……..was a profit.
Indeed, the moment I saw the news this weekend about the Yuan easing, I had a sinking feeling today (Monday) might be one of the worst trading days of my life. I didn't really grasp what the Yuan float news would mean, but once I read that Bernanke, Geithner, and Obama enthusiastically embraced the "good news", I was pretty sure my goose was cooked. After all, I was virtually totally short, and my portfolio was about 120% committed.
So my stomach was in knots Sunday, anticipating the opening of the Euro at 2 in the afternoon. Those knots went into spasms when the Euro exploded higher at the open. My worst fears settled down as the Euro softened up, but when the /ES opened up 14 points higher, I really started to worry.
On the way back home from Tahoe, I noticed the sudden and unexpected plunge in both the Euro and the /ES (I haven't read comments for the past two days, so I'm totally out of the loop as to what has happened the past 48 hours). The /ES gains were cut in half. My glimmer of hope, however, was soon dashed at dinnertime, as all the markets pushed to yet new highs. (Excuse the blow-by-blow, but the past 24 hours have felt very, very long, and I'm just reliving them for you here).
When I went to bed, I was seriously considering simply closing all my positions and closing up shop for the rest of the quarter in order to retain some profit for Q2. That was a disappointing prospect, because I've worked terribly hard, and simply throwing everything away in order to protect my remaining profits and bring risk to zero was an unsettling option, but it was one I was very seriously considering. I had a feeling it was going to be a very rough day.
I woke up at 5 a.m., went into my home office and was pleasantly surprised to see the Euro had gone into a hard fall during the night. I was outraged, however, when I fired up the /ES chart to see that it was as strong as ever. The "one-edged sword" seemed to be at play again; that is, the Euro strength helping the /ES but the Euro weakness having no effect.
I then made a decision to do something I don't think I've ever done: there's a special button on my trading platform labeled Xcl All Orders. It deletes every stop order in place (and there were 190 of them). I decided to click it, and I watched all the orders vanish (this, by the way, is the Willy Wonka reference; "I've pushed al the buttons except for this one"). It was a very considered decision. My feeling was that I would get popped out of a ton of positions at the worst prices of the day, and it was worth the risk to let the market be open for half an hour and then, one by one, reset all 190 of those prices using the latest information.
The market opened, and wham, it showed a loss of $130,000. That loss bounced around from $125,000 to $145,000, and I carefully watched. I then started going through all my charts, and by the time I was through, I had only decided a handful of positions merited closing.
Thank God I decided to cancel the orders and re-evaluate them. It is something I probably will almost never do, but in this instance, it was essential.
There's no need to take you through every tick of the day, but as the day wore on, the loss chipped away, piece by piece. It didn't erode all at once, of course. It wiggled up and down – – sometimes dramatically – – but I kept passing levels that improved the day. It got beneath $100,000. Later, it was beneath $50,000. Then $25,000. Then $10,000. And then – – Holy Moses!! – – into the green. Un….be…….lieveable.
I don't have a brain sufficiently large to understand how this whole Yuan float is ultimately going to effect things, but it definitely seems to rah-rah optimism that kicked off the day was badly misplaced. I'm sure a lot of folks gobbled up securities on the "good news", and they're all sitting on losses right now. Pity.
As I mentioned earlier today, I had good success shorting precious metals, although as I sit here right now, I only have a small short on the GDX. Overall, I've got 190 short positions and nothing else. The bottom line for me is that, as I go through my thousand or so stock charts in my watch list, there isn't a single one that strikes me as a compelling long. Even UNG, which I considered buying early in the day, seemed to be exhausted, and sure enough it completely keeled over.
So I remain completely short and, having gone through today, somewhat more confident than I was 24 hours ago. I also note with more than a little amusement that Market Sniper's postulate that my Laser Quest score of 1130 was in fact a message from God that we would retrace to that level came true magnificently today. If we don't see 1130 again, we can put that in the Spooky Hall of Fame.