With about 40 minutes of trading, the S&P500 has pierced its 1230-33 resistance (which includes the 100-day moving average)  though has come in a little from its morning high.   Closing above the 100-day at 1232 will be an important win for the bulls.   Lots of performance anxiety out there in the under invested crowd.

Here is a great quote from a money manager/trader we know well,

The systemic fear of going down with the ship keeps you on shore.   You wake up one morning and find the ship has left dock.  You jump in and try to swim to catch the ship and almost drown in the choppy waters.   All while thinking you’re not sure if the ship will eventually hit the iceberg that kept you on the shore in the first place!

Miss the boat and if stays afloat for six months, in the words of Donald Trump, “you’re fired.”

Couldn’t capture the frustration and fear of missing the boat here any better.   And the longs are worried that this may be a bull trap.   That’s part of the reason why markets are  so volatile.  Nobody knows for certain what the future holds and that is what makes markets.

The levels to watch on the upside for the S&P are today’s intraday high of 1239.031243,  .618 fib retracement of August-October sell-off;  and 1257.64, the break-even for 2011 and level where money will be forced in.  The 1274.67, the 200-day, which will probably be slightly lower by year-end.

Stay tuned.

Category: Investing, Psychology, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Night Sweats of a Money Manager”

  1. TLH says:

    I do not see how we are in anything but a trading range. The economy is not as bad as feared, and people became too negative. Thus the rise. This will fail because of our poltical class-USA & Europe. People will become too positive, or at least the shorts will have all covered. Then we go down. Keep it simple, but be alert.

  2. safe haven says:

    BR – you have a 1st in the class page – congrats – but this mornings piece strikes me more in the direction of what a fund manager might say to his clients ( don’t miss the boat analogy or, your Fired). Might be true but, the other reality is – Equity Investor’s have time and again ( a substantial % in any event) both domestically in the U.S. & globally have been thrown off THAT SHIP and left to the sharks ( often times the fund management industry) both in absolute performance terms one a 1,3,5 or even a 10 year basis with the primary beneficiary being the now obsense fund management industry delivery poor returns in exchange for fees’ that are charged nonetheless. This is a very large problem for the entire ( mutual/hedge fund) industry as it goes more to what people like Ray Dalio suggests – if there is a problem – bring it out — talk about it — find the truth of the issue — and attempt to resolve it. Today, it is still the fund management industry that is the WINNER while most investors are on WATER DEEP and, very uncertain about being in ANY SHIP ….Best …Bob

  3. Expat says:

    I am still torturing business school students with a trading sim. It’s commodities, but the markets are probably worse than equities right now. In just a very short time they have (mostly) learned the value of stops. Ritholz’s Zen of Trading was trotted out earlier in the semester this time, but too late to save at least two teams.

  4. dougc says:

    The reason that investors like J Rogers are so rich is they evaluate what is going on long term and invest their money and don’t pay attention to daily, weekly or monthly movements in markets, also they don’t use levarage. Average investors bel;ieve they can time the market , use a ruler and look for the ultimate timing indicator.

  5. safe haven says:

    BR – you have a great page – Congrats…
    That said, the “don’t miss the boat” analogy bothered me enough to make the following clarification. Fund managers receive fees whether they generate + or – performance while the retail investor often times is left under water. The industry (mutual/hedge) has creditibility problem that can’t be easily resolved without open and perhaps difficult conversation leading to solutions. A significant portion of the fund management industry on either a 1,3,5, or 10 year basis has profited nicely from a significant portion of investors that have generated little to no absolute returns over this period of time.

    This “short term” portfolio positioning time and again leaves the Capital of that Ship being the Fund Management industry with the normal investor being left out to sea EVEN IF that fund manager has taken the decision to “get on the boat” for the next ride.

    The industry has a huge problem. Dalio would argue — bring it out in the open. Discuss it. Attempt to find a proper solution and, re-create what there no longer exists — confidence in the process. Best – Bob

  6. mathman says:

    Some early morning links:

    the Gaddafi elimination (ala Sadaam Hussein) being about currency war:
    http://www.youtube.com/watch?v=GuqZfaj34nc

    Max Keiser on the USD:
    http://www.youtube.com/watch?NR=1&v=wcXgeIzhNrY

    Cenk on the coming election and OWS:
    http://market-ticker.org/akcs-www?post=196415

    Well, here we go – another week going in the same direction, doing the same things, changing what’s possible in our personal lives while the economic ground shifts around under our feet (prices rising for essentials, wages frozen or being eliminated) like the earthquake in Turkey and elsewhere (don’t look now, but earthquakes of over 6 magnitude have been on the rise of late all over the globe).

    Have a good start, shall we?!

  7. mathman,

    with.. http://www.spiegel.de/international/world/0,1518,792590,00.html

    “…The future belongs to drones, remote-controlled unmanned aerial vehicles (UAVs) equipped with sensitive reconnaissance electronics and powerful precision weapons. Drones provide the kind of weapons system strategists have always wished for: They allow a military force to exert power while minimizing its own risks, and to carry out precise, deadly strikes, without sending its own soldiers into danger.

    The additional fact that drones are comparatively cheap has made them a favorite with the United States, which has used drone strikes to execute over 2,300 people. Most of these attacks have been carried out as part of the hunt for Taliban members hiding in Pakistan along the border with Afghanistan, and those killed include American-born al-Qaida associate Anwar al-Awlaki, who was executed by one of the remote-controlled weapons without first having been convicted by a court.

    A $94 Billion Market?

    Zaloga points to a table showing Pentagon budget figures. In 2002, the US military spent around $550 million (€400 million) on drones. In 2011, the figure was nearly $5 billion.

    Demand is growing around the world as well. “The Middle East will become an important market for drones,” Zaloga believes. “Oman, Saudi Arabia, Egypt. And then Asia, of course: Malaysia, India, Australia. And Europe: Turkey, Italy, Poland, for example.”

    The analyst estimates global drone sales in the coming decade at $94 billion. Should it so choose, the US has a potential major export success on its hands. The only technological item possibly more popular is the iPhone. A new global ” drone arms race” is coming, the New York Times wrote…”
    ~~~

    should we getting Long(-er) http://www.finviz.com/quote.ashx?t=AVAV&ty=c&ta=1&p=d

    or, merely, taking Over/Under bets on when “Don’t Drone Me, Bro!”, enters the popular lexicon ?

  8. dead hobo says:

    Damn my dyslexia. I first read this as Night Sweats of a Monkey Manager.

    Ob the other hand, trying to figure out what the algos will do next is not much different. Personally, I think they will drive it higher because it looks like so much smart money is ready to come off the sidelines because they are afraid they will miss the boat. Then, when Europe fails, the algos will thank you for your support. After all, nobody could have seen that coming.

    Unless, of course, you think Europe is going to announce victory over debt and find money that wasn’t there last week or last month and happily dance with glee around the money Maypole. And, of course, their first estimation will be spot on accurate and complete.

  9. AnnaLee says:

    No BR,

    The boat got caught off-shore in a giant whirlpool. It is circling the periphery appearing to be near clear sailing but still risking being rapidly sucked suddenly and rapidly into the abyss.

  10. DeDude says:

    “1257.64, the break-even for 2011 and level where money will be forced in”

    How does that work? Are there people who have obligations to purchase stocks if they are positive for the year?

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