoMore]

[FONT=&quot]"A guy on Twitter says..."....
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OK, I could have explained that better. He's a chart analyst. Seems to be a pretty good one.

Regardless of differing opinions on charting and TA, you've gotta admit that the computerized algorithms that drive 80+% of all trades on the market nowadays are largely built on looking at data like this.

Today's close is a good example - we were quite a ways up from 4,111 with ~10 min to go. And I watched it drop like a stone to...4,112.50.

Coincidence? Don't think so.

Look at the chart posted above. 4,111 is practically a magnetized point that the index keeps getting pulled back to.

The only question is - will those levels (and more importantly, the 50 DMA at ~60 points lower) hold or fall?

There are a whole lot of people nowadays that make decisions to buy or sell based on things like 50 and 200 day moving averages. Going against that "herd" is getting increasingly difficult to do, and I'd contend much different than even 20 years ago.

In a big way, TA is increasingly becoming a self fulfilling prophecy, because so many in the market nowadays are acting on TA signals. Which in turn leads to precisely that outcome happening..

 

[NW-Bound]

The OP asked, "Will the "Other Shoe" EVER Drop?"

What if there's no other shoe?

 

[FREE866]

OK, I could have explained that better. He's a chart analyst. Seems to be a pretty good one.

Regardless of differing opinions on charting and TA, you've gotta admit that the computerized algorithms that drive 80+% of all trades on the market nowadays are largely built on looking at data like this.

Today's close is a good example - we were quite a ways up from 4,111 with ~10 min to go. And I watched it drop like a stone to...4,112.50.

Coincidence? Don't think so.

Look at the chart posted above. 4,111 is practically a magnetized point that the index keeps getting pulled back to.

The only question is - will those levels (and more importantly, the 50 DMA at ~60 points lower) hold or fall?

There are a whole lot of people nowadays that make decisions to buy or sell based on things like 50 and 200 day moving averages. Going against that "herd" is getting increasingly difficult to do, and I'd contend much different than even 20 years ago.

In a big way, TA is increasingly becoming a self fulfilling prophecy, because so many in the market nowadays are acting on TA signals. Which in turn leads to precisely that outcome happening..

As I mentioned above I don't really buy into TA like some others do. I think you and I just look at investing differently. I'm all about the time frame which I have a long one. Zero interest in trying to chart my way with my investments. [FONT=&quot]Dialing up cash to try to time short-term swings is more likely to hurt than help. [/FONT][FONT=&quot]
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[FONT=&quot][/FONT][FONT=&quot]If you’re a long-term investor, the biggest risk to reaching your goals likely isn’t a bear market. Stocks’ long-term annualized return of 10% includes bear markets! Bigger risk? Missing bull returns. [/FONT]

 

[24601NoMore]

As I mentioned above I don't really buy into TA like some others do. I think you and I just look at investing differently. I'm all about the time frame which I have a long one. Zero interest in trying to chart my way with my investments. [FONT=&quot]Dialing up cash to try to time short-term swings is more likely to hurt than help. [/FONT][FONT=&quot]
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[FONT=&quot]If you’re a long-term investor, the biggest risk to reaching your goals likely isn’t a bear market. Stocks’ long-term annualized return of 10% includes bear markets! Bigger risk? Missing bull returns. [/FONT]

I'm not really a timer, either, but having experienced some pretty rough downturns over the years no longer have the desire to go through that again and am more in asset preservation vs. asset growth mode at this point. So if things start to point strongly to us being at the cusp of a big downdraft, I do expect to dial back from my current relatively low equity allocation even further - because my hunch (and it's just that - an educated hunch) is that the next downturn could take a very long time to recover from. If I'm wrong, oh well. I'd rather be wrong and miss out on upside that I may not truly "need" than be right and watch a 30-50+% drop that could take the rest of the decade or so to fully recover from. Of course, it "could" also come back faster than that - but a lot of variables and current policy decisions would seem to indicate that's less likely.

All that said, folks who have determined they "need" portfolio growth (vs preservation) would appear to have little choice other than to ride the bronco up, down and sideways. But there's something to be said IMHO for Bernstein's sage advice to quit playing if you have the ability to do so..and to OP's point, it does appear there are a lot of "other shoe about to drop" signs that are blazing thermonuclear neon out there at the moment.

 

[Exchme]

OP should understand that going to cash wasn't one bad decision, it was a bad decision every single day you've been out of the market, so a couple hundred times in a row so far that you've thought you have better insight into the future than anyone else.

You must grasp that neither you nor anyone else can see the future, but humanity will muddle through. Period.

Go to Bogleheads.org and search for investor Policy Statement. Their entire Wiki is an in-depth education, you don't need all that, but you really need a better grounding in what you are doing or you will continue to hurt yourself. An IPS will make you think through and write down your goals, needs, asset allocation, rebalancing strategies, etc.

Note that you should stick to something simple, like a balanced fund or a target date fund, they rebalance daily and are a mix of stocks and bonds. You should not try to pick winners or do anything fancy - simple and steady makes more money than most. Then stick with it through plagues and pestilence.

 

[RobbieB]

My thoughts on equities;

I like to invest in providing goods and services. As long as we have people we will need goods and services. Easy.

 

[RetireeRobert]

My thoughts on equities;

I like to invest in providing goods and services. As long as we have people we will need goods and services. Easy.

Yes, I always thought when buying a stock that (like Warren Buffett) I was buying a business. And as long as the business was providing needed goods or services it would do well "over time". In other words, I like to invest in the productive power of private industry in this country.