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I was recently asked a question on Quora (“What does support level mean in a technical chart of a stock?“), and after I finished answering it, I realized it was way too long not to share here. So here it what I said:
Although I’m a chartist, I will answer this in “human” rather than chart-based terms. I’ll use a rather facetious example to make my point.
Let’s say a given stock X traded between $50 and $51 for two solid years. Countless people bought at that price. It was boring but very, very stable.
Now let’s say for whatever reason the stock vaulted swiftly over the course of a month up to $80 per share. Perhaps there were takeover rumors or optimism about a new product line. So now you’ve got a huge mass of people with nice fat profits, as well as some newcomers who paid between $51 and $80 for the same stock.
So now you have two classes of owners – – a large mass of folks with a good basis price and big profits, as well as newcomers whose profits range from decent to very small, depending on the price they paid. This latter group is going to be quite nervous and have weak hands. The former group will be more confident, since they have a much lower basis and have grown accustomed to the stock never being below $50. (more…)
One of my favorite Steve Jobs stories is, in the early 1980s, Adam Osborne kept bad-mouthing the secret Macintosh project the company was working on. Osborne even started harassing Jobs about it at a trade show, when Jobs purportedly said, “Adam, what we’re working on is so great that even after it puts your company out of business, you’re going to buy one for your daughter.”
Feel the burn! Oh, and most of you probably don’t remember Adam Osborne………..which is partly the point.
Anyway, I think it’s cool to retort with something positive and constructive (even if it stings) instead of lashing out ad hominem against those doing the criticising. Which brings me to one Mr. Musk, who seemS to have become completely obsessed with bashing short-sellers. I mean, the guy is a multi-billionaire, has three big companies to run, and yet he actually takes the time to “block” people on Twitter who question the Tesla share price. One quick glance at the press recently shows a theme:
A thoughtful Sloper sent me a video of another person who got really hung up on short-sellers…….. (more…)
Below is NFTRH 499‘s opening segment and the first part of the US Stock Market segment. As for the entire report, here’s what subscriber JF had to say before giving me some of his views on the market. Interactions with NFTRH subscribers, an astute bunch, is a hidden benefit I receive from this service.
“Will write more later when in front of PC, but this is a great report. Fucking absurdly solidly enjoyable thorough and easy to read and ponder. Well done.”
It Is What It Is
We will update charts of US stock indexes and sectors, along with global markets in the report below, as usual. But for this week’s intro segment I want to think about the origin of Biiwii.com’s URL (but it is what it is) because there are echoes of inputs from 2004 in play, which were part of the reason for the name of the website.
Specifically, back in 2003-2004 most people were still bearish in expectation of an ongoing secular bear market to follow the secular bull that had concluded in 2000. Personally, I had been leaning toward a resumption of the bear after the 2003 double (‘W’) bottom and bounce. But at some point in 2004 I realized that it wasn’t happening and that inflation was lifting stocks while it lifted gold, silver and commodities even more. But it was what it was, Alan Greenspan had cooked up new bubbles. (more…)
Since the BTFD crowd and “it’s still a bull market” imbeciles were after me today, I thought this would be appropriate…………..
As we move deeper into the year 2018, and as the market slips lower, I am increasingly confident that the gargantuan bull market that started on March 6 2009 ended on January 26 2018. We all know that no one rings a bell at the top………but I think we’re all starting to hear the ringing anyway.
With that in mind, I decided to take a look backward at the kind of chatter that was going on in mainstream financial media when the market was peaking. What became quickly there clear was two “legendary” voices – – Bill Miller and Jeremy Grantham – – took center stage and encouraged people to throw all their money into an equity market that had already gone up over 300%.
Let’s start with the first “legend” – – Bill Miller – – who in January 2018 (that is, the month the market reached its highest peak in human history) notified planet Earth that the market was going to “melt up” by 30%.(more…)