I really enjoyed this discussion last night, and mentioned that I wish I’d had more availability to discuss some things that have been on my mind. Since I didn’t get to start that conversation there, I’ll start it here. This may get a little wordy, so hopefully you stick with me and have additional insights to lend.
So, I’m a bull with bearish tendencies. I find the current ranged market situation (ironically, not what today is doing at all) fascinating and have been profiting off it quite a bit since my positions are either extremely short term scalps playing what the day shows, or very long term shares/leaps that have been purchased at the end of days that have moved in the opposite direction the whole day(s) from what I’m purchasing/expecting long term.
What is of most interest to me though, is something I’ve mentioned in passing multiple times over the past few months that seems to still be true, and possibly more obvious now than ever: people WANT TO HOPE. They want to believe that things will get better. Just give them a reason to believe and they will. And when they believe en masse, usually that belief finds enough people that then act on that belief to make it become a reality.
The macro data shows that we “should” be in a bear market heading for deep recession, but we keep finding ways to hang on. The markets keep finding HOPE. This doesn’t necessarily mean we won’t be having an ugly recessionary period coming (data is rarely wrong). But maybe the context and weight of the data isn’t exactly correct, or inclusive. Maybe the value of hope isn’t as quantifiable as debt and inflation numbers. If so, we should be able to account for it more than just a fear/greed scale. And not just account for it, but figure out where the hope is being applied, and find ways to profit on it.
So how do I see hope manifested in the market outside the typical (and short sighted) fear/greed scale? Hyped innovation. It’s great that there is battery tech on the horizon that can reduce our need to use rare earth metals, and the potential to mine asteroids will always be intriguing, and who can forget META trying to force us all into The Matrix or AMC’s popcorn deliveries!
But these don’t move the needle because they can’t be hyped by the layman around the watercooler (or discord channel…). Either they aren’t cool enough, aren’t translatable to neanderthal level discussion (or at least shown to a neanderthal with your phone so they can click buttons and see it work
), or are too far away as not to be any more real than science fiction.
What kind of innovation am I talking about then? Currently, AI. Before that it was EV tech changing how we moved around via TSLA. Before that, Bitcoin/Blockchain dominated many recession discussions, Amazon changed the way everyone shopped, and we had the Iphone. You can keep going back to find innovation that changed the overall market narrative from a bearish tone to a bullish one just by being present. Why these? Because they:
- Were available to a majority of people
- Were easily hyped
- Were perceived (at the time) as being able to lift human existence to a better way of being
- Had the 3 previous criteria met at a time when a large enough group of people were searching for a new hope
Looking at the current hyped hope (AI), I find it incredibly interesting how it’s been around for so very long, but it wasn’t until Microsoft put it in everyone’s hands, in the form of ChatGPT, that it dominated the conversation. EV’s have been around since the 1890s, but didn’t really scratch the itch until Elon started marketing them while fuel prices started rocketing. For an innovation to truly be able to become the hope people need in order to look beyond the pessimistic world around us, it has to be prepackaged and marketable NOW.
Now, markets don’t just move because main street gets excited about something either. But they do move when that excitement becomes infectious. News cycles, streaming channels, and water cooler conversations soon move to board meetings discussing how to incorporate these things into their business model (or how to manage the disruption it might cause).
So how do we, as day traders, capitalize on this? Well, in my trading, I went heavy in MSFT and AI at the beginning of January because I saw this starting to manifest itself. I felt that the paradigm was shifting and people were ready to be hyped up about something. I didn’t really discuss this in depth then because, to be honest, I wasn’t sure if I was right. I wasn’t sure if this hope theory of mine was just the bull in me trying to make it true, and I wasn’t sure if the ChatGPT fervor was going to be the next TSLA or the next META.
I’ve sat on this and discussed it with rl mentors for months who seemed to agree with my thoughts, but I think last night, seeing how most of the conversation seemed to get caught up in the data points showing us that markets “should” be doing the opposite of what they’re doing, I felt like I needed to put this in writing and let us all discuss it. I believe this is correct, but am open to being wrong. I just want to understand these mechanisms in a way that allows me (and all of you) to be able to make more informed trades and capitalize when we see opportunities.
Anyway, feel free to discuss your thoughts on this with me here, in tf, or save it for the next DD night. I just want there to be a discussion. ![:pepepray: :pepepray:](https://forums.ascendedtrading.com/uploads/default/original/2X/5/5a88a32f04bc0a89107f163a28898fcc94e54f87.png?v=12)