In a period measured in hours, not days, the Dow has roared quadruple points higher and the /ES has tacked on nearly 200 points. The reason? Nothing to do with anything fundamental. It’s the same old “everyone is bearish” logic, coupled with the US dollar dropping in value after a long run-up.
Most of you are acquainted with the part of trading culture which recognizes that when a person enters into a trade that goes against him and decides to stick with it, hoping things will get better, that “trade” becomes an “investment”. In a way, that explains my commitment to buying options with ridiculous amounts of time left on them. I don’t want to be at the mercy of the little blips and blaps of news and Reasons For Stocks To Go Higher that invariably come along. I want a lot of time for things to grind lower in large, nominal terms.
That’s why I keep harping on my dumping of SPY puts yesterday morning, because buying options that expire in a week isn’t my style, and it shouldn’t be, either. Getting lucky now and then isn’t a great strategy. I’d rather play it safe and stick with “investments”, even in the form of speculative options.
It was also disappointing that the /ES blew right past the resistance level I was mentioning only yesterday.
But I suggest you keep the bigger picture in mind. Indeed, I’m going to go out in a limp and saying today is probably a terrific day for me to add new shorts, because the “drop and pop” we’ve witnessed over the past week is pretty typical for these grind-em-up bear markets.
This sort of thing is even more clear on the /NQ. The triple analog I’ve crafted speaks for itself.
Looking closer at the /NQ, I would like to assert that because the prices are mashed against an important intermediate-term trendline, this could be a turning point for tech stocks to the downside.
Rounding this argument off with the small caps, take note of what an important level 1910 is on the /RTY futures.
Finally there’s our old friend crude oil, which for me is foundational to my bearish argument. This bear market, which is coming up on ten months old now, is just plodding along, and I am confident it’s going to extend well into 2023. The “anchor tenant” for this bearish shopping mall is energy.
My current portfolio is as follows:
- 28 positions, all bearish;
- 26 of them are individual equity puts expiring January 20, 2023 (133 days out);
- 2 of them are ETF puts expiring November 18 (a more aggressive, but not irresponsible, 70 days out);
- As of Thursday’s close, 21 were in the green, 7 were in the red. The biggest profit stands at 86% (NVDA) and the most massive loss is 5.8% (GM)
This has felt like a crummy week so far, but I hold out hope Friday could be good.
