Thursday was a good day for me, but only because my utter paranoia was rewarded.
Prior to the open, the /ES had been falling steadily for hours. I was frantically headed back to my computer for the opening bell, walking swiftly the final few blocks, and watching my iPhone the entire time. When the market opened, the /ES took another swift dip, and the Dow was down in the triple digits. I was determined to close out my positions in DUG, SKF, and DXD as soon as I could, which I was able to do shortly after the open.
Recently history has taught me to distrust any gaps down for their tenacity, and I'm glad I acted as I did. Basically almost all my profits for the entire day were made in those first few minutes. The only exception was XHB, which I used as a long position during the day. I have long stopped caring why on earth homebuilders would be rallying the way they have; I simply take advantage of a very bullish chart. It has been an amazing pattern.
What's been weird lately is how the range of the /ES has changed from relatively calm to far wider recently. Just look:
Lately it seems that every excuse the market has had to fall gets shrugged off. A drop by IBM, a big drop by QCOM and EBAY, a plunge in AMZN or MSFT, a reduction in Greek's credit rating – – – all of them yield nothing, in the end, for the bears. The market's willingness to drop for more than a day seems to have been utterly excised.
Even more late-1990s-like is the runaway moves in the likes of NFLX, AAPL, CBRL, CAKE, and a host of other casual dining establishments. I mean……Cracker Barrel Old Time Country Stores?!?! Huh?!?! What Lewis Carroll novel have we found ourselves in? CBRL is suddenly one of the hottest stocks on the planet? I say again: HUH? (to say nothing of Chipotle).
Even some of my very long-term charts are starting to fall away as bearish evidence. The NASDAQ bearish case has pretty much crumbled, and the Russell 2000 is having some serious violations as well. I am, at the moment, very light in my portfolio, with a mix of long and short positions and no meaningfully large positions in either direction. I felt quite satisfied that Thursday went as well as it did, particularly since, after a 100+ point drop on the Dow, most indexes wound up very deep in the green for the day.
So tomorrow should be the final of ten days trading away from home. I never expected the trip to be this long, but it's gone surprisingly smoothly. I just wanted to share a few thoughts about this rather unusual day. I'm off to bed. Au revoir!
