If only one thing in this crazy world of trading were true, it would be this – certainty about market movement is prevalent and, without a doubt, indicative of a bias. I would add one more thing to that, uncertainty is one sure path to “eating crow.” The quote below is certain – certain that the markets have hit their peak and will soon find their way back to the bear market of ‘07. How long the bear market will last, or how severe it will be, is not addressed directly, but the implication is that it might last awhile.
All I can tell you is to stop fretting and start shorting. You can see the charts, the Dow topped on Jan 11… Several sectors topped awhile before that. You can see wave 1 down, wave 2 up and wave 3 going down. Wave 3 should last as long or longer than wave 1 did, but any correction in Gold/silver, oil, or other commodities will be fleeting in the intermediate term … This is not a correction. It is a resumption of the bear market that began in ’07… The U.S. dollar is about the only long position you’ll want for a long while!!!
My question is: how can anyone be so certain, especially in these times of uncertainty. Perhaps the uncertainty in the markets is the basis of this person’s certainty. Maybe he feels so certain because the issues of foreclosures, sovereign debt, the deficit, the debt, hyper liquidity, and a couple more troublesome issues cast a shadow over rising corporate profits, bullish corporate outlooks, shrinking inventories, rises in manufacturing indices, shrinking unemployment, rising consumer spending, rising consumer confidence, and one or two more optimistic indications that the economy is coming out of the economic collapse of ’08 and the recession that began in December ’07.
My point here is the data and indicators are mixed, and that to be certain the flow will move strongly one way or another is, well, presumptuous. Certainty presumes one understands the mindset of the market, which I have said in the past is the collective consciousness of all the human participants. This reality alone should dissuade anyone form certainty. Human behavior in the abstract is somewhat predictable, but in concrete, specific environments it is unpredictable in most all situations. Now add uncertainty, or indecision, to that environment and you have real unpredictability.
So why is this person so certain? My guess is he has a bias to the downside, so predicting with certainty simply reinforces the bias. This characteristic behavior of humans could very well damage your chances for trading success. In my opinion, one should keep an open mind when it comes to the future of the markets in these uncertain times. If you do, you are better prepared mentally for divergence from the expectation, thus, you are less likely to have a detrimental emotional reaction if the flow should not go in your favor. You are also less likely to a poor trading decision.
This gentleman may be right. He is not alone in predicting that the broad-market will revert to the pre-March bear market we have seemingly put behind us. Yes, he may be right, but, and as well, he may be wrong. My question to him is: is there any value in being so certain?
Trade in the day; invest in your life …
