Market hunches | stockbee


Market hunches

When in tune with market, many times I get hunches about possible moves in a stock or in overall market. Many times they do not come true and sometime they come true. There is no rational or logical explanation for it. Part of it is just pattern recognition by subconscious mind. Part of it is related to getting immersed in the market, you feel you see things ahead of time.

The hunches has become more a regular phenomenon as I gained experience in market and perfected methodologies and started looking at same things day in and day out. Now the thing about hunches is that if you do not act on them, they create a tension between your thinking and action. So to resolve this problem I act on my hunches and regroup after some days.

Currently my hunch is market risk is increasing. So even though I put on some capital to work in market yesterday, there was conflict between hunch and actual action. So today morning I am going to reduce risk to bare minimum.

There are couple of friends and associates and investors who get my market analysis emailed to them at regular frequency and they are well aware of this thing. More often that not I have found the hunches proving correct. So when you are completely in tune with the market, the market talks to you.

Market monitor is also about nature and size of opportunity
IBD 85-85 and earnings

Pending for weekend
Pleadership question on exit and risk management and my small account size in his opinion

Fear of loss and trading or fear and trader ( I don't remember who asked this)


James said...
This comment has been removed by the author.
James said...

Say the market is going down and you own a stock that is currently rallying. Would you sell it just because the market is going down (and your stock might follow that trend)? May be it depends on whether you plan to keep the stock for 3 weeks or for 1 year?

What weight to give to market direction vs individual stock? Probably the answer is simple. Just watch the price. If it goes up, keep it. If it goes down, sell it.

About market hunches, I should say that I don't like hunches very much. Not because you could be right or wrong but because they are a personal thing: I can't feel your hunches and thus I can't understand/grasp them.

Right now I have not very much market experience so my hunches are meaningless. However, I think that the market direction cannot be anticipated and thus I adopt a wait-see-(re)act approach.

Pradeep Bonde said...

1 There are many times I will go to complete cash for sometime. Getting caught in an intense selling phase in market is no fun. Even good stocks get affected by it.
I might do many things, like I did today, I closed lot of positions early morning or closed part of position to bring risk down.

2 Market direction affects individual stocks the most during the intense selling phase. Intense selling phase in my scheme of things involves days where 250 plus stocks are going down 4% plus.
It is my observation and research shows that such days are bunched in a telescopic time frame. Once intense selling phase is over, I get back in to market.
One of the biggest problem in stock trading is almost everything is correlated, no matter the amount of diversification you have , during intense selling phase, everything will go down.

3 Only once I had 30% draw down from open profits in the second year of my trading, after that experience I have worked diligently to avoid the repeat of the same thing.
My basic objective is to make profit not stubbornly follow a method.

4 If you don't act on hunches, then you have tremendous inner conflict, which needs to get resolved. So psychologically I find it better to resolve it by acting on the hunch. Taking time out, rethink, regroup and restart.

5 Everyone has different mental model and they think and act accordingly. So there is no right or wrong thing.

john said...

The keyword is synchronicity....with so much liquidity in the system...lately almost every asset class is correlated, defying historical norms.

Look how GLD, $SSEC, QQQQ, $CRB, EEM all fell during 5/06, 2/07.

With so much liquidity, program trading, hedge fund trading, how will the global financial system handle any major crisis?

So far everything's been OK. Will the trend continue? It'll be interesting how the markets handle the next US recession, whenever it arrives.