Good morning, everyone., Well, today’s the big day. And I do mean BIG day! It’s a damned shame we all have to slavishly react to whatever the financial politburo utters, but there we have it.
I want to thank everyone for their generous suggestions in last night’s “What do I do??” post. The poll results were spread fairly evenly, although the distribution isn’t at all a surprise to me. Suffice it to say I’m strongly inclined to follow your counsel and take on a meaningful long position to act as a salve at the all-too-likely rally.
The shame of it all is that, God DAYUM, bear markets are fun, and these counter-trend rallies are a drag and a big waste of time. Why do I say waste of time? Because the market will simply go DOWN again, every time, to new lows. So it’s a futile “sentiment-relieving” gesture on the part of the opposition. But, again, there we have it.
Looking at the /ES, we can see how over just the past few days, we engaged in a series of exciting down-steps, but with less vigor (that is, a more muted angle) every time. And, over the past couple of sessions, we’ve got our first little uptrend cooking, with a fairly decent bullish base spread out over the week so far.
Another item in the bulls’ favor is the VIX, whose peaks seem to be relatively regularly spread apart and seems positioned for a sustained tumble.
The one sector I’m inclined to stay bearishly positioned on is energy. My view is that energy stocks didn’t get anything like the drubbing all other stocks did, and if we breach this horizontal on crude oil, it should help drive those energy stocks down.
As for my own positioning:
- As of pre-open, I’m only in bearish positions: 30 of them, which is 80% of my portfolio;
- I will almost certainly trim back a few of these and take profits;
- I will also almost certainly move into one or two bullish positions that are substantially larger than any individual bearish position to act as an insurance policy for a rally
If there’s one thing I can say to myself, which is where I screw up every time, it is this: STAY with those hedges! Don’t take quick profits and scurry away. If a counter-trend rally takes hold, it always lasts much longer than I think it will.
Good luck to us all. This isn’t going to be easy.
