Well That Escalated Quickly

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Well, it’s really, really obvious now that the final vomiting up of stock sales happened very close to yesterday’s final bell. The ES bottomed at about 4:30 EST and it did nothing but climb between then and now. I don’t mind that I still have the vast majority of my short positions, but if I had it to do over again, I would have closed out my larger ETF shorts at the close. That kind of rush for the exit is probably going to be reversed, and it was.

I’ve backed off quite a bit, having taken my portfolio from a 95% commitment level to 66%. I got blown out of my only large short – FXE – at a loss, and many of my individual stock holdings were up 2%, 3%, and even more on the day, meaning, of course, a chunk of my profits from yesterday were eaten alive.

0416-CHANGES

The bounce didn’t take me by surprise, although it was perhaps a touch stronger than I anticipated. My line in the sand was 1570, and that’s pretty much where it peaked. I’m actually a lot more comfortable being short right now than I was at the close yesterday. Big sell-offs are nice, but they are discomfiting to those holding positions overnight, since (so-called) bargains are bought up.

0416-ESNOW

The $COMPQ (NASDAQ Composite) continues to provide the clearest picture. We need to stay below the blue resistance line (the tint shows the violation point, approximately); we need to break the red supporting line (tinted in teal) in order to make my target between now and the end of next month feasible (tinted in magenta). This is conjectural, obviously, and perhaps over-simplified, but it conforms most neatly to the ranges we are in now.

0416-COMPQ

Not to beat the precious metals horse to death (or, at this point, into glue……) but I continue to await the buy-point for miners and metals, which is coming up fast. I was nervous last night that I missed the boat, given gold’s handsome gains during the night, but I reminded myself that the charts hadn’t reached their targets yet. It turns out this was the correct thinking, because pretty much all of gold’s gains were shaved off by day’s ends, and miners had, almost incredibly, turned in yet another day of losses.

0416-HUI

The overall theme for years now has been occasional scary sell-offs (marked in magenta below) followed by what I think are best described as “Oh, No You Don’t!” smack-downs in the VIX. Importantly, each of these surges is more diminished than the one prior, and it’s getting to the point now that what passes for a “surge” in the VIX is almost laughably small. After all, the VIX was at 17 yesterday, and people thought the world was going to pieces. This is the same index which was approaching triple digits back in the glorious autumn of 2008.

0416-NOYOUDONT

Finally, I notice with interest that two NASDAQ bellwethers, Yahoo and Intel, both surged higher after reporting their earnings this evening, but they are both in the red now (with Yahoo having completely flipped upside down, from a nearly 5% pop to a nearly 5% drop). As I said, I’m two-thirds committed in my portfolio at the moment, and I will cheerfully get more aggressive with some big ETF positions tomorrow if we seem to be getting back on the Weakness Train.