Big, Fat, Stupid Mistake

By -

I feel rotten this morning about my trading.

Why? Simple. There seemed to be a mass consensus that there would be a powerful bounce this week, and shorts were far too stretched to the downside to be safe anymore. Some of the smartest people I know – and some of the most bearish people I know! – were quite clear that they were going to switch to the long side.

Well, I decided it was time to take profits and get out of my shorts, so I did so. And after a brief bit of strength this morning, the bears once again showed that they -not the bulls – are in charge now, and I've been watching my former portfolio do sensationally well. It's very, very painful to watch.

After carefully examining my former positions, I decided about half of them were worth re-entering. It doesn't feel good to re-enter positions at worse prices than you had in the first place, but the fact is that these are still good charts. I feel like a total bozo for letting (a) fear and (b) opinion overcome cold logic. Markets sometimes can fall farther than you think and can sometimes rise higher than you think. The bounce might happen, but it's not happening now.

I am only one-third committed at this point, but entirely short, and I continue to feel that GDX has incredible potential. Anyway, I'm going to be quiet the rest of the day as I try to get my head screwed on right again.