711 replies to this topic

[lawdog]

had a tough time breaking 20k on the dow 30; no problem with 21k, as predicted by GO. i will forever live with the reality of being short when the dow broke 21k. very sad, but no shame. whoa, spx just took another quantum leap. hmm, maybe i can reshort at better prices. but not yet.

[lawdog]

one thing to watch out for is the "revenge trade" where you missed the market, got it wrong, and double down on your error by going in more against the trend, thinking "I'll show them who's right about this market." not a smart thought process, and believe me, i have done it frequently. 

 

still considering getting back to 50% short, but also considering getting flat. chance of a reversal today is about 5% and declining by the minute. the market does get drawn to round numbers and spx 2400 is 8 pts away.

[lawdog]

back to 50% short; revenge trade, all the way.

[lawdog]

i'm liking the short; may face more pain today, but i'm liking this side of the mkt here at 50% short. and in the words of king Charlemagne in "Pippin," "and if this war does smother us, there'll always be another."

[lawdog]

This string will move to page 3 soon, where it belongs. I have had many days like this over the years; they are never fun. but I will not flog myself or be ashamed. As I have written before, the pain of loss is about ten times the pleasure of a win. That's because when we make a trade, we always expect a win, so there is little joy in getting what we expect and great pain in getting something bad that we don't expect.

 

The problem with my short positions is that usually tops don't occur with a grand finale like today. The tops (not ultimate tops, but traders' tops) form more slowly, so it is unlikely now that a precipitous drop will immediately ensue. There is just too much bullishness out there to spell an end to this strength. The only chance I have of recovering some of my losses today is to retool. so to speak, and take a look at things with fresh eyes. If we get a small drop from these levels, that's about all that I will expect because it is likely that even if we are at or near a trading top, the market will decline, then bounce, then decline and bounce and so forth. So it is inevitable that my current positions will be closed out at losses, but that will give me new eyes to figure out what to do next. 

 

It was amazing how hard it was to get to 2330, and how easy it was to get the rest of the way to 2400. 

[lawdog]

i'm liking the short; may face more pain today, but i'm liking this side of the mkt here at 50% short. and in the words of king Charlemagne in "Pippin," "and if this war does smother us, there'll always be another."

 

I just remembered, the actual words from the song, War is a Science, are "and if this war does shrivel us, there'll always be another."

[lawdog]

I still kind of like it for a short-term top, but not expecting too much from here to the downside.

[lawdog]

You don't see many comments on this these days concerning the Investors Intelligence reading, but it is at about 64/16, almost 4/1. When this ratio last got this high was Jan 2014 when the spx hit about 1850, and the indicator finally bottomed out at about .8/1 last January/February 2016 when the market bottomed out at 1829. Of course, it is important to note that, although the indicator was similarly high in 2014 at spx 1850, the market did, in the next 1.5 years, rally 250 points to 2100, then dropped down to 1829. So there was an advance of 12% in there over a 2-year period if you were able to get out at 2100 and back in at 1829, but the round trip ended up lower than where the market was when we got to the similar 4/1 ratio in 2014. So a buy and hold from 2014 to Feb 2016 in the SPX didn't give you much. There are similar indicators which really make me wonder about how much advance is left here. The buy and hold crowd are the geniuses right now, but I know I made some good money in 2014 and 2015, and that was the result of some decent trades, both long and short. How much is left for buy and hold? Maybe Trump has brought in a new paradigm. I hope he has, but will that translate to higher prices from here? 

[lawdog]

indicators are stretched to extremes. if this were bottom extremes, i would buy all in on the long side, 100% and just sit back. i will now do similarly on the short side, but i will keep a core 50% short and then trade a little as opportunities are presented. the extremes right now are historic in magnitude. 

[lawdog]

sold some of my naz100 qid's that i picked up yesterday. small loss from yesterday. will add them back eventually. i doubt the bulls will be defeated quite this easily today.