Bulldozer Closing In

The dip buyers are still actively picking up dimes in front of the coming bulldozer.  Even though I believed that the dip on Thursday/Friday would be bought, I couldn't pull the buy trigger just because of the weak backdrop for stocks in the current environment.  Declining year over year earnings growth, high valuations, and newfound optimism on emerging markets that is based on dollar weakness hopes, not realities. 

The fund managers haven't been actively adding equity exposure this year according to reports, but I get the sense that they will start doing so slowly over the next few weeks.  The quant funds are usually the first to buy the rebound, then come the active managed funds, and then when the up move is over and starting the downtrend, retail comes in to buy "cheap".  I expect a repeat of this base case scenario over the next month. 

Unless the markets trade more volatile and there are more opportunities, I will refrain from making unnecessary blog posts.  As the market has slowed down and become less favorable, I've reduced my blog posts about the current market.  At a later date, I may write a few posts about trading in general, when I find the time and motivation to do so. 

I've noticed over the years since I have written these posts on the market that they affect my trading, and sometimes for the worse.  The more I post, the more I seem to overtrade.  Overtrading is fine when it is a favorable trading environment, but if its a one way train, its best to just get on the train and hang on, or stay out of the way. 

I do sense a longer term opportunity brewing but I will be patient in putting on the position.  Needless to say, it is on the short equity side.  In the meantime, I am waiting for more concrete signs and rumors of a US/China trade deal, which should put a local top in the emerging markets and set up a long ride down.