Previous Post
Next Post

There’s No Stock Market Crash Yet aka My Take On Capitulation

Posted by Timothy Sykes on Fri 10th of Oct, 2008 07:37:21 AM
  Tags:

So everyone and their mother…hint, hint LiveStock today from 1pm til who knows when, gotta cover this potentially awesome day today in all its glory…wants to know where the bottom is…and the word you must learn to recognize is C A P I T U L A T I O N.

You know I don’t believe in market guessing games–I don’t think anyone who reads or doesn’t read this blog is smart/rich enough to be able accurately quantify all the moving parts–nor buying falling knives, but I do know a little something about traders and investors psychology and capitulation is all about psychology.

Imagine for a second you’ve been a dip buyer–probly a sissy value investor/wannabe Warren Buffett “buy into fear” aka I fear how many morons out there think they’re wise/experienced/mature/disciplined enough to be part of the 10% of traders who make money instead of failing, losing $ and becoming part of the problem, not the answer–at Dow 11k, 10k, 9500, 9200, 9000, 8800…You’re down big, bigger every few hours/days and you can’t understand why the market is not bottoming like the experts/gurus/bloggers/talking heads/reason tells you it should?!?!? You keep adding to average down your cost basis so there’s still a chance you can make it back…

And there’s a ton of people doing that right now…the problem is they haven’t capitulated nor do I think they’re even close to. They haven’t thrown up their arms and sold their dip-buying-positions because they still think there’s hope.

The damn media and talking heads who say recovery in 2009 have got everybody all excited about hope and they’re responsible for making people dumber…and now poorer.

In individual stocks, falling knife chart patterns USUALLY last a longer than people expect and there’s rarely any quick rebound, if any rebound at all, but when we’re talking an entire index/market, you gotta give up on individual investor/trader psychology and focus on big issues–like the fact that the S&P 500 hit a near perfect double top from 2000, essentially meaning we ain’t breaking through 1600 anytime in the next decade. Meaning limited upside.

More importantly, the steepness of the decline mirrors the bottom in 2002, but we forget that 2002 was after big drops in 2000 and 2001, meaning all those dip buyers–yes, they were around back then too–were finally giving up…right now the dip buyers are just starting so I’d be surprised if they gave up anytime in the next few months as we’ve really only had 1 year of downside…typically, we need another 1-2 before we get any true panic. Meaning plenty of downside.

And of course, you’ve got all these messy credit swaps, derivatives and who knows what else that nobody understands well all we know is financial companies are now leveraged 20-1 down from 40-1 and it’s all coming apart.

In short, who the hell knows where the bottom is, the downside pattern is just beginning, at least historically…we might get a snapback rally, but everyone is expecting a snapback rally, which makes a snapback rally less likely which means we could/should get a serious panic that discards all historical norms and teaches everyone that technical analysis is an inexact science, especially when combined with non-transparent over-leveraged carcasses of companies.

Spread This Post:
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • MySpace
  • StumbleUpon
  • Technorati
  • TwitThis
  • Yahoo! Buzz

TIMstore Monthly DVD Specials:

See all TIM DVD specials HERE

Related Reading

Previous Post
Next Post
  • Interesting take.. especially the last paragraph.. ".. everyone is expecting a snapback rally".. to be truthful.. I am one of those.. and likely in the 90% of investors whom don't know what the fawk they are doing but think they do... Trying to time this market for a rally is ridiculous, when 90% of the days are red, why are you trying to catch the 10% that are green? Most 'analaysts' are saying that when it does snapback.. buyers will step in, and that may definitely be the case.. but why not try to make the money today shorting, instead of waiting (and losing) money trying to time the rally back?

    Great insight Tim.
  • correct, people dip buying at dow 9500, 9000, 8800 are the ones who will ultimately sell at 8000, enabling a potential crash to 7500 7000....i love this cuz i know i'll be one of the survivors and i'm selling DVDs to teach people to think like me!

    http://www.timothysykes.com/store
  • leo00o83
    Timing a market that obliterates historical trends or odds based on historical chart patterns and indicators is not a good idea if you're expecting you'll get a rally that is similar to the ones we got already because if the nature of the downside is a totally new animal, so will the nature of the rally.

    The only things that DO still work are intraday support/resistance levels. support becomes resistance, resistance becomes support, weak volume breakouts are more likely to fail than succeed, etc. that's it.

    But all this could be obliterated on a big news event, especially one that would create scary spikes that don't follow any kind of support/resistance level.

    So even day trading this market is extremely risky.
  • yes leo, isn't it wonderful!
  • Well I do have shares in the market, in things like MBIA - I know silly boy, and am down 35% and many many thousands, but have not sold out and dont think i will, ill just hold and see what happens.

    Im in a position where I can lose my entire portfolio, it would suck but its not a massive deal for me as im mainly sitting in cash right now, I feel very sorry for all those around retirement age though that have seen their life savings CRASH in the space of a couple months
  • cash
    Thanks for the insight Tim one of your best blog posts.
  • A
    Yeah, Tim, been following your blog for 9 months now. Definitely one of ur best posts. Keep up the good work man.
  • thanks guys, nice rebound this morning, TIMalert subscribers know i just picked another winner for 10% gain this morning http://www.timalerts.com
  • 8.69% GAINS in 20 MINUTES off your latest TIM ALERT this morning!! THIS STUFF WORKS! watch this video NOW http://tinyurl.com/53jc6o
  • Cadel
    If all those bitter investors are losing money, who are the people making those tons of billions being swiped away from the markets??????
  • wow
    wowzers, so this is where all the idiots come to listen to a stupid prick who got lucky once and now likes to talk down the market cause he needs to cover his shorts?

    market going down, we are at 1987 immediate post drop, bottomed out and from here its up like crazy especially the financial sector starting monday
    but keep shorting fools
    hahahahahah
  • sissy value inv
    "dip buyer–probly a sissy value investor/wannabe"'

    uhh, haven't you been buying strong "value" off the bounce. You took into consideration ISRG's fundi's when you bought. Not all value investors buy and hold without taking profits.
  • yes, yes, I agree. atleast 2 more years unless the gov messes it up and we recover just to get setup for a HUGE crash in a decade. We need some real panic this is a wimpy crash, we need 10-12% in a day or we crash again IMO.
  • Getshorty
    Hey wow, nobody is upposed to be short here, people who listen Tim shoud be ALL CASH. Don't have a clue what or who you are laughing about.
  • Made 13% trading Dow Ultralong ETF today... looking at all the index ultralongs next week for potential bounce. VIX is way too high not to get a decent bounce... just make sure not to chase, and buy when everyone else is panicking.
  • Getshorty
    Congrats Puma, which are some good ultralongs?
  • Incantoto
    You just talked your people out of the greatest rally in 20 years
  • Adam
    Nice work on shorting today! Keep shorting and see what happens.
  • lncanto, i could care less about market crashes/bounces, just take it one pump at a time...thats why my people are sad only up 100%+ on the year so far!
  • BurstYourBubble
    Poor Incantoto...He talked himself out of getting the inside scoop on how to trade. He will wait around for another 20-60 years to get a bounce like the one he probably missed as well.

    Oh well...In-Can-toto... In Can is another way to say "in butt"...toto is Doroty's dog. Dorothy's dog is in his butt?

    I don't know.
  • what bounce? we had one big gap up--which anyone watching livestock was not short for, but long--and then an afternoon rally...other than that we go down, down down
  • Andrew
    Thanks for the education.
  • mcbowler
    Hahaha.. I KNEW you were right anyway.. everyone in my office talking about moving their 401ks AFTER the first crash. I told everyone in my office, the word of the day is capitulation!
blog comments powered by Disqus




Start Here

Who Is Timothy Sykes And Why Should I Care?

See Tim's full bio HERE. Tim turned a few thousand dollars into a few million by taking small gains time after time on hundreds of volatile penny stocks, discovering that his trading strategy, while consistently successful, works best for those with smaller accounts.

Determined to teach others this PennyStocking trading strategy (learn more HERE), he went back to his original $12,415 roots (already $58,000+ even though the stock market has crashed) to show everyone how to turn thousands into millions, even while having a life (somewhat) and making plenty of mistakes. Currently he is the #1 ranked trader out of 25,000+ on Covestor)

How Can I Consistently Make Money In The Stock Market?

Hard work, Determination and Know How.

Hard work to learn how the greatly misunderstood niche of penny stocks provides opportunities every now and then on which you should pounce.

Determination to seek those probable profits out and know how in order to actually profit from them.

Long story short, wait for stocks that are extremely volatile - for whatever reason - and then aim to take small profits (between 10 and 50% within a few hours, days or weeks) here and there, either from betting on higher or lower prices (yes, you can make $ betting on lower prices, it's called Shortstocking (learn more HERE).

Why Penny Stocks?

As Tim explains in several ALL-NEW instructional DVDs (see them HERE) and in over 2000+ blog posts, penny stocks are the most hyped and corrupt niche in the entire investment world. These two qualities make them the easiest to profit from (legally) because the vast majority of people who play penny stocks are suckers and all-around ignorant people. If you have any intelligence whatsoever, you have a clear advantage and it's like playing basketball against mental midgets.

Where Do You Find Stocks To Trade?

This is the #1 FAQ (see more HERE) and it is answered in THIS instructional DVD.

Of course, that's just a brief introduction - to receive a full education, there is Tim's book An American Hedge Fund which is the story of his remarkable rise and lessons learned.

To truly increase your odds at profit, Tim has designed an entire set of detailed instructional DVDs, covering all the variables that amount to over 24 hours of instruction (see them all HERE)!

TIM Trades

View All
Date Stock Buy Sell Net
Nov 6 QXM $4.31 $4.80 $1936
Nov 4 COT $8.66 $8.88 $642
Nov 4 QXM $4.61 $4.89 $822
Oct 30 DDRX $25.70 $26.53 $812
Oct 29 CTDC $4.00 $4.42 $781
Oct 26 AWSL $3.24 $4.10 $2516
Oct 23 RODM $5.27 $5.23 $301
Oct 22 AMLM $2.69 $2.97 $820
Oct 22 USEG $6.12 $6.09 $85
Oct 20 CBOU $8.93 $9.06 $243
Oct 16 VRMLQ $16.79 $18.65 $2773
Oct 13 YONG $11.05 $11.66 $1202
Oct 13 NPHC $0.59 $0.71 $583
Oct 12 IMGG $0.60 $0.70 $682
Oct 9 ZAGG $5.50 $6.10 $2380
Oct 7 GVBP $0.03 $0.27 $702
Oct 1 NPHC $0.70 $0.85 $1482

Total: $92,304 (644%)