Finger to the Wind

 A small minority make money in the markets.  So by that logic, you cannot do what the majority if you want to win in the long run.  Not talking about investing, but speculating.  Investing is safer, but almost always not life changing.  Speculating is riskier, but has a much higher probably of making life changing money.  

That is the basic principle that I follow when I make trading decisions.  And since I'm not trading in the pits or talking to clients, I need to get information.  Information about what the majority are thinking, trying to figure out how that will affect the market.  Information is the most valuable thing in this business.  Charts alone don't tell you much.  You need to know what people are thinking if you want to improve your predicting skills.  And experience from remembering past instances with similar investor behavior and thoughts, with similar charts.  

I don't watch CNBC and read Twitter for fun.  Its a job.  There isn't much joy in watching a bunch of so-called experts with little to no skin in the game making market calls with irrational confidence.  Its like hearing from the armchair quarterback sitting on his couch calling into a sports radio talk show acting like he knows more than the head coach about every little detail. 

So that brings me back to the current market.  This is not like June 2020 or September 2020.  We are in a full blown bubble now, and there are positive catalysts (stimulus) ahead, not high uncertainty events (the election).   That makes any selloff different, because most investors want to be long ahead of a stimulus bill passing, unlike ahead of an important election.  So that itself makes the selling more likely to be shorter in duration that what you saw in fall of 2020.  

Ok, so some may be thinking about February 2020 again.  Again, a very different situation.  The economy was getting worse, not better, as it is now.  And once again people were looking ahead to the uncertainty of the Rona, now there is the uncertainty of how much stimulus will be passed, which is a totally different kind of uncertainty, an uncertainty that the market likes to have.  

How about January/February 2018?  Again, a totally different situation.  Powell was super optimistic on the economy and a little worried about inflation, now he's somewhat pessimistic on the current economy, and not worried about inflation.   Maybe we'll get a different Powell in the 2nd half of the year, but he's still not going to change his tune until you see mass vaccination done and the economy fully reopened.  

And then we can go to the anecdotal things that I heard last week.  Worries about a correction, too much retail speculation, hedge funds under pressure and needing to sell longs because of their shorts getting squeezed, Fast Money bearish in the short term and looking for a pullback.  Those worries might have more merit and accuracy if this was actually a weak market and not one in an extremely strong uptrend.  In an uptrending market like this with few big pullbacks, last week was the first 4% dip we've had since late October, you need to look for long opportunities not short opportunities.  This market still hasn't given you many chances to buy at a meaningful discount from all time highs.  That usually means that there are a lot of dip buyers who've been waiting to get in and haven't been able to until late last week.  The first meaningful dip after a long uptrend is a good risk/reward buying opportunity.  

I am long SPX and will probably keep it for several days, at a minimum, and may hold some to play for a blow off top sometime in the spring.  Won't be trading in and out of the position, will just hold here just in case we get that V bottom to new all time highs again.  Good to see that the bulls got a bit scared on Friday, it clears out the weak hands and makes its more favorable for the long side over the coming few weeks.