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USA: A Dirty Mississippi Riverboat Gamblers Market

  1. Found this on a US forum, sounds so true....... opinions expressed are naturally those of the original poster, not moi. Extreme choppiness, and rapid reversals cleaned out many small players
    during the protracted early 1930s bear market.

    USA: A Dirty Mississippi Riverboat Gamblers Market.

    Nice wrapup from Mark at "Capitol Stool":

    Mark’s Market Commentary – October 15, 2002

    Once again, the Invisible Hand showed up (Stateside, Tues.)at 3:00am and put another bid under the futures. What happened next is the most spectacular derivative meltup of the year. So far, the percentage gain has been greater than the March Madness spike. And the gaps are unprecedented.

    So far during this bear market, the easiest money to be made has been “buying the dips”, since it is a virtual certainty that some type of “bailout” always appears when the market is on the verge of some type of accident. Even if you are stopped out 10 times, the gains to be had on these maniacal squeezes can quickly make up for the losses.

    Short squeezing has now turned into the latest ESPN Extreme Sport for the X-Games.

    Extraordinary volatility seems to be ruling the day. Not only are the equity markets experiencing fantastic moves, but the currency and bond markets are making equal size moves as well.

    How are the leveraged arena players holding up in this environment? Are the HedgeHogs making money? Or is more money being lost? Are the X-Box Program Gamers fast enough to catch these moves? Up or down?

    What kind of performance results will we see in the 4th quarter? Will we see a bunch of banks and brokerage houses come out with “trading losses” as an excuse for weak earnings? And what about the HedgeHogs? Are they keeping up? If they have been unable to game these moves, what happens if they lose money in the 4th quarter in the same way they lost it in the 3rd quarter? Will the rich and famous invested in these hyperfunds finally ask for their money back?

    If Uncle Al is indeed engineering some type of jam to “hide” a major bailout, how much longer can he fight the secular trend?
    How long will the rally last? Another week? Up until election day? Another 9 months? Who knows?

    Has the “As Good As It Gets” interest rate environment finally come to an end? Will the 298 day record of 40-year lows finally crack?

    Does the recent bond market performance mean further rate cuts are now out of the question? Could it be finally marking the end of an era of cheap money?

    Like most of the other short sellers, I’m a little bit in a state of shock at the size of this move and these unbelievable gaps. They seem to come out of nowhere.

    So we’ll wait and see if the usual Wednesday OE reversal occurs, or if the meltup continues into never-never land.
    Longs better pray that a geopolitical shocker doesn’t appear. If that happens, then who is going to be left to buy? Short sellers? Dippers? Mutual Funds on margin? Uncle Al?

    The game has really extended beyond the limits for ordinary speculators. How can they possibly keep up?

    The reality is that there is an enormous amount of speculative cash remains floating around in the arena. There has been no real selling in the stock market, with the exception of the large outflows experienced in July.

    The bull market in speculation, volatility, liquidity, and unlimited credit remains unabated. There will be no real selling, no real meaningful stock market declines, no limit down days in the futures market, no unfilled downside gaps until the huge ocean of cash dries up.

    When and how that will happen cannot be determined.
    Quite simply, there is too much cash in the bond market. There is too much cash in the short seller hedge funds. Too much cash holding the U.S. dollar. Too much cash sitting in junk bond markets, emerging debt markets, and whatever is underperforming. Too much cash running around chasing the first thing that moves to the upside. There is too much cash chasing the Greyhounds, which ever way they happen to be running.

    For now, the Perpetual Motion Liquidity Machine cannot be stopped. Like the Terminator, all efforts to shoot it, burn it, or crush it have failed.

    As usual, nobody describes the scene more expertly than the Color Commentator:

    “This is a classic full on Riverboaters' Market. Unless you place spectacular counterintuitive trades short term and hold overnight and are right, you lose. Plain and simple. Unless you have cast iron intestinal constitution holding long term short is difficult. One is gaming against his own government and against the organized and systematic lying of the syndicates of CEO, House and analyst.”

    “Dippers pulling furiously at slot machines all morning, the din is unbearable and not for human consumption. Al is working the rear room in low light, dressed in a shiny green sequined shark- skin suit and running thru all his standards as old timers and lowlifes pass out in the front row and middle aged adulterers grope and grab under the tables.”

    “Shorts continue to be blown out daily, long term shorts continue to sleep fitfully wondering when the next vacuum pumping sucks more profits from their fundamentally reasonable positions. Chaos reigns and best trades are short term dip buying off high bear confidence, bear gloatage, VIX at 50,etc.”

    “Note how since all technicians have been looking for a reasonable retrace to get in long there isn't any. How many times have we seen the Market fool most of the participants most of the time, especially those playing with textbooks open beside monitor? It gets worse the deeper into the Bear. Here we are at the 50 day MA, 3 days after a major new bottom. Anybody trying to game that kind of action is just riverboating as far as I'm concerned. Note how every day the technical picture changes dramatically, all those saying they would go long at a close over the 13 day MA missed their chance after the huge gap up eclipsed them. All those saying they would wait for volume finally have it but climbing in at this level is like diving in to do laps in a penthouse pool, when the high rise is on fire."

    There are no good entries period. Best entries are off new lows for RiverBoaters. Thats what the Crack market offers up.

    “If you dare to hold overnight make sure you have a reasonable direction based in charting figured out and then trade directly against it. This is the high probability winner. More confident bears crawling all over board last night than roaches in a post nuclear Manhattan. All daytrading directional traders must be prepared to lose 60% of time or more for small losses until paydirt is hit. Unfortunately cardiac arrest may occur before the gusher hits.”

    “I would not be surprised to see Al Green bandwagon this hysteria by cutting rates at anytime however unlikely that sounds. He is lusting for the legendary turn he manufactured in Oct 98. Al Green's lounge act continues. I thought he was exiled to some lightweight gambling den in Reno but I was wrong. He is alive and well and pumping money into the Casino this morning, selling his old hits like 'Theme for Moonlighting' and his version of 'Lush Life' to the dipper crowd. The only thing that stands in the way of this dirty old degenerate is a sudden geopolitical stunner. The only thing.”

    My congratulations to the dippers. Just remember to sell.

    What to Expect Next
    Based on the violence of this move, the highest probability is that we are in the midst of a August rally, where there is no pullback. Only a screaming panic to the upside until failure hits.

    At least during the April 2001 and September 2001 rallies there were some pullbacks or consolidations.

    It appears that we are setting up for an all time record two-day low TRIN on the NYSE.

    On the other hand, the fear gauges remain in high territory, and have not collapsed. I do not know if this is a reflection of systemic stress in the bond and credit markets, or if it is genuine “wall of worry” action.

    But of course, the volatility, speculation, and the sheer chaos which is occurring in today’s market means that technical analysis pretty much goes out the window. Now its all about greed and fear, both of which have reached such extremes that traditional measures are unable to follow the madness.

    Did today mark an exhaustion top? Gap down tomorrow? Or accelerate to the upside? How far can they push it? Who is going to get blown out tomorrow?

    What happened to the credit market crisis? Did it disappear? Everything back to normal? Or are Da Boyz pushing this market up to build up a large cushion against an inevitable crash right around the corner?

    Another big volume day today. Yet we went nowhere after the open. Accumulation? or Distribution?
    Only the serial dating chisel-faced NYSE specialists know.
    Once again, the bear market continues to do its work. Each month, more and more participants are carried out on stretchers, dismembered and mauled by the extraordinary volatility.

    Position Summary:
    More positions covered on the open today.
    Will not go long unless we get a decent pullback. To risky to chase this straight up move.




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