Lord in heaven; can anyone actually trade this thing? The markets have entered their insane phase; just look at those lunges on the /ES.
Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
I have traded CTXS religiously for a long time. I just wanted to show this daily chart of CTXS. I believe the order flow has reversed from the buy side to the sell side just as it did where notated on the chart. I bought June puts from $39.80-$39.00. I like the trade from a risk reward perspective, $40.50 is my MENTAL stop and gives a little wiggle room in the gap. Im risking $1.00 loss for a $12.00 gain roughly.
I will keep my short position in tact until my final target is hit or approached, but I will also play the thrust up patterns on the long side along the way. This allows me not to micromanage my core short position the whole way down and profit on the long side when circumstances dictate. This really compounds my returns and keeps me from sweating the bounces. Of course this strategy is only valid as long as $40.50 is not hit and if it does get hit soon, then as I said I believe the trend has changed and will keep my eye on it for the weakness I presume is percolating.
Well, the magical double-digit unemployment rate is with us again. I don't think this has happened in about 18 years or so. In spite of the government's machinations with the numbers, it is undeniable – – the unemployment situation is getting worse.
This news had an immediate effect on the e-mini markets. I was watching the /ES, and moments before the report came out, the /ES vaulted a few extra points higher – – I suppose by those hoping to get in front of a surprisingly good report. Surprise! The /ES lost its own version of double digits within a few seconds.
Looking at the /NQ, it is easy to see a head and shoulders in formation. There are two things to remember, though. One, it's in formation; it isn't complete. And two, as we oh-so-well remember from this summer, these patterns can fake you out unless they decisively break the neckline. But if it does, I'd put the measured target about where that yellow tint is.
The nature, definition, and manifestation of good and evil are subjects I have pondered many times in my life. All cultures, philosophies, and religions have their own views on these subjects. Some of them dismiss the idea that evil even exists. This is something with which I disagree.
The best definition of evil I remember reading was this: “That which destroys life and liveliness.”
But how does one comprehend goodness? Do we simply invert the aforementioned definition, yielding “That which creates life and liveliness.”?
I think that is a step in the right direction. But the thought of goodness conjure up, for me, a variety of other properties. In no particular order – and surely this list is incomplete – I think of:
None of this is terribly controversial. But there are some subtleties in human nature and behavior that make the topic less simple.
The mass of individuals on Earth don’t align themselves to a standard yardstick of principles and behaviors in order to present themselves as being on a particular point on the continuum of good and evil. People are, in my view, self-interested creatures, and it is tempting for a person to consider someone “evil” who is simply dissimilar to themselves (or whose world-view differs from their own).
I seriously doubt Osama bin Laden stares at his fragment of a mirror hanging in the cave wall, cackles mischievously to himself, and declares, “Oh, what a fine life it is to be evil. I shall crush all those goody-two shoes that oppose me!” Nor do I think the likes of Hitler or Stalin considered themselves to be evil. They were consumed with their own motives, and those in opposition to those motives were going to either get out of the way or be destroyed.
I think the vast majority of humanity would agree that such individuals were, in fact, evil. But what’s required to make this sort of assertion is some perspective.
Is Heroism Chosen?
What constitutes a hero?
On a regular basis, the newspapers and television shows have stories of individuals who, in the face of danger to themselves or loved ones, decided to act with remarkable courage and strength in order to attempt a positive outcome. A man runs into a burning building to save the life of a stranger; a woman dives into a frozen lake to rescue someone who fell in; a dog drags an injured dog off a road to prevent it from being killed.
These are all heartwarming, and as sentimental as I am, I’m probably even more affected and moved by these stories than most others. But do heroes choose to be good, or are they simply “wired” that way? And if they are wired that way, are they any more deserving of our praise as anyone else blessed by other genetic dispositions, such as having blonde hair or a nice singing voice?
In the end, I don’t think anyone really cares if it was a person’s conscious choice or not to behave heroically. The fact is that they did, and the action itself gives that person heroic attributes. It is all the more alluring and praiseworthy to the public that these decisions are usually made in a split-second, because deep inside we’re all wondering if we would have done the same thing; we ponder, no matter what our self-image, if we have that goodness within us that we so admire in others.
What Does This Have to do with Trading?
The reason I bring this subject up on a trading blog is because I believe there is a big misunderstanding about the actions of traders and what those actions represent. Specifically, the notion that buying stocks (and being bullish) is “good” whereas selling or shorting stocks (and being bearish) is “bad.”
Let’s start with a few basic facts:
- Unless one’s trading size is so gigantic compared to a given security’s volume that you are going to push the market substantially up or down, your actions are immaterial to the market as a whole;
- Unless you are actively and effectively spreading malicious untruths about a given organization or security, you are trading morally
- Your participation in an aftermarket does nothing to help or hinder a public company.
Let’s focus on that last point. If you buy 5,000 shares of AAPL, the company Apple doesn’t care. You’re not helping them, or their employees, or their sales, or their customers, or their management of expenses. If you short 5,000 shares of AAPL, likewise, the company doesn’t care.
Now, if it were 1976, and Steve Jobs and Steve Wozniak came to you for startup funding, and you gave it to them, Apple would care very much. Because you are providing them what they need to create a business. And if, in 1980, you as an investment bank agree to underwrite their public offering, Apple again cares, because you are providing them with a source of financing that will help them grow as a business.
But once a company’s public, your actions as a trader really have nothing to do with them. Sure, a company (and more particularly, its shareholding employees) like to have a stock bid up to higher prices. But your actions as a trader aren’t creating any good (or evil) for that organization. You are operating in a realm outside the bounds of that enterprise.
Creation and Destruction
Some people get the idea that bears are malicious, nasty, grubby creatures that relish the thought of destruction and collapse. I can’t speak for all bears, but I would say for myself – – and I would think most sane people – – that this notion is absolute junk.
An objective technical trader does the following:
- Examines a chart;
- Reaches a conclusion;
- Acts upon that conclusion.
There is nothing malevolent in the above. Nothing. If I believe the stock BIDU is going to fall, and I short it, then I am taking actions that I hope will be profitable for me. I am taking a risk. Yes, I am hoping the stock will fall, because that benefits me and aligns with my analysis. It feels good to be right, and it feels good to take a profit. But this “hope” has nothing to do with wishing ill on others; it is simply a supposition made based on analysis.
Others might say bears want America to fail, or that they hate America. Again: utter crap. I love this country. I built a business here, creating employment, products, and profits – – and I sold it to a much bigger firm. I raise my family here. There is, on the whole, no other place I’d rather live.
But my perception that this country is going very bad places doesn’t make me un-American. If anything, my willingness to perceive and talk about these concerns makes me that much more of an American. I would like to see this country come out on the other side of this mess in one piece. I would say blind optimists who figure things will get better just because they ought to get better are unpatriotic by way of their apathy.
As for corporations: if you really want to destroy a company – – – if that’s your fondest wish – – – then create a better competitor!
Who do you think had a more destructive effect on Yahoo………….(a) short sellers, or (b) the founders of Google? I think even 2 million short-sellers couldn’t even approach the damage that the 2 co-founders of Google created. So Joseph Schumpeter’s notion of “Creative Destruction” wins the day.
The Amorality of Trading
For 99.9% of traders out there, trading is an amoral act. You’re not good for buying; you’re not evil for selling; you’re not virtuous by being bullish; you’re not malevolent by being bearish.
What about the circumstance where you actually make a profit as a direct result of the suffering of others?
Let’s suppose that, on September 10, 2001, you were strongly of the opinion that airlines were going to go down in price, so you put all of your trading capital into puts on American Airlines, United Airlines, and the like. September 11 happens and – when the market finally re-opens on the 17th, your puts soar in value hundreds of percent (I do not know what the options actually did during that month, but I am guessing this is close to the truth).
Was there evil intent in your trade? Did you contribute to an evil cause? Did you assist the terrorists? No, of course not.
Did you (unwittingly) profit because of a terrorist act? Yes. Does this make you evil? Based on hypothetical circumstances I have described, I would say the answer is no.
Now, it certainly might feel unseemly if you were in this position (and we won’t even go into a potential visit from federal authorities, curious about your prescient timing). Your profits might feel like blood money to you – – you might even donate all the profits to the Red Cross, since it would seem like the right thing to do.
I propose that you have no sin which you need purge, although I do agree it might be fitting, and erase a perceived stain on your soul, to surrender the profits, since the circumstance would be profoundly unusual.
But, let’s face it, 9,999 times out of 10,000, a profitable short sale or put position doesn’t do well because of an event that causes human suffering. But I think the wise bear keeps his mouth shut about profiting from a company’s troubles – – – no matter how morally neutral a trade might be, there is still room in this world for decorum and common sense.
The bottom line, for me, can be expressed simply as this……….
You simply are; and your trading is; and the markets are. These things are neutral, and it is your relationship to the market that will dictate your profits and losses. Outside of those boundaries, nothing matters, and no one need care.