Category Archives: Risk

Pushed to the Brink

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October is turning out to be far more “trick” than “treat” for equity bears.

At the midpoint of the month, things looked sensational. Stocks were breaking down left and right, and it seemed that we had finally encountered a sea-change in the market.

Since then, however, stocks have exploded higher with a gusto that I underestimated. I certainly expected a bounce, but nothing of this degree. Much worse, it seems that the cessation of QE (announced yesterday) has done nothing to slow the equity bulls down.

This kind of environment can really mess with one’s head. Let’s take a look at the past couple of days on the ES: (more…)

Dead Soldiers Stay Dead

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“No bastard ever won a war by dying for his country.  He won it by making the other poor dumb bastard die for his country.”  -George S. Patton

Did you hear about that new medical invention that can now bring the dead back to life?!  No?  Oh, that’s because it doesn’t exist.  Just like there is no way to bring the money we lost in a trade back into the account.  Pardon the morbid start to this commentary but it is meant to shock us into paying attention to a very important point:

Small losses are better than large losses.

cut loss


Counting Cards

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I’ve had quite a few new readers in the last few months and it struck me yesterday from a couple of comments that at least some of these were obviously still hazy on the distinction between technical analysis and fortune telling. It can be an easy mistake to confuse the first with the second, as a good analyst can sometimes make calls that seem almost supernatural. Some of my past calls have been amazingly and rapidly accurate, and some offhand examples I’d pick would be: (more…)


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In spite of the late-day run-up, I had a pretty terrific day. Both my options and my equity accounts appreciated, and my equity portfolio beat the general indexes by 100 basis points, approximately (in other words, if the market is up 0.50%, I expect to be down 0.50%; but if it’s up 0.50% and I’m also up 0.50%, and I’m entirely short, I consider that a 100-point beat, which is really, really cool). It goes without saying that when the market was down earlier in the day, I was really up.

It’s not all sunshine and petunias, however. As I’ve stated before, my fear is biting me in the ass, and I’ve really got to let these positions blossom (or, in my case, rot). Here are a couple of put options I sold at a profit, only to see the profit become more………errr………profitable. (more…)

The Cost of Fear

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Greetings from the Pacific Northwest, where I will be with mia familia until late Monday.

This morning, I wanted to share some thoughts about fear and the damage it can do to one’s profitability. Now fear is quite a distinct thing from frustration (both of which have been served up in ample heaps to bull and bear alike thus far in 2014). A good example of frustration is when a Sloper will write me, expressing disgust at the market and resolving to quit trading either for a while (measured in months) or permanently. I got one such email this week. I’ve marked the point at which the email arrived: (more…)

General Screwup

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ARGH! Aie-eeeeeeeeee!!!!!!!!!!!!

OK, I present to you my Royal Screwup Of The Day: General Motors. As some of you know, there’s nothing quite so painful about being correct on a trade and yet losing money on it. This is one of those times for me.

I have been bearish on General Motors for a variety of reasons. They came out with their earnings this morning. The Street loved what they heard. They bid the stock up massively (relatively speaking; we’re talking about General Motors, after all). (more…)


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I probably don’t have to say how discomfiting it is to be holding fast during this upsurge. The NASDAQ has added nearly 6% in just the past five trading days, and we’re getting dangerously close to violating our nice, neat series of lower highs. If we slice above the prior high, it’s not the end of the world, but it definitely muddies the water. As if it weren’t muddy enough.