This blog tends to be about charts, but this post is going to be an exception. I'm just going to type what I'm thinking, and this will be my last post of the day.
Today stunk for me, just like the prior five trading sessions stunk. In fact the only reason the stink is diminishing is because I am backing farther and farther away from the market. Two of my four accounts are all cash. That, for me, is extraordinary. I only wish I could wave a magic wand and turn all four into "all cash" as of last weekend!
I haven't been in the comments section in any meaningful way for quite a few days now, but I did catch a glance at one comment which stated that no real downtrend would resume until the bulls became net sellers. I hadn't thought of it that way before, but the Sloper is absolutely right. No matter how much we stare agape at the gullibility of the investing public, the fact is that they are buying stocks, and their demand is driving up prices. So no matter how many bears there are………..and there are rarely many……….their selling is going to be completely puny compared to the buying of the bulls. As long as the bulls are drinking the Kool-Aid, we bears are going to have to keep buying the drinks.
If I look at the total value of all four personal portfolios that I manage, I haven't made any net profits since February. Across the four, obviously a couple are higher and a couple of lower, but the net result is that the five past months have yielded me $0 for the countless hours I've spent on the markets. That is demoralizing.
But demoralization isn't going to do anyone any good. It isn't instructive, and it isn't edifying. When I reflect on 2008, which was an amazing year for me as a trader, I am actually more proud of my ability to pick myself up and recover than I am proud of my ability to make money during the "good times." March-May 2008 were horrible for me, and when I discovered e-mini futures in the autumn of 2008 and wiped out almost an entire portfolio in a week's time, that was horrible too. But I bounced back hugely from those mistakes, and there are times I really wonder to myself how I managed to do so.
Sometimes I get tired of being strong, though. And, believe me, watching hard-earned profits evaporate in a very public way takes a lot of fortitude. When I'm making money and offering suggestions which are scoring money for my readers, all kinds of good things happen at once. My accounts grow in value. I look good to my family. I look good to my readers. My self-esteem and confidence are strong. I am a charting wizard.
When things go badly, everything happens in the opposite direction. What is heartwarming to me is that I actually get more nice emails and thank-yous during the bad times than during the good times. I am really moved at how much people appreciate the community here.
I had an absolutely blast trading late last year, but markets go up more than they go down, and I need to be able to thrive as well in an up market as a down market. I proved this to myself, in a limited way, with my 401-k this year. But as I survey the charts, I cannot bring myself to buy. The risk/reward isn't good enough to my eyes. I have set aside a handful of charts that might look like good longs, but the ratio of interesting short opportunities to interesting long opportunities is about 15 to 1 for me, so it's hardly worth bothering.
I still think the run-up in asset classes – – – be it gold, oil, silver, or equities – – – is running out of steam, although as we threaten to bust above June's highs on the S&P, I wonder how much more upside the bulls might be able to muster. It's entirely possible that "steam" could last much longer than I anticipate. But, for better or worse, I still remain 100% short (setting aside the fact that I have a very large amount in cash, since I've been stopped out of so many things and since I haven't had much interest in loading up on a lot of new positions).
What's most important for me is to make sure I keep my confidence and wits about me. Getting some consistent profits flowing again would do me a world of good. Until then, I'm taking it one day at a time, and I am keeping both my eyes and my mind open.