As you might guess, I have read virtually no comments over the past few days, so I am very "out of the flow" of things, which bugs me. I really like to read what people are saying and referencing. But a vacation is a vacation, and I'm getting a bit of leisure time.
Well, not exactly. My day began, as it did yesterday, at 5 in the morning, and I ambled down to the lodge to start the trading day. I had something like 25 longs and 48 shorts, and I was lightly positioned (maybe 30% of my portfolio; the rest in cash), and tilted somewhat bearish. I was struck with immediate disappointment when I saw the /ES was down 15 points already. I had really, really hoped the last two days of the quarter would be a bore, much like yesterday, but it was not to be.
What happened today sets us up for either an immediate (and it has to be immediate), hearty bounce, or we crack the neckline we've all been obsessing about for all these weeks. Look at the S&P:
If we break the neckline, a measured target would be around 875. At that point, I think the bear fun would be done for many ,many months. It would just be a range-bound grind from then on.
Ironically, it would be drastically better for the bears if we rocketed toward 1125 – – or even 1150 – – before softening up again. This would be a once-in-a-lifetime chance to load up on shorts at amazing prices. Sadly, that opportunity may not come.
The Dow Jones would fall to about 8250 (and I believe it will before October is over) in a similar scenario. The giant question is what will happen tomorrow. What could the Fed pull out of their backside at this point?
I have been somewhat hampered – – – but only somewhat – – by my remote location and paucity of computer equipment. To be brutally honest, had I stayed home, my results would probably have been extremely close to what I'm seeing thus far.
As of now, I have 87 short positions and 3 long positions (FXE, RTH, and TLT). Tomorrow is bound to be volatile, since today probably threw a lot of people into spasms. Whether it's up big or down big is unclear. I am shocked how fast the fall is unfolding. The bulls are in a much more pitiful situation than even I imagined.
