A Lesson from Super Bowl

The Seattle coach made the right decision to pass when New England had a goal line run defense set up.  The execution was poor, and thus resulted in an interception.  Then came the armchair quarterback criticism saying it was a dumb decision.  The statistics for the season, although a small sample size, showed Marshawn Lynch having very little success in running it in for a touchdown around the goal line when the defense was stacked up against the run.  Just like in investing, everyone that keeps score is results-oriented.  For fans, just like investors, it is never about what the probabilities are beforehand, just what the outcome is afterwards.  The pass was the higher percentage play than the run, but nothing is 100%.  The odds of an interception are very low in that situation, but not zero.  The worst possible outcome occurred, but it doesn't make it the wrong decision.

Just like in poker, what keeps the long run losers in the game is the luck factor.  Trading is a game of probabilities.  The long run winners are usually on the right side of probability, and the losers on the other side.  But anything can happen in one day, in one week, even one month.  The losers, if they have luck on their side, can win in the short term, but the more they trade, the more the probabilities come to bear.  In the long run, the probabilities play out and the long run winners win, and the long run losers lose.

On to the markets.  Crude oil has rallied strongly now for two straight days, after bottoming at a new low last Thursday below $44.  With seasonality suggesting a bottom in oil any day now, it should be a support for this market, at least for those who are in energy names.  I remain long ES from Friday's close, and will hold it for a swing.  ES resistance levels are 2015-2018, and beyond that 2033-2036.  A close below Friday's low will be a warning sign that this market will need to probe lower levels before bottoming.