Big selling day | stockbee


Big selling day

Selling dominated the post election action. The selling was focused on sectors which were bid up pre election in hope of Romney victory by some. The Financials and coal were two sectors that saw lot of selling.

How big was the selling in breadth term? It surpassed the last big day of selling 6/21/2012 in our Stockbee Market Monitor breadth monitor.

Will there be a follow through. Probability favors that as breadth has been deteriorating for sometime.


Smiddywesson said...

Markets today are a policy tool to sooth the fears of the masses. Yes, it looks like we are the terminal stages of distribution, but you don't know when the government and large banks are going to step in to keep the game going. So when Pradeep says don't take anything for granted and measure what can be measured, I'd that is excellent advice.

This is a game. The markets aren't always markets, especially now. And most of all, the end games for whole generations are different than they are between the crest and trough in less memorable times.

What I am advising is listening to Pradeep and learning from the generation that went through this the last time:

John Kenneth Galbraith, author of 1929 - The Great Crash, described the pattern of the 1929-1932 bear market as follows:

'The worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few people as possible escape the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited for volume of trading to return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next 24 months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.

My advice is to reduce risk. That doesn't mean to run from it, it means to manage it. Lower position sizes, reduce holding times, and where possible, tighten stops.

Smiddywesson said...

Sorry, that read horribly but I tried to post 3 times and had problems with the interface. (The good news is it didn't cost me anything.)