This is going to be one of those longish, therapeutic posts which is as much for me as it is you.
In spite of all my griping about screwing up trades, and leaving tons of money on the table, and the Atilla cell in my spreadsheet, etc., etc., I actually wound up Thursday with the highest portfolio value ever. I had stars in my eyes about securing a triple-digit percentage gain for the first half of the year. I was 100% bearishly invested and ready to rock.
Friday changed all that. I went from a swaggering, super-confident bear to a quivering, timid, 54%-in-cash nimrod. The vast majority of my profits are still intact, but let’s just say I’ve totally dispatched with my triple-digits dream, except inasmuch as for the year 2022 as a whole. Friday was, in fact, one of the worst trading days for me in the entire year, and as I’ve mentioned, just about the ONLY thing I did right with this “all thumbs” week I just had was sucking out a mountain of cash from my brokerage account a week ago so I didn’t hurt myself even worse than I did! So, yeah, a cash withdrawal was my most resplendent victory. Pretty sad.
The one or two folks that I respect and follow were both pointing toward a mighty bounce, and I pretty much ignored them. Big mistake (and I’m not talking about Atilla here). I misinterpreted the inability of the bulls to go above the horizontal as something which would persist, but nope, once the market was open on Friday morning, the bulls stomped all over my back:
Thus, over the past week, we have been enduring YET ANOTHER tedious, annoying, tiresome, and, in the end, completely meaningless counter-trend rally. What a drag, man. Seriously. Why not just accept reality? But, no, we all have to play this little game over and over and over, pretending that Everything Is Peachy Again.
Once those horizontals were cleared, the bulls totally dominated. Just take a look at this bullish base on the /NQ. It’s a pretty clear shot up to that next horizontal.
The cool part is how the bearish pattern (left half) and bullish (right half) are mirror images of one another, and the decision point is that horizontal stretching across the chart. The rest of the trip should be pretty easy for the /NQ bulls. The key is what happens afterward. If it just keeps traipsing above that line, it could just mean more pain. If it falls, that doesn’t mean very much for the bears. It is ONLY meaningful if the drop pushes back INTO the pattern I’ve emphasized with the red rectangle.
The peaks in fear have been remarkably regularly-spaced during this year, and quite obviously we’re burning off the latest one right now. It hasn’t descended to any kind of meaningful support yet.
So, looking back at the past week alone……….
What I Did Right
- Last Friday, went heavily into cash (50%) and big long DIA position;
- Moved a substantial portion of cash profits OUT of my brokerage account so I couldn’t get my grubby little hands on it;
- Did a semi-decent job participating in the energy wipeout, with particularly good gains from CPE and COP puts
- Wasted no time GTFO of my new bearish positions this morning when I recognized how hosed they were.
What I Screwed Up
- Got out of DIA long on Tuesday, enjoying only about one THIRD of the profit I should have received, since we were nowhere even CLOSE to the price gap (we got right up there today, so, yeah, today would have been the SMART place to exit);
- Pushed back into bearish positions, particularly on Thursday, since it seemed the bulls couldn’t get their breakout going. I took losses left, right, and sideways on these new positions.
- Not respecting the opinions of those I respect!
I am thus ending the week on a low note, having sacrificed a minority but meaningful hunk of profits that existed on Thursday. For the start of the new trading week, I am positioned as follows;
- Long XLV puts in my personal account (September expiration)
- Long 20 different puts in my big account, with expirations no sooner than October 21st;
- A whopping 54% cash position, since I’m uneasy just how high this bounce could ultimately go.
- A big fat slice of humble pie.
Find a way to fade my emotions, and you will be rich.
