Market On Wire

By: Erik Swarts | Mon, Oct 10, 2011
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Market On Wire

"I observed the tightrope 'dancer' -- because you couldn't call him a 'walker' -- approximately halfway between the two towers. And upon seeing us he started to smile and laugh and he started going into a dancing routine on the high wire....And when he got to the building we asked him to get off the high wire but instead he turned around and ran back out into the middle....He was bouncing up and down. His feet were actually leaving the wire and then he would resettle back on the wire again....Unbelievable really....Everybody was spellbound in the watching of it." - Sgt. Charles Daniels of the Port Authority Police Department, referring to Philippe Petit's tightrope walk between the World Trade Towers on August 7, 1974.

As a trader, I can appreciate what a successful dance with risk looks like. Not in the sense that I place my financial health in jeopardy each trade I execute for the sole purpose of taking on risk - more in the approach to successfully carrying out the act and ultimately being strengthened and rewarded by it. There are times when you can feel a sense of balance with the market, even in conditions that present a high degree of difficulty - such as the current market. You are in the flow and dancing with the tape. Other times, you look like Elaine from Seinfeld dancing at her holiday party - awkward, clumsy, spastic - one step behind the music. At times like these it is best to extract yourself from the market and reduce its flow down to a few key components.

For myself, the year could be distilled in one asset - silver. From its parabolic and ephemeral run at fifty dollars an ounce this spring, to its May-day crash and most recent disorderly decline - it has been the canary chirping softly deep within the mine. I believe over the next week, silver looks very susceptible to another bout of selling, with strong similarities and proportions to silver's decline and the U.S dollar rally in 2008. If this is to materialize, it will likely extend the gold/silver ratio to relative new highs, which leads me to believe the equity markets have more work to do within the range - and likely on the downside part of the range.

"The essential thing is to etch movements in the sky, movements so still they leave no trace. The essential thing is simplicity. /That is why the long path to perfection is horizontal." - Philippe Petit

Directly after the time period below - silver went on to loose an additional 30%.



Erik Swarts

Author: Erik Swarts

Erik Swarts
Market Anthropology

Although I am an active trader, I have always taken a broad perspective when approaching the markets. I respect the Big Picture and attempt to place each piece of information within its appropriate context and timeframe. I have found that without this approach, there is very little understanding of ones expectations in the market and an endless potential for risk.

I am not a stock picker - but trade the broader market itself in varying timeframes. I want to know which way the prevailing wind is blowing, where the doldrums can be expected and where the shoals will likely rise. I will not claim to know which vessel is the fastest or most comfortable for passage - but I can read the charts and know the risks.

I am not a salesperson for the market and its many wares. I observe it, contextualize its moving parts - both visible and discrete - and interpret.

I practice Market Anthropology - Welcome to my notes.

Erik Swarts is not a registered investment advisor. Under no circumstances should any content be used or interpreted as a recommendation for any investment, trade or approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This is strictly for educational and informational purposes only. All opinions expressed by Mr. Swarts are subject to change without notice, and the reader should always obtain current information and perform their own due diligence before making any investment or trading decision.

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