Investing General Discussion

Big Phoenix said:

Member when we where supposed to have rate cuts by now?

Click to expand...

It's almost like it's all noise

Big Phoenix said:

Wasn't that a massive contributor to the market performance from November to February? Expected rate cuts by March/April.

Yet here we are now with rate cuts talked about being at the end of the year now if any due zero progress combatting inflation.

Click to expand...

Was it? Pretty sure the market was going up because it was cold.

If you keep wanting to know the reason you'll just spend all your time chasing your tail trying to make sense of why price action is what it is. The market went up for the same reason it always goes up because buyers thought prices would be higher in the future more than the sellers who thought they would be lower. This will be true 100% of the time so you don't need to bother with any of the silliness of the market went up because it thought....

I'll go ahead and spoil the future, the market is going to go down when sellers have a stronger conviction for lower prices in the future than buyers feel prices will be higher.

It's Sentiment all the way down

Big Phoenix said:

If it's all noise and it's just ebbs and flows why the appreciable jump and change in momentum over noise today after fomc?

Click to expand...

market is 0.13 change on the day. Seems like it doesn't care about the Fed or it only cares about the FED OR the answer to that question is irrelevant.

Some of things we talk about affect sentiment, so in that way they do matter and worth discussing. But it's never THE reason. The final movement is a variable on NET sentiment which has many factors. The reason this logic pretty much never works is because you can't look at one driver of sentiment and come to useful conclusions. On days net sentiment aligns with your theory you'll think you're a genius and then the day it does the opposite you decide it must be the market that is missing the super important factor you have decided to focus on.

Tmac said:

These are good reminders.

- "Why" doesn't matter
- There's no silver-bullet when it comes to sentiment
- Don't try to understand why
- All that matters is what's happening in front of you

I guess this is why SMA's are so helpful? They paint a relatively clear picture of what's happening today based on a historical perspective?

Click to expand...

Correct idea. One of the primary reasons people like to know why is so they can argue with the conclusion. If something is upsetting sentiment then whether I agree with that driver pushing sentiment is irrelevant. News Items do indeed push and pull on sentiment just like many other things, but day to day can be noise.

We also look at the Sentiment of non market participants way too much. The opinion of a non TSLA share holder on TSLA is of very little value. THey have their bearish reasons they don't hold the stock. It's why we don't need to address their concerns for things to change, they have already taken themselves out of the equation. It's why stocks can bottom on sentiment. The people who are so obviously and strongly bearish are no longer holders, their opinions now have little factor on price action. Now compare that to stock holders turning sour, that's a horse of a different hue.

Right now I would say the market participants who are most concerned about the Fed are not participants they are on the sidelines hoping something happens in their favor to reward them for their prudence.

I always get a chuckle from this, Blazin's red line of doom.


I drew that line over 10 years ago That seems impossible but the main channel of the secular trend sometimes has been a stopping point to the penny but most often its just a good guide post . I posted about it four years ago because we were leaving it going into 2021 and that made me cautious but we held on a back test so I held my nose and bought. Now in hindsight we can see the market did spend some time above the line but ultimately gave it all back.

Going into this year we have been in a similar situation so I've been open to the idea of the top line again becoming support rather than resistance. However as of right now we have failed to hold it on the back test.


For those interested in the history of these long term trend lines. They absolutely can change slope and historically they have near the end of the secular trend. "The blow off top" People use that term all the time where it doesn't apply but in long term bull markets this trend will at some point steepen and you can get a sequence of monster gains. See 96-99 for an example. The market had been a bull trend for 13 years but things accelerated the trend lines broke to the upside. Fear of missing out really peaks during those periods and people pile in. That period will be the give back period. That is the part of the bull run that will likely be given back in its entirety during the next bear phase. The "easy money" phase will be wiped out.

This is the same trend line that had me go a little heavy early in March 20 because I felt it would hold. It did but for those few days it was certainly crazy trip below the bottom of the channel.

The market hurts itself by increasing the slope. An increased slope makes the lower channel closer so it ends up taking just a short time (3-9months) of running sideways that then puts the trend in jeopardy and then a massive air gap ensues.



I love studying this stuff, look at how 1987 got punished for leaving the trend line and the correction went to exact point of the bottom of the channel. Then in 96 things start to change and 13year trend channel changed it's slope, and sure enough a decade later the market returned to that exact point. Very easy day to day to get lost in the weeds but when you look at large macro behavior things can really start to come into focus.

Probably boring to people stacking bills and earnings 3% a day but for us less capable I think this stuff is worth a look and helps to understand.