| The Whitney Theater (Hamden, CT) marquee
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| | want the markets to go up and up because
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| advertised movies for children
| |
| | it means more money. When markets hit
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| ("Gidget"..."The High and the Mighty").
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| | successive days of positive returns,
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| Every kids matinee, the manager would
| |
| | investors get starry-eyed. We like it
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| pick a ticket out of a large popcorn box.
| |
| | when Neil Cavuto (among others) reports
|
| He would give the winner candy, free soda
| |
| | new highs for the Dow (read " The Dow
|
| and popcorn, or a toy connected to the
| |
| | Jones Industrial Average: Failing the
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| movie.One afternoon he read the numbers
| |
| | Average Investor" by Steven
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| on my ticket stub. The prize was an
| |
| | Selengut).Dizzying heights cause most
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| air-pumped rocket. My friend Elly and I
| |
| | investors to miss subtle market moves.
|
| went to an open field, pumped it as hard
| |
| | Stocks/indices must move higher on strong
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| as we could, and let it go. It went
| |
| | buying volume. When markets reach a
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| straight up, stalled, lost momentum,
| |
| | bench-marked high level, getting past it
|
| nose-dived and hit the sidewalk.Stock
| |
| | will take three times the average number
|
| Markets soar and crash too. Stock Market
| |
| | of daily buyers.If the price stalls at
|
| traders sometimes become kids with a toy.
| |
| | the bench-marked high and the buying
|
| Every day the market pumps itself up.
| |
| | volume is less than the daily average,
|
| Indices spiral upward making many giddy
| |
| | index prices decline."Don't worry." Elly
|
| with kiddish delight; nobody wants this
| |
| | never worried; I always worried. When
|
| rocket to fall from its lofty heights.
| |
| | that rocket went off, I feared it would
|
| With little notice, the market stalls,
| |
| | break a window or hurt someone. Elly
|
| momentum is lost, and markets
| |
| | said, "Just pump it Ray and let it go!"
|
| crash.Simple laws of gravity inform us
| |
| | Some stock investors never worry. Wise
|
| that upward moves of any force require
| |
| | Wall Streeters know that "The market
|
| energy and momentum. The stock market is
| |
| | needs to climb a wall of worry." War,
|
| ruled by the same laws. Markets cannot,
| |
| | high oil prices, poor consumer sentiment,
|
| will not, and have not moved in one
| |
| | and Federal Reserve rate increases are
|
| direction without correcting. This means
| |
| | walls of worry. Euphoric investors topple
|
| that bull markets are not forever, and
| |
| | markets.Something to Fear The Vix Index
|
| bear markets are bearable."What
| |
| | is the "fear index" When the Vix spikes,
|
| happened?" My toy rocket did not give me
| |
| | worry increases; when the Vix is down,
|
| any warning when falling to reality.
| |
| | optimism is excessive. Today, May 22,
|
| Stock markets project warning signs when
| |
| | 2006), the Vix spiked.The VIX "is a good
|
| upward momentum stalls. You never want
| |
| | indicator of the level of fear or greed
|
| markets to go up forever. It is best when
| |
| | in U.S. and global capital markets. When
|
| markets move up, pause, contract, and
| |
| | investors are fearful, the VIX level is
|
| build a base before making their next
| |
| | significantly higher than normal."
|
| move.A base-line provides support for a
| |
| | (Antognelli, Ferreira, McArdle, and
|
| market index like the Dow or the S&P.
| |
| | Traub. "Fear and Greed in Global Asset
|
| Long support lines give investors solace
| |
| | Allocation." The Journal of Investing.
|
| because it takes a lot of sellers to
| |
| | (Spring 2000), pp. 27 - 32). Every rocket
|
| break through it. A support line or base
| |
| | must return to earth for refueling. I
|
| (see image) is a trading pattern of stock
| |
| | learned this with my friend Elly and my
|
| buying and selling with little price
| |
| | toy rocket.Want to build a toy rocket?
|
| change.No support means the market index
| |
| | Gary Rollins tells you how in his
|
| has potential to keep falling until it
| |
| | articleBuilding A Model Rocket Can Be A
|
| finds a support line/base or bottom.
| |
| | Great Learning ExperienceRay Randall
|
| Markets stall when reaching a high price
| |
| | serves clients as a registered investment
|
| on average daily stock trading volume.
| |
| | advisor with his firm, Ethos Advisory
|
| Bulls (buyers) will strain to push the
| |
| | Services, Essex, Massachusetts Ethos
|
| markets upward, but Bears (sellers)
| |
| | Advisory Services. He has wide experience
|
| thwart the momentum. An excessive number
| |
| | within the financial services industry,
|
| of sellers (many more than the average)
| |
| | writes a weekly newsletter for Ethos
|
| can force an index/stock to new
| |
| | Advisory Services, and coordinates the
|
| lows."Make it go higher!" My toy rocket
| |
| | developments at Ray holds a Masters
|
| did not reach heights too fast. Elly and
| |
| | Degree from Gordon-Conwell Theological
|
| I were ten or eleven years old; we wanted
| |
| | Seminary, Hamilton, MA. You may call Ray
|
| that rocket to disappear in the clouds.
| |
| | (617-275-5565).
|
| Many investors act the same way; they
| |
| |
|
