You probably would be surprised at how emotionally detached I am from profits and losses in the market. It may not seem so sometimes, but I am very cool-headed when it comes to trading. For amusement and/or torture purposes, I keep track in a special portfolio the positions I have closed, just to see what they do (either gaining or losing value) after they are closed out. So for any of you feeling sorry for missed opportunities, take a gander at this small sampling:
The left side shows the "coulda/shoulda" profits for today alone, and on the right are the "coulda/shoulda" profits since the position was closed. I have sorted this by percentage change since the close, and there are many, many more than this (although these are obviously the biggest percentage gainers). Quite a sight, ain't it? I feel like Carl Sagan should walk onto the blog and say "billyuns and billyuns."
Anyway!
My point today is very simple, and it's in two parts: (1) the major indexes have reached retracement levels that would have seemed unthinkable even just five trading days ago; (2) it has taken place breathtakingly fast. Just look at these, and take careful note of the tinted areas (and I realize these are somewhat "overshot", but you'll get the idea………..)
And, of course, our dear moon-bound friend the VIX which had yet another all-time record today (I don't buy this "October 1987" stuff, since the VIX was based on a totally different formula back then; this is a NEW RECORD):
Now, I got in touch with my inner bull near the end of yesterday, and it cost me today. I've lost track, but I think I got blown out of half my positions easily (and the other half, I assure you, are almost all in the red!). I made up for it with a pretty decent collection of puts I've held on to for a long time, as well as some pretty deft DXD and SDS trades.
But my game plan is unchanged. FIRST, a multi-week or even multi-month uptrend; and SECOND, once that retracemtn appears to be done, short like there's no tomorrow. I actually think that will be a bigger opportunity than the one we've witnessed since September 18th (doesn't that seem like about ten years ago now, even though, incredibly, it's just a few weeks!??!?)
Although I may live to regret it, I loaded up on SSO when the Dow was down nearly 700 points, based simply upon the fact that the aforementioned retracements were getting nailed. I am putting my money on the idea that tomorrow will rally.
This market is not headed to zero. I believe, and have never stopped believing, that we're in a sustained, multi-year bear market, and I also believe that deflationary depression outlined by Prechter is in the process of taking place. So don't worry about me getting all bulltard on you. But this market will at some point find buyers, and when it's even slightly obvious that there's potential for upside (like two days in a row where the Dow is in the green, even if just a little) you're going to see buyers storm in for "bargain prices."
Huge fortunes are being made and lost in this market, and financial history is being made. Ten years from now, when you look at a chart, you will still easily see the past few weeks reflected in the market action. The key is to remain calm, rational, and focused (And, of course, read Slope constantly). And if you ever feel like kicking yourself over a mistake, make use of the handy table I've generously provided at the top of this post. Good night!
