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This market is even weaker than I imagined. As I said in my last post, my brief fling with bullishness was quickly dispatched, and I’m pure bear once more with 80% committed to positions and 20% in cash, which I think I’ll leave as-is until after the FOMC. Please take note of these VITALLY important Fibonacci levels!
This is a weirdly awkward time for me. The list of stuff I have gotten OH-MY-GOD correct is pretty goddamned astonishing. Seriously. This shows the planet isn’t a meritocracy. Cramer makes $5 million a year and is a world-famous Bozo. Whereas I have to scrape around for subscriptions. Oh, well. At least I have my hair.
I am knocking it out of the park this year (charts=A+) and my trading remains a solid C+, at best (and that’s probably generous). I trust you’ve been benefiting, however. I’ve been tying myself up in a knot all night about what I’ve done right and wrong, and how I would handle today. Superficially speaking I’ll come right out and say it, I think we may be hitting an important low at the moment. Take note of the Fibonacci at the bottom.
I have had a bit of writer’s block for a few weeks. I had started to write something on Trade Management, but that was so boring even I almost fell asleep while rereading it. So I figured I would just give a walkthrough of my current trade.
I’ll start off by saying that my overall market bias should be no surprise to many who’ve seen my sporadic comments over the past few months. I am leaning very bearish overall, somewhat for fundamental reasons (economy, inflation, lack of QE, etc.), but really the technical story is following along as well, despite recent market strength. This bounce has taken us right back to the underside of some very long-term overhead resistance. Given the length of time this resistance spans, it is not surprising how much of a fight we are seeing at this level. This could work to my benefit, painful though it may be, as it gives me time for my positions to be “vested” (trade restrictions require all profitable positions be held at least 30 days).
(more…)Let me start off by saying something crystal clear: not flipping from totally bearish to totally bullish on May 20th was the biggest mistake of the past twelve months (probably twenty-four months). I mean, it was right there in front of me: these Fibonacci retracements are not new information. They’re well established. But I got greedy and I decided to wait for more profits, and then BLAMMO, here we are. It’s a damned shame.
There isn’t a single trading morning that starts without me holding my breath to see what the first quotes of the day reveal, but this morning was particularly anxiety-laden, considering the consequences of the retracements about which I’ve written endlessly and the nauseating strength of the bull run over the past six trading days. How pleased I was to see my favorite color, red, slathered all over the screen. It was particularly delicious since, of course, futures had been so annoyingly (but appropriately) strong on Sunday, with the NQ flying higher by another triple digits. As of this moment, all of that doe-eyed, Fed-sucking bullish delusional thinking has been laid waste.
