I tried to get cute with another short attempt last Monday around 2860, and have gotten squeezed since. It was a small short, so its not that big of a deal, but anyone who trades knows that any loss is irritating, especially when I kind of broke a rule of not shorting S&P unless I had a bearish view in the longer time frames, and I didn't. I was bearish in the short term, but as I mentioned in the last blog post, Pullback Reveals a Lot, I had changed my stance from intermediate term bear to bull. Despite this, I still wanted to take another crack at the SPX short, and I have gotten punished for breaking one of my rules.
During slow markets, especially when many are on vacation and volumes and volatility are low, it is best to do nothing. Especially when I don't have high conviction, and the short I put on last week was not a high conviction trade. Its another one of thousands of mistakes I have made, just glad that it wasn't a big one because I didn't put on much size. I am still nursing the short, hoping for a more graceful exit point. But the recent dollar weakness and the heavy long dollar spec positioning doesn't look favorable for equity bears. Also, bonds are acting strong which is another positive for stocks. I still believe bonds will pullback and move towards the 3.00% 10 year area in September.
The honey badger SPX doesn't care if you think it is too high, it doesn't give up, it just keeps grinding away, making new highs, irritating more traders. I don't see it stopping anytime soon, and we probably will have to deal with the SPX not making the final top until well into 2019.
You have to trade based on your market analysis, not based on what you want the market to do. It will be a grind for those with a bearish lean for the next few months. But there is no way I will chase on the long side with this kind of overvaluation and excesses built up.
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5 comments:
TrendRambo: Unfortunately Trump completely sold out to Wall street but will have no choice but to vote Republican this November We need a decent immigration reform ( wall , deporting 20 million latinos etc) Once that is done what we need a national socialist figure to move against this harmful bilionaire system. Then we will have volatility.. Id give it 30% chance otherwise Ill have no choice but move to Norway with my family...
Trump and his crew told you their scorecard is the stock market, so obviously that means selling out to Wall Street. Big corporate tax cuts, small tax cuts for everyone else, begging Powell to stop hiking rates, all talk no action on immigration reform. It has been a dream for Wall Street, Trump has served up money to bankers on a silver platter.
TrendRambo : Indeed unlike as he promised he is nurturing/reviving an outdated corrupt deeply flawed economic system. Trickle down for most wont be enough anymore. Will find out by the November elections whether he will shot the government down or not. Will his base reject him or not. If rejected then all will be lost and at the same time he wont be super rich either.
The social liberal Rothchild globalist democrats will destroy the western world as planned.
I went short at too. Europe is lagging the S&P so I reasoned that it would bring the S&P down with it eventually for a brief sell off but oh no this S&P is a powder keg! Where do you think you will get a chance to exit?
I don't know where a graceful exit lies, but anything around 2875 and I will close out the short and regroup. Anyway, I don't see more than 20 points upside before a big dip so I don't mind hanging on either. Expecting a big dip in historically weak September - October time period.
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