Investing

Market timing step 2: going back in

  • Last Updated:
  • Nov 27th, 2020 3:18 pm
[OP]
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Aug 4, 2014
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Toronto, ON
Hm interesting “explanation of observation”:
The S&P 500 has been in a pattern that is considered bearish by some market observers. This pattern plays off of an old theory suggesting that “dumb money” trades in the morning, while “smart money” trades in the afternoon.

Here is how it works:

Dumb money is thought to move in the morning. Retail investors trade in reaction to recent news events or sentiment. They are reacting to very recent or even old news – myopically. Their knee-jerk trades can create sharp price movements in one direction. The first hour or so tends to to be the most volatile period, providing plenty of sophisticated day traders to take advantage of this movement. Program trading reacts quickly to breaks in various moving averages on an intraday basis – adding to the fun. Although it sounds harsh, professional traders often know that a lot of “dumb money” is flowing at this time. So do the program traders.

Smart money is thought to move the later part of the trading day. Stocks are ready to be scooped up by the pro’s on the fear trade of earlier hours, or sold by the pro’s based on knee-jerk bullishness. Theoretically, the selling pressure in the afternoon can be more significant as a predictive indicator than buying pressure in the afternoon. That’s because of the longer termed bullish bias of stock markets to go up. Selling indicates a more unusual conviction by the smart money than does buying.

When we look at morning vs afternoon movements, the most important thing is to look for a pattern. If you see one day where the market goes down in the late afternoon after a relatively good start, that’s probably nothing to get excited about. But a string of days where we get, say, 4 of the last 5 trading days with the market selling off in the last hour or two is a different story.

That may be what we are seeing right now.
Smart money may be selling this market.
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Aug 17, 2008
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The 2020 US election thread has to be the worst ever opening RFD post. Would be a waste to post this there.

[OP]
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Aug 4, 2014
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@MrMom , I think I’ve got an overdose of market analysis today, and only remember two “predictions” (which aren’t new Face With Tears Of Joy):

1) Consumer Discretionaries and Industrials will be leading the 2021 recovery and the Tech will lag
2) Biden win will be good for value, Trump - for tech
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Deal Addict
Aug 17, 2008
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I find my morning readings and any news headlines enough. I'll scroll through my "Twitter roll" developed and filtered over time when I have the opportunity. The talking heads on CNBC and Bloomberg are just background noise.

I'll happily trade any personal financial gain to never have to hear from the orange buffoon and his family again.
Sr. Member
Oct 21, 2016
792 posts
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freilona wrote: @MrMom , I think I’ve got an overdose of market analysis today, and only remember two “predictions” (which aren’t new Face With Tears Of Joy):

1) Consumer Discretionaries and Industrials will be leading the 2021 recovery and the Tech will lag
2) Biden win will be good for value, Trump - for tech
Biden corporate tax hike is going to sting every sector of the market . I see a decline across the US market when that kicks in.
Deal Addict
Aug 17, 2008
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freilona wrote: @MrMom , I think I’ve got an overdose of market analysis today, and only remember two “predictions” (which aren’t new Face With Tears Of Joy):

1) Consumer Discretionaries and Industrials will be leading the 2021 recovery and the Tech will lag
Have a look at this then.

Click on "perfchart" to see where the real gains are. Is it across all subsectors or just one? https://stockcharts.com/freecharts/sectorsummary.html

e.g. Consumer Discretionary Sector Fund - https://stockcharts.com/freecharts/perf ... TT,$DJUSTY
Deal Addict
Dec 3, 2014
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Ontario
Shaun80 wrote: Biden corporate tax hike is going to sting every sector of the market . I see a decline across the US market when that kicks in.
Should be a buying opportunity. Give the companies about 6 months to a year to plan how to avoid those taxes.

Back to Ireland I guess? https://www.google.ca/amp/s/www.latimes ... f_amp=true

We’ve seen this show before.
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Oct 14, 2015
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Looks like I'll be buying something shiny today;
unless something yuge happens in the next six hours.

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ADDED from here:
On October 28, 2020 at 4:20 am, Glenfidish says:

Just a brief update and extension of my last update. Red flag continues with a possibility of printing $1862-$1868 today..If correct Thursday and Friday will creat the smash down as i have been predicting. This is not set in stone but looks very possible from glens lens..
Deal Addict
Oct 21, 2014
1475 posts
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Burlington, ON
Shaun80 wrote: Biden corporate tax hike is going to sting every sector of the market . I see a decline across the US market when that kicks in.
Do you think that the democrats will gain control of the senate? They'll need to pick up four seats to give them a 51-49 majority. If the Republicans hold the senate majority I think that tax hike might not happen.
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May 31, 2018
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Have put a lock box over the Buy button until Friday at the earliest. Still at ~10% cash and am also thinking shiny objects and maybe DXG/ZGQ with some of it. We're still way overweight in Canadian energy & pipelines (15% of portfolio) so no more averaging down there, dividend income is right where we want it for now and the balanced ETF's are fully allocated. Time to add something different maybe.
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Dec 3, 2014
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Gungnir wrote: Do you think that the democrats will gain control of the senate? They'll need to pick up four seats to give them a 51-49 majority. If the Republicans hold the senate majority I think that tax hike might not happen.
Polls have been wrong before (surprisingly often actually); however, if one is inclined to follow polls this website is interesting: https://projects.fivethirtyeight.com/polls/

Right now Democrats are favoured to win presidency and senate. Democrats are strongly favoured to win the house.
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Oct 23, 2003
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democrats win may be bad for corporate tax but good for green energy initiatives. Its not like the money will disappear from the market. It'll just shift over time.
[OP]
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Aug 4, 2014
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FarmerHarv wrote: Have put a lock box over the Buy button until Friday at the earliest. Still at ~10% cash and am also thinking shiny objects and maybe DXG/ZGQ with some of it.
Entered two limit Buy orders for ZGQ last night, @$39 and $37, 300 shares each (5% and 10% below my September bottom purchase price - which is where we are today! :))
We're still way overweight in Canadian energy & pipelines (15% of portfolio) so no more averaging down there, dividend income is right where we want it for now and the balanced ETF's are fully allocated. Time to add something different maybe.
Hubby agreed for me to move ~47K from my Alterna HISA to joint margin account. He’s still iffy about Canadian dividend stocks (whether individual or ETFs) and would prefer HBAL. If ZCN drops 10% more, it’ll be yielding 4% (the average of the individual stocks that I’ve selected), so might just buy it instead :)

As for something different, (almost) decided to start a small position in ARKK in my RRSP (and then use BHK’s monthly USD distributions to DCA) Alternatives are good old VTI or IEMG that I sold in July “too early (tm)” lol - or VYM or DEM/SCHD or JPEM or too many other ETFs that I researched & watched for a bit before discarding Face With Tears Of Joy

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