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SP500 4,100 was an important level. Market has to be comfortable there, and so far in Feb, all closings have been above 4,100 (although it has been breached intraday). Then, the next hill is at 4,325. You may have seen nearby that the AAII Bull-Bear Spread has turned positive after a negative streak of record 44 weeks. Some fireworks are already being seen in trashy stocks. Golden-cross also happened in Feb. https://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p51599677386
One supposes there is a math formula regarding 'conviction' in the investing arena.
Compounding via time is good one, eh? The very meaning of the word.
So, one's conviction should be time based. A day trader conviction period is obviously short; but may provide a decent daily compounding if they are good at what they do. OR NOT !
The investment market players have their convictions, too; but they may not always be what the individual investor is hoping, for direction.
Fidelity indicates that their FBALX (inception1986) has a full life return, which includes distributions; is at 9.2%. In this time frame, one will find numerous points where it would have been difficult to maintain a 'conviction'.....but, the return is there regardless of the chart patterns.
Once one has determined their investment compounding time frame; investing life may become easier to deal with, yes?; and not be overly concerned with an open/close period for one day. Yes, I watch, too.
Good thoughts from @catch22. Generally people’s time horizon seems to have grown shorter in recent years. We live in an age of “instant everything.” There’s a lot in Barron’s this week about the frenzied buying and selling of ”end-of-day options” by both professional traders and individuals alike. In effect, plunk some $$ down on a speculative bet (going either long or short) at 9:30 AM and than “cash-out” the same afternoon. One market observor predicted this craze might even lead to a *“flash-crash”. It’s definitely contributing to the greater volatility. ISTM I read that last Friday was the single largest options trading day in history. Perhaps @Crash is seeking conviction where there is none - or precious little.
It is also possible the increased volatility is a precursor to a large move either up or down. If markets were to drop sharply, I know more than one prognosticator who will get caught flat-footed. There’s actually quite a bit of bullish sentiment out there as I think some numbers posted by @yogibearbull earlier today substantiate.
Here’s Marty Zweig calling the October 1987 *flash crash. The Monday following the show, the Dow fell 22.6% - most of that in just a few hours late in the day. Advance video to the 6:30 mark where Zweig is introduced.
Glad to hear from you all. I've had to cancel a small exchange between funds, 2 days in a row, now. I suppose what's behind my original thought above is: "what GOOD are the Futures numbers, then???" Was it Ben Graham who first said the Market, short-term, is a voting machine; long-term, it's a weighing machine." The past two days have not changed my life, exactly. I admit I'm the sort of guy who prefers a neat, clutter-free picture. But life, and the Markets, are messy. Still, when you open so far to the positive and then tumble, by the end of the day, by over 450 points from the starting high point---- that's VOLATILITY. And of course, you have the day-traders doing their old "in-out, in-out, in-out" thing. (Reference "Clockwork Orange.")
Martin Zweig, yes. I watched WSW quite a bit, back then. Still just learning, with no money to invest. His droopy, sad manner was characteristic, always. And I recall the Flash-Crash of '87. I was in Spokane. I recall the very ROOM I was standing in, and my "holy cow!" reaction. Meanwhile, in 2023, I am beset by good fortune and a comfortable life, with the chance to do some good things for other people. Many of them are in-laws. It's a nice problem to have.
...MORE lay-offs in the big firms, lots of them in Tech. Were they all really so bloated with humans, until now? Good thing I don't foresee needing their Customer "Service" anytime soon. Still watching my "off the radar" smaller, lesser known companies. Still quite a bit ahead of the game in 2023. Finally, I note that JRSH, almost my smallest holding, zoomed up over +7% in a single day, today. And so, WTF is up with THAT? Talk about yer outliers, eh? Are people buying the 5cent dividend???
“I've had to cancel a small exchange between funds, 2 days in a row… “
Goodness. I must confess to cancelling a small sell order myself on one of my funds at Fido about 10 minutes before today’s close. Great minds think alike.
I haven't done full research on it (yet), but I don't think that the term flash-crash or mini-crash was around in 1987. These last from minutes to hours on a single-day. The Big one was in May 2010 and there were several subsequently too. Then, the WSJ mentioned in 2010 that May 1962 may also have been a flash-crash (that was at the tail end of 6-mo decline in 1962/H1). They are stop-loss order killers (many such orders were canceled that one time in May 2010, but not later).
Anyway, 1987 was a genuine historic crash. Market had peaked in August 1987, the historic crash of -22.6% was on October 19, 1987 (the Wall Street Week video above was from October 16, 1987), and turnaround began in December 1987. So, not only there was a record 1-day decline, but the decline lasted from August-December, 1987.
There were investigations in 2010 on what had caused that flash/mini-crash; there were several subsequent flash/crash too. New exchange rules came into force. However, there wasn't any good explanation. The best I saw was that the HFTs and unlinked cross-markets (stock exchanges were closed but futures exchanges remained open) caused market instability.
@yogibearbull - Thank you for the correction. You are correct that the term flash-crash doesn’t fit what happened in October ‘87. I’ve attached an excerpt from Investopedia that more correctly defines flash-crash. I continue to learn so much here.
All I remember is I was driving home from work late in the afternoon when they interrupted the music on the radio to explain what had happened in the markets. Stunning. Lots of grim faces at work the next morning from those nearing retirement who had a lot more invested than I did at the time.
”The term flash crash refers to an event in the electronic securities markets wherein stock withdrawal orders rapidly amplify price declines before quickly recovering. The result of a flash crash appears to be a rapid sell-off of securities that can happen over a few minutes, resulting in dramatic declines. But as prices by the end of the day, it's as if the flash crash never happened”
Above excerpt from Investopedia (“Flash-crash” definition)
Comments
You may have seen nearby that the AAII Bull-Bear Spread has turned positive after a negative streak of record 44 weeks. Some fireworks are already being seen in trashy stocks. Golden-cross also happened in Feb.
https://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p51599677386
One supposes there is a math formula regarding 'conviction' in the investing arena.
Compounding via time is good one, eh? The very meaning of the word.
So, one's conviction should be time based. A day trader conviction period is obviously short; but may provide a decent daily compounding if they are good at what they do. OR NOT !
The investment market players have their convictions, too; but they may not always be what the individual investor is hoping, for direction.
Fidelity indicates that their FBALX (inception1986) has a full life return, which includes distributions; is at 9.2%. In this time frame, one will find numerous points where it would have been difficult to maintain a 'conviction'.....but, the return is there regardless of the chart patterns.
Once one has determined their investment compounding time frame; investing life may become easier to deal with, yes?; and not be overly concerned with an open/close period for one day. Yes, I watch, too.
It is also possible the increased volatility is a precursor to a large move either up or down. If markets were to drop sharply, I know more than one prognosticator who will get caught flat-footed. There’s actually quite a bit of bullish sentiment out there as I think some numbers posted by @yogibearbull earlier today substantiate.
Here’s Marty Zweig calling the October 1987 *flash crash. The Monday following the show, the Dow fell 22.6% - most of that in just a few hours late in the day. Advance video to the 6:30 mark where Zweig is introduced.
Here’s a Wikipedia Article on the
FlashCrash of 1987Martin Zweig, yes. I watched WSW quite a bit, back then. Still just learning, with no money to invest. His droopy, sad manner was characteristic, always. And I recall the Flash-Crash of '87. I was in Spokane. I recall the very ROOM I was standing in, and my "holy cow!" reaction. Meanwhile, in 2023, I am beset by good fortune and a comfortable life, with the chance to do some good things for other people. Many of them are in-laws. It's a nice problem to have.
...MORE lay-offs in the big firms, lots of them in Tech. Were they all really so bloated with humans, until now? Good thing I don't foresee needing their Customer "Service" anytime soon. Still watching my "off the radar" smaller, lesser known companies. Still quite a bit ahead of the game in 2023. Finally, I note that JRSH, almost my smallest holding, zoomed up over +7% in a single day, today. And so, WTF is up with THAT? Talk about yer outliers, eh? Are people buying the 5 cent dividend???
Goodness. I must confess to cancelling a small sell order myself on one of my funds at Fido about 10 minutes before today’s close. Great minds think alike.
Count me in the group that doesn't know where this market is going. We all know what the other group is...
Anyway, 1987 was a genuine historic crash. Market had peaked in August 1987, the historic crash of -22.6% was on October 19, 1987 (the Wall Street Week video above was from October 16, 1987), and turnaround began in December 1987. So, not only there was a record 1-day decline, but the decline lasted from August-December, 1987.
There were investigations in 2010 on what had caused that flash/mini-crash; there were several subsequent flash/crash too. New exchange rules came into force. However, there wasn't any good explanation. The best I saw was that the HFTs and unlinked cross-markets (stock exchanges were closed but futures exchanges remained open) caused market instability.
All I remember is I was driving home from work late in the afternoon when they interrupted the music on the radio to explain what had happened in the markets. Stunning. Lots of grim faces at work the next morning from those nearing retirement who had a lot more invested than I did at the time.
”The term flash crash refers to an event in the electronic securities markets wherein stock withdrawal orders rapidly amplify price declines before quickly recovering. The result of a flash crash appears to be a rapid sell-off of securities that can happen over a few minutes, resulting in dramatic declines. But as prices by the end of the day, it's as if the flash crash never happened”
Above excerpt from Investopedia (“Flash-crash” definition)
Here’s the earlier cited Wikipedia Article on the Crash of 1987
Still learning! Thanks.