Lets Blame Obama For the 87 Crash

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November 9, 2012

I’m surprised at how many traders I respect, think the market is tanking (see going lower) because Obama won reelection. They must be using super secret technical indications I’m not familiar with, but I doubt it.

My timing indicators went on a sell signal October 19th well in front these past two “decent” sized down days. Not a brag, just making a point.

October/November 2012

October 1987

The 87 comparison is technically the same. A sell signal above the 50dma that broke the 50dma. In 87 a panic took it much lower than the standard deviation. Has everyone been lulled into this year’s low volatility market that anything above a 1% move in a day is shocking? If so the market got you. Again. Which is what it does all the time.

There are many more examples, but I picked an extreme comparison for the sake of discussion. I’ve said it many times in this blog over the years, big market movements give clues.

Market does what it does and the market was heading in this direction already. Looking for market movement excuses is left to the media outlets like CNBC and Bloomberg. Yet so many traders online say they turn it off or they never watch it with the sound on. How can you on one hand discredit/disrespect what CNBC/Bloomberg/Jim Cramer does, and on the other hand do the same thing? Market movement reasons du jour is a sucky business and will prevent you from trading correctly.

Sure the uncertainty factor of events is like greasing the wheels, but the cart was already moving in that direction – don’t twist the picture.