QUOTE(mindstorm @ Jan 30 2010, 05:31 PM)
how do you decide wheather to be "greedy when all fear" or "don't catch a falling knife"?
when there is a strong downtrend, often the downtrend are fed by mini bulls themselves...to be more precised, bulls that are weak holders, thereby turning bears themselves. As prices fall, there will always be contrarians who think, "ah, time to buy... cheap, buy when dip". However after buying, they see that prices continue to head south... after a while, they think, "oh shit, made a wrong decision.." and then they start selling, taking loses because of fear that they will lose more if they continue to hold. Hence they become the bears. Then the next group of bulls will come in thinking, "ah...time to buy now...really low". But then the bears coming in from earlier group will feed the selling pressure caused by overall bad news, and price continue to head south. After a while the same thing happen to the second group(of course it is not so clear-cut) and they also start selling... thereby causing the prices to spiral down.
And when stocks market fall, there is a general mood to spend less causing companies to earn less... and so forth... reflexivity theory kicks in.
We also should not forget there are many big players who have interest in falling prices...
besides this year is world cup year. huh? well, do a google to see the year returns for world cup years. More often than not, it isn't good.
so how sure are you the bottom has been reached for this "mini" reversal?
time to write a granma review
ur analogy sounds ok, however most big funds & forever fans retailers r not nimble nor quick enough to cut loss
big funds cannot create an exit stampede, they need to sell into strength while shouting bull, tat y we see a ding dong & not straight collapse
how many retailers u know wil cut loss? very few do it, most get attach to stocks via dividend, valuation & etc
so once the selling accelerate, at some point of time in future, there wil be no one to sell to, tat y there is a teknik call 'swing trade'
dunno abt the others, but for me, tis is more of a dark art than a simple black & white teori
hmm... world cup years, I learnt not to believe those hype anymore eg. october bear myth, were u in or out of stocks?
My job is not to reassure anyone of anything, kindly do ur own dd & I have no idea has the bottom been reached for this "mini" reversal
volume is high on down & index seem is gonna hit their 200 dma soon, wil it bounce? I dunno, choose ur side & place ur bet
if sector rotation affect real estate & commodity only, y are all sectors taking a tumble
how do you decide wheather to be "greedy when all fear" or "don't catch a falling knife"?
there is no clear cut answer to ur question, it is more of a dark art & u get better at it + ur odds increase in proportion to how much sifu market teach u a lesson

'Insanity: doing the same thing over and over again and expecting different results - Albert Einstein'
as a guideline "greedy when all fear", anything bullish from klse lyn thread, edge, star biz, analyst report are good signs something not right
initially, stocks wil go up, but there is no news, if u were able analyse & detect it via FA, tat is good for early entry point
now, for 'them' to write positive review, stock could be on uptrend, but since u hav enter earlier via FA, jus ride it
those lazy do r&d on own will just follow recommendation, the trick is to sell it after a certain % up & accept fact, tat u can never sell at the highest
as a guideline "don't catch a falling knife", the indexes are hitting low after low & volume is high, oso support line is being breach
sometimes news is not there or it is conflicting news available for reading, at times volume dun lie, take tat as a clue
& it is alwiz too late to short when the fall occurs, might as well wait for a rebound, but tis no garanti either
since most TA knows the support & resistance price level, try to set below or above price level, as depending on u buying or shorting
"and when stocks market fall, there is a general mood to spend less causing companies to earn less... and so forth... reflexivity theory kicks in"
imo, the next one wil be 8-10 yrs later, ensure u have enuf standby reserves & go SAILANG it! when the next cycle cum
those old timers wil see opportunity & patiently await selling subside, the new virgins wil see blood & fear
look, the investment advisor r starting to be bearish, the followers will follow, jus like how they were slaughter as bull, hav patience
I wanna join in to comment on the debate between the former & latter thoughts on this current pullback
the real & conclusive answer will be clearer & known after 3 months, just like the sub-prime crisis; learn abt cds, swaps & etc at tat time
from an ikan bilis player point of view
former
newsletter - n/a
stock selection:buy & sell price - yup
market direction - yup
worldwide / alien view - yup
prompt feedback for emergency - yup
october myth - yup, we were riding sama2
latter
newsletter - none, not for our view, maybe clients only
stock selection:buy & sell price - none, not for our view, maybe clients only
market direction - none, not for our view, maybe clients only
worldwide / alien view - only china (sure boh?)
prompt feedback for emergency -
october myth - hmm
thus for the moment with a point of 5 to 1, have to side with doomcake

the final winner wil be decided by sifu market itself
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This post has been edited by sulifeisgreat: Jan 31 2010, 03:54 AM