Feb

20

Caution Flags, from James Lackey

February 20, 2007 |

At the Daytona 500 finish the boys were running three and even four cars wide at 185 mph. Ex-champ Darryl Waltrip was announcing and said "on the next caution" and laughed as he said there will always be a caution when they run four wide into the tri-oval.

This year's Daytona 500 was rather boring until the finish. Goodyear brought a new, hard tire compound for the race. Teams seemed to struggle with the tire during qualifying. Yet by the race it was obvious the tires held up and the cars ran with more down force this year for more traction. There were few cautions until the end when everyone had to stand on the gas and run three wide, or finish at the rear.

The worst markets for traders or guys with cars that don't have the backing of big banks, are caution-free. It takes plenty of buying power to run up front in strong markets. The best markets for traders are constantly changing.

There are a few stories out there on our current situation. First the bond market's movement has been so low that even the big banks don't find dealing in government bonds worth the profit. Second, as almost all stocks go up in the current rising tide, advisers of short sellers have lost their audience. Even companies with bad fundamentals keep going up. Last, it's a global rising market. One guy told me he has never seen all markets go up at once like today. It is rather amazing to see oil even gold higher over the years with the SNP and world markets up.

It's never a matter of if we have a panic in the markets, only when. The problem is always: how to predict. When we hear we have not seen a 10% correction in X days we all cringe. It hurts bad to get caught in a panic, yet it can hurt much worse to sit out a huge rise, only to see a 10% panic conclude at prices much higher then where you bailed.

The market is not about you. However, a the joke to get is the market's ecosystem. Sooner or later, the market starts feeding on itself. It's not bullish or bearish, it "is". The market needs a tremendous amount of energy to sustain itself or it will grind to a halt.


Comments

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search