Break

Next week I'll stop writing this blog and take a vacation in San Diego, Los Angeles and Las Vegas.

No matter what you did recently in the stock market, I wish you a happy holiday and come back strong and refresh. Thank you for your comments!

Have a great weekend everyone, I'll blog again on June 4th.

Be fearful

I got caught in the middle of a market turn? I started to cut shorts and add longs several days ago, and now the market finally turned? And I don't have any fear of unwinding my longs and adding shorts either.

1. Today when I saw the Dow gave up 100 points and turned red, I calmly started my action.
2. Sold ONXX, ONXX calls, most of URZ. All at a loss.
3. Added MZZ, QQQQ puts. And at the end of the day, they're ahead.
4. I think there is a possibility that we'll have another down day to start the trading tomorrow, if Chinese market tanks tonight. I need to sell some of the puts if that happens.
5. I need to be fearful, being shorts for so long, and once I started to change, the market turns.
6. And today I quickly switched again. I don't know this is right or wrong.
7. We have so many one day wonder (down sharply) and got reversed the next day.
8. I could not wait. I just reversed myself one more time, to the short side.
9. Either I have the trait of a good trader or I'm just insane. Am I reckless?
10. Yes I still have cash, but is that enough?
11. Today's action, a reversal day, has all the making of an important market top, with increased volume again. This has been true for the previous down day for market as well.
12. So this can be the start of the down fall, or just another wonderful opportunity for bulls to buy tomorrow. But I feel it's close to the end for this run. At least a correction.

Chinese weather and the stock market:

1. Today I read a news about world weather this year maybe bad, flood, hurricanes, drought etc.
2. One news from China, Melting Tibetan glaciers could cause the worst flooding on the Yangtze since 1998, when more than 3,000 people were killed as China's longest river overflowed, state media said Thursday.
3. Heavy floods could be potentially disastrous as populous cities such as Nanjing, Wuhan and Chongqing are situated along the river, according to the paper.
4. State media earlier this month warned that China this year faced its greatest threat in a decade from typhoons, floods, droughts and other extreme weather caused by climate change.
5. When you have extreme bad weather, usually the stock market will do poorly. So maybe the bubble in China stock market will burst in summer. This is specially true in China, since government funds are invested in the stock market, and if there is a natural disaster, the officials will keep the funds in a safe place, so they may need to withdraw before the disaster hits. Just a theory.

Alan

Today the market was very strong early on, took out new highs for S&P500, Dow, Russell 2000, and Nasdaq was at a 7 year high I believe. And I continued to cut puts and thought I was lucky to sell QID, DXD and TWM at a higher price (on Monday and Yesterday). Then the markets turned, Alan Greenspan spoke about the risks of Chinese crash, and U.S. market took a tumble in a hurry. This showed the majority of the traders are on the edge, they want to protect their profit and anything can trigger a sell off.

1. This showed that it's really hard to timing the market. Therefore I should not time the market. A 81 year old can still move the market with a speech, wow, Alan is the one and the only one.
2. Need to keep enough puts, the market is very nervous now, anything can trigger a sell off.
3. And I cut some of calls as well. Now is not a time to make a 180 degree switch from short to long. Now is time to be careful and keep enough cash.
4. I already had big losses, don't try to make up the loss, but try to not losing more and still in the market.
5. I learned a lot today, the feeling of on the edge, the feeling of losing and the feeling of desperate moves.
6. Next week I'll be on vacation, it's a great time to take a break, I'm sure it will be an eventful week, maybe the crash will start next week.

Change

Now I think I'm wrong all my trading life. I use charts, but mainly use fundamental analysis, and what's worst of all, I use my reason and the reading I found to support my idea. This is totally wrong. I was lucky before that I have some winners and I thought that's due to my analysis.

1. Now I need to change to mainly use momentum with trends only. Some of my plays like URZ, it's due to momemtum more than fundamentals.
2. Yes, I may turn to bullish at the last moment as the market turns, but I got to try this new method.
3. Once it turns, then I'll follow the new trend, which is bearish.
4. And if it moves sideways, then I will use tight loss limit to cut loss.
5. I'll still use FA, like the uranium story is still great, but I'll use TA as the main method to trade, and focus on momentum.
6. This change is due to very painful experience I had recently, I'm on the wrong side. And the lessons I learned from year 2000.
7. Today I continued to sell my short ETFs and puts. As a result, I don't have any short ETFs left. I sold about 1/4th of my puts. Still like the idea to do it slowly since the market is very top.
8. But Dow and S&P500 can work out their overbought condition by just pull back a little like today and yesterday for a while. So it's not exactly what shorts are in mind.
9. So I'll continue to raise cash to add long positions.
10. Today I added URZ, ONXX, LVS calls. All are speculative plays.
11. I know change is not easy, but I got to do this, and make sure I make it work with my style.
12. Buy when it's moving up, sell when it's moving down. This is what the momentum is.

Bowed out

Another day, another record in S&P 500, today it's the Nasdaq and Russell 2000 that led.

1. China's market dived down more than 3.5% at opening, then closed higher 1%. Once I saw this in the morning, I know it's another long day for shorts like me.
2. I waited to try to get a better price to sell the shorts, instead, I got worse price as it continued to move higher.
3. I sold all QID, my biggest position today. I also sold some RIMM puts. I'm blooded and bowed out.
4. I kept DXD and TWM, plus lot of puts. I'll do this one position at a time. In case there is a pullback, I get better price. Usually after I sold, the price moved up. Let's see the luck continues.
5. Added URZ again today. Last time it saved me after I sold some short ETFs. It's a very speculative play.
6. And I sold CYD calls and my other long ONXX is not working so far. But I'll wait for the ASCO and see if there is any momentum.
7. I have no one to blame but myself. The biggest problem is not my pick or bearishness, the biggest problem is money management, I should never keep such a big percentage on the short side. I should cut loss short.
8. Let's start over.
9. Change brings hope, but that's it.
10. I can be screwed twice, once by shorting and now I moved to some long positions, these longs (URZ and ONXX) can crash too.
11. So keep things in perspective, and try to come back from this disaster.

What's next:

1. Now I think the bubble will keep growing for a few months.
2. Let's be nimble and try not to lose further.
3. Last thing to do is to make some money back. But the main priority is not to lose more money.
4. Keep in mind the great traders are these cut loss quick, this is what I'm missing. I know this and thought I know what I'm doing, sometimes, ego plays a bigger part than discipline.
5. In Early March, my QID was a winner, now it's a big loser. Just 2 months later and 20% lower.
6. So the first thing I will do is to cut loss quick, that is the first rule. No matter what.

Yuan's appreciation

Since China announced the wilder band of trading range of Yuan against Dollar, I think it will rise larger than market expected in the next few weeks, to show US and the world it prepares to resolve the trade issues, and this in turn will force Yen to rise, carry trade to unwind, and Dollar to fall further against major currencies.

1. Dollar's fall will force the liquidity to leave US. That will put an end of US bull market run this year.
2. And if the Yen unwinding is out of control in any way, that will have greater impact on world stock markets, specially these countries with higher rates, like US and Australia.
3. So this is something that can be found out in the next few weeks to see if China is serious about the Yuan appreciation or not.
4. And gold will benefit when Dollar falls out of it's current historic low support.

Clear

China's decision to raise rates this weekend, plus the conditions in Chinese markets, makes me think the short term crash in Chinese market is very likely. After that, US will follow to certain degree. This is clear to me. And it can turn into a big correction this summer.

1. Don't count out the possibility that the market will ignore all the fundamentals and push to another record week.
2. Don't count out the possibility that the market will pullback a little, and then make another assault to all time records.
3. All things considered, now is time to be careful, but only change your view if the fundamentals change, don't change your view because the crowds are saying so.
4. The liquidity is one the the fundamental reason we have a record stock all over the global, but it always ends.
5. There is a possible black Monday in Shanghai stock market, then what happens we need to watch carefully.
6. Keep enough cash, and using short as the primary means to make money. That's all I can tell myself now.
7. It's not a shame to lose money in this market, many great traders already did. There are some traders luckily on the long side and make money, but it needs a great skill to turn bearish at the right time.
8. Some traders make money because of luck, but great traders make money because of themselves. So if you're a great trader, you're going to show your greatness sooner or later.
9. On the other hand, if you're a bad trader, why do you even care how bad you are? Since you'll disappear sooner or later.
10. Do what you think is right, study and work hard, but don't do what others tell you.
11. Be yourself.
12. Change because you want to, you really believe. Don't follow others even you're against that in your heart.
13. Eventually, these who are great, are due to their convictions, not due to they always listen to the right people at the right time (luck). Luck will run out, but your heart and your brain are always with you.

On the edge

Today's market was flat, Dow didn't close at record high today, but it did break 13500 before closed a little lower today. And Nasdaq closed lower as well.

1. Now I'm still heavily in Ultra short ETFs and puts. I think the market will have at least one pull back, and I'll sell a big portion of the short positions when that happens. The most likely case is next week. I had to take losses on my May puts, and added ONXX today, it's another long position for me.
2. I added ONXX, it's a speculative biotech play. From all I can find, it will deliver a good news in ASCO on June 1st. From the link below, seems like the news is already in the media, see Leak Info from ASCO?
3. ONXX may also be a target: Bayer may Buy ONXX?
4. I am on the edge now. Too much shorts and not enough cash. Need to be nimble to go through this market without further losses in the near future.
5. DIA formed a Doji star today. Considering it's up 1500 points since March low, I'm looking for 3-5% cut in the next few months.
6. People started to short DIA since early May are under water now, since then, another 500 points added to Dow with only two down days, including today.
7. Out of all my ultra short ETFs, TWM is the only one that's ahead. Because I added it late, and Russell 2000 is the weakest among all major indices. So when you short, pick the weak one, not the strong one. I added mainly DXD about the same time, but it's under water since Dow was so strong lately.
8. Dow's recent chart from March low of 12000 to 13500 today (12.5% gain) is the strongest showing of any major indices in U.S. since the 1999-2000 bubble year.
9. It's really hard to be on the wrong side for more than two months, it's very difficult to maintain your balance.
10. During these time, I tried different plans: I cut some shorts and used URZ to make some money; and recently used short term option play to make a few bucks, overall, I'm in denial and I am afraid of losing more if I sell all the shorts. But I guess that's what I need to do, cut one position at a time, so if market starts to fall, I'll at least catch some of the moves.
11. Need to raise cash at the end of each day, pure and simple.

Big fish

Check the DIA chart, the new highs with lower MACD. You have to think the possibility of a pull back is very high.

I'm not going to lie, I took another beating today. Dow closed at yet another new records, the 23rd (or whatever the number) new records in 2007. Unlike last two days, this time Dow was joined by S&P500, Nasdaq and Russell 2000. Market took a while to figure out that "bad news" was really good news, so here we go again.

1. You don't need to read the headline news, a bull market will find good news to rally, and a bear market will find bad news to sell.
2. I added some DIA puts when Dow shot up 40 points in the first surge.
3. When it turned negative, I didn't add, I wanted to be patient; but I didn't sell either, I thought finally I caught a big fish.
4. Then it started to push higher, and I thought it would fade at the end.
5. But no, it's another short squeeze at the end, and I added another DIA puts and QQQQ puts just before the close today.
6. I'm lost in this stock world that has anything but common sense, so a normal approach won't work here.
7. And we the shorts were at fault too: we added fuel to this fire. And bulls are encouraged by the shorts and force shorts to cover. This cycle goes on to make it even more attractive to short. But just like 2000, the bubble will burst, but we don't know when.
8. Let me repeat, we don't know when.
9. He or she who correctly predicts the exact timing is due to luck more than skill.
10. It can be tomorrow, it can be next week, it can be next few months.
11. It's a big fish, if you catch it at the right time; if you don't, you may be eaten by this big fish and you will be part of the bigger fish.
12. This is the best game ever, and reason and logic are not part of it. You need mental toughness, need enough cash to survive, need to be alive when the big fish is caught. Most important of all, you need luck.
13. But you have choice, you can walk away and sit on the sideline.
14. Or you can even join the bulls to have some fun.
15. But don't cry foul when it crashes; don't cry foul when you've been caught twice by first being shorts when it rallies and then being longs when it crashes.
16. The choice is yours, the decision is yours.
17. I want to be in the market, I want to try. I promise, I'll be careful.

Even better

Today's market action is even better than a straight down from the start. We had "good" CPI number, Dow made almost to 13500 before closed up only 30 points, while Nasdaq, Russell 2000 all closed in red.

1. Dow formed a shooting star today and is the only man standing, I think it will follow rest of the markets after another record close today.
2. Yesterday's sale of DIA puts and SPY puts turned out to be a great move, since the market was way up early in the morning. I bought DIA May and June puts again today, sold the the May puts before the close today for a great profit. I wanted to have enough cash if tomorrow is another crazy up day in Dow.
3. I also added CROX puts. I think it's overextended, and a general market pullback will make it under 70s for sure. Currently this position is also ahead.
4. The sale of PTR puts yesterday was also a good move, by the close of today, it's a loser, and I sold yesterday for a small profit.
5. But not all the recent actions were great, the CYD calls turned out to be disaster in the morning, since it delayed the earning release. I doubled the size of the June calls on this one. And at the close of the day, it's not that bad. It went from down more than 10% at 9.5 to close at 10.5. Hopefully it will turn out well for me, this is truly a hedge against a continuous China crazy rally.
6. And today I saw URZ was down hard, and I jumped in, now I'm down 10% on this position, and I didn't pick it at the top of the day. Talking about bad timing. Even though long term I love uranium play, I need to be careful on this one.
7. From the comments, I saw David smartly keeps QID as the only position, Michael's comment indicates he's on the right side, and floorsmall sold all longs and went shorts at 2:30pm! Talking about great timing!
8. From a late comment from Min, you're on the same page as floorsmall.
9. You guys are great, regardless the markets go up or down, you have far better entries on shorts than me. Great job! I'm under water for all my short ETFs and puts except the ones I added very recently. I need the market to crash to get all my losses back.
10. So it's critical to have great entry, it gives you time and reason to hold a winner! Bad timing keeps you off balance and may force you to do some desperate moves.

What's next:

1. I think the market will have trouble to move up in short term.
2. Now seems like it's ready to pullback. I expect a small crash near term, like 5%. But who knows tomorrow's housing number, since everyone expect the worst, any relatively good number will bring up the bulls. That's why I sold the profitable DIA puts today to have more cash for just this purpose.
3. The bulls have the control of the market for so long, it won't give up without a fight. But today is the first day it failed a big rally. So all signs point to a weak market ahead us.
4. I'll be nimble in this volatile market and try to make money by being on the right side. There is no bull side or bear side, you need to be on the right side, this is the key.
5. And move quickly if you are wrong. I did such bad job on this, cut loss is as important as select a winner.

One thing to remember:

1. People are talking about there are too many traders too bearish on the market, therefore the rally is not over.
2. But, becuase of the above logic, more traders and hedge funds go long without care, since they think they're oversmart the other traders (shorts). That's precisely why we even have this crazy rally in the first place. I think it will end badly.
3. But I don't know when. So just because we all went shorts today doesn't mean we're on the wrong side. We're such a small group in the market. Hopefully, we're onto something. But only time will tell and we still have a lot to learn and share.

Calm before the storm

Tomorrow we can have market moving events in CPI, and other economic data. Let's see if the weakness in Nasdaq and Russell 2000 today is the indication of bad CPI or just people are uneasy about this week's number.

1. Today I sold some DIA puts at loss and SPY puts at loss. Don't want to have too big of positions. Still have enough puts and shorts.
2. Sold PTR calls at a small profit today. This again reminds me that by sell options quickly, sometimes you can make a profit. Don't want to risk too much on long as well.
3. I bought some out of money CYD calls. It should release earning today, but I didn't see any. Another China play, but it's a speculative play. Found it had several big up days since last week on large volume, maybe something good to come?
4. Will continue to play the long (China, maybe Biotech) on momentum stocks, and keep shorts and main puts on the overall markets.
5. Today another news may have big impact on the world stocks down the road, that's the news from Pakistan. If the country falls into the hand of Islamic fundamentalist or somehow becomes unstable, the world will pay a heavy price for that. This is the country with nukes.
6. Today's gold and precious metal actions continued to puzzle me, if the dollar is in a great bear market, why gold doesn't live up to its reputation of store of value?
7. And uranium stocks like URZ, EMU and FRG continued its consolidation, which is good for us waiting on the sideline.
8. And if the China bubble is at risk of bursting any time, why are people still buying into that like there is no tomorrow? Is this the end, or this is the start of another crazy up leg? Is this in the 99 stage of the internet bubble, or in the March 2000 of the internet bubble? Whoever accurately predict the exact timing (or close to it) of the fall of the Chinese market will make a great fortune.
9. Tomorrow my take is we'll have a worse than expected CPI, but not much. And on Wednesday, we'll have a weaker than expected housing number, but not too much.
10. And how market react to these numbers may give us a hint of the second half of the year.
11. For the first time in last six weeks, we have two down days in S&P 500 out of four. More weakness to come is the tape the market tells me today.

Bad

I'm really bad at this? Sometimes, you think you find a reason, and you know the reason, but market doesn't care. It shot up 1% after yesterday's drop.

1. By removing non-essential items such as like fuel and food, we have no inflation, by having a bad retail number assures market a rate cut. So all in all, good news is good news, bad news is good news for the market, and here we go again.
2. So today I did something exactly the opposite, I bought PTR calls. If China is a great bubble, PTR is one of hot stock in the bubble. The major big cap in FXI, and it has some fundamentals to support it, it finds new oil recently and China may get rid of state subsidies to oil companies so that they can control the gasoline price, therefore a great benefit for major oil companies in China.
3. So I'll try both short and long and see what happens.
4. As the comment said, I'm bad at this, need to shut up and give up!
5. It's sad if you don't have any talent and you want to try something, you think you're good at this. You tried small, you succeeded, you figured you got it. Now you tried something big, you were dead wrong.
6. What do you do? Try something new and learn from failures. Pick yourself up.

First blood

Above chart is from another blog side, you can decide which stage we're in, I think it's close to the peak than bottom.

1. Today is the first big drop in Dow since April 11. Is it a one time dip or this is the first blood in a correction?
2. Tomorrow and Monday's action will tell. I think this is the first blood, we'll see a normal 3% drop in a overextended bull market first, it may stop right there, or it may turn out to be a 15-20% correction that usually happens during summer time. Time will tell.
3. I see lot of great comments today. Min has a good observation that China won't let a stock market crash to ruin it's Olympic Games in 2008, but I think China can't control a hot stock market bubble for too long. They'd better manage it than let it grow out of control.
4. David did the best by selling QID at 52 and bought back at 47. Great move and money management.
5. It's wise not to buy the first dip, specially after a long and overbought rally. I added SPY puts today. It's really cheap, even after today's drop, there is not much risk premium in the price.
6. Almost all major indices broke 10MA today, so short term direction is down. And another down day tomorrow and on Monday will let bears back in control.
7. The volume expanded today, but not much. It's not a convincing move, and lot of longs are still sitting, so we have more down side to go if people start to exit. Usually, a bear market has a way to keep people in the market and a great bull market has a way to keep people out of it.

The end of this bull market is near

Unfortunately, my yesterday's call was right, the market was lower today, then took off after Fed meeting, another all time high for Dow. I can not be in good conscious to buy here, I need and should be on the short side. But I think the end is near.

1. Shanghai index crossed 4000, last time it crossed 3000, then the 3rd day (Feb.27th) it was off 9%. So we have a big test on Friday (also 3rd day after it crossed 4000), do the speculators in China take profit before weekend?
2. Chinese financial news have stories saying the average workers are borrowing money to buy hot stocks, some officials use government money doing that, so I don't see much steam left in this bubble. Yes, at most a few months, my take is a few weeks, before it has another 10% drop like Feb.27th.
3. And Richard Russell, a super bear, has finally thrown in the towel on his long-standing bearishness and predicted an "unprecedented world boom."
4. CNBC has a "million dollar challenge", is this another indicator we're in a hot market?
5. Goldman Sachs' Chief U.S. Equity Strategist Abby Joseph Cohen has raised her year-end forecasts for the Dow 30 and S&P 500; she now sees the blue-chip index hitting 14,000 and the broader market barometer touching 1600. Last time she called a thousand number target was in 2000, calling Dow 12000 before the market crashed in 2000.
6. And if we find the tapes the market gave to us from previous Fed meetings, usually, the market has second thought after the Fed meeting, that is, it usually go another direction the second day. Let's see how tomorrow plays out.

Invitation:

1. I like to thank the readers on this blog: pbierd, curt504, Dmitry, David, Min, Fred Wallace, hlgold, floorsmall, 7ryan7 for your comments on this blog. Some of the comments are good advices that I should follow. I like to invite you to comment and add your recommendation, hopefully we can all learn from each other. You can comment in this blog, or the following blog. http://simplecommunity.blogspot.com/. I hope we can find the consistent winners and learn from the picks; or consistent loser (like what I did recently), then we just go against the loser's pick, but she/he has to be consistent!
2. My bias is to short, but keep enough cash to live another day, so you can short at a better entry.
3. Eventually, we can all make money by listening to other ideas.

China's Shanghai Index 2 year chart

It's almost the repeat of Nasdaq from May 1998 to May 2000. If China crashes, then U.S. will follow, remember Feb.27th? It's Shanghai index's 9% drop that triggered worldwide sell off. I think we're near that point, it will happen. Maybe tomorrow, maybe a few months away, but it will happen.
http://simpletrend.blogspot.com/

Sick

I'm sick of this market. There is not even a single down day now, every dip is bought with the fear of being left out? Yes, Dow was red by the smallest amount.

1. Use the new tape the market gives to us recently, tomorrow, we maybe down at the opening due to CSCO news, then we'll rally after the Fed statement.
2. And then the bulls will run bears over again, push S&P 500 to all time high this week.
3. This old bull is getting old.
4. It will be ugly when it ends, but traders are trying to make more money before they sell, hopefully to the last fool who just get in.
5. And it's ugly for shorts already. I'm sure some shorts are dead already.
6. Today my RIMM puts got crashed, I thought momentum players left RIMM already. An upgrade? Is this the last oz of juice in RIMM?
7. Maybe I'm just bad at this thing, why try to find reason and skill to play? There is no reason, even the TA tells you it's time to sell.

Market close to an impending crash

Today Dow hits its usual new record high again, crossed 13300. 5 new records in a row! CNBC is again in its 2000 spirit! People are talking about 14000 in May, by this rate, we're talking about 14500, not 14000. There are several things show signs of a top and impending correction:

1. We have Dow led all major indices again, and Russell 2000 again showed weakness. The overall markets were weaker than Dow again. Only a few stocks paint the rosy picture again.
2. AA shot up 8% on the news it's going to buy AL (up 35%, over the target price), this MA events get too crazy now. If the logic holds up, why don't we just have companies buying each other and they all go up? Remember 2000 internet bubble?
3. Consumer credit jumped to 13.5B vs 4.5B expected, and market continued to rise, thinking we can borrow to rich?
4. We have pending Fed meeting and then the seasonal weakness in summer, but who cares, buy Dow is the way to go.
5. In China, Shanghai index is up 50% since Feb 5th low. And it's the Feb.27th Shanghai index's 9% drop triggered world wide sell off.
6. Even the market doesn't crash, I think a correction is very near. Even for bulls sake, we need a pull back. The more it continues to shoot up without any pull back, the sharper the correction it will have. When everyone exits, it won't be pretty.
7. I traded AMZN puts today and had a nice profit. It's a 50% gain in one day. Sometimes you have to wonder if you can trade like this, you don't need to do anything else. But it's a small position and it's very lucky. I also added two more small puts today. I hope they are good trade for short term. And will sell if it doesn't work out this week.
8. So it's great to be in cash, and it's risky if you want to short. I'll take the risky road. Small positions please.

There is always tomorrow

The market again pushed the shorts like me to the edge. I need to continue to reduce my short and put positions if there is a chance. I'm wrong and I need to increase cash. If it starts to correct, then good for me and I can get out of some positions in a higher price.

1. Even though I think the market will have a tough time ahead, but I've been on the wrong side since last November.
2. My plays in PM and uranium saved me so far this year, so trust your instincts, but verify it before you commit too large of a position. I didn't verify and the market's Feb.27th crash so far was just a one day wonder, and I thought I got the green light to short.
3. And please don't try to find all the reasons why the market behaves certain way, sometimes, there is none. That's why we have internet bubble in 2000. So don't be the one to be run over by the markets.
4. My main problem so far is money management, I didn't honor my rules. From now on, I'll give a 5% on all positions and 15% on options. You don't need to eat the whole dish to know it's bad, you should know from first bite.
5. Life is great if you have the ability to learn and be better in the future.
6. You need a strong will and deafness to defeat.
7. You need to adjust quickly and realize quickly if something really bad is coming.
8. You need to be perfect in order to make great money in the stock market long term, but you only need to be nimble and have common sense to make some money in the stock market. That's what I intent to do.
9. Sometimes, common sense is so obvious and so boring that no one is even thinking about it.
10. Making money in the market is simple, it's just not easy. How many people know that simple is the way to go, but people like complex solutions and almost always forget the simple and best way to play the market.
11. I had some successes in market before; but you're as good as your last trade, so be really careful out there.

Reset

I sold all my DIA puts and IBB puts today. Yes, I may gain if market pull back, but I don't want to be killed if the market marches on.

1. Today we have good economic data, and market failed to rally, as it usually does the last 4 weeks. It's up a little.
2. We have job number tomorrow, plus the S&P 500 is approaching its all time high of 1527 set in 2000. I expect it will get there.
3. By this rate, the Dow will cross 14000 before end of May. I don't believe this is a healthy market to be in now. But the question is when it will pull back.
4. Back in 1999, we know the market was crazy, and then in Jan.2000, people who shorted the market got killed. it's not until March.2000, then market started to crash. And I truly believe this market will correct this time, just don't know when. Maybe a few days away, maybe a few months away.
5. I reduced the puts so that have cash. And I was totally wrong to commit too large positions on the short side.
6. I'll reset and start over; I'll be patient on entry, be quick on cutting loss and taking profit as well. Unless the market is finally turned, now is not a good time to be smart to pick an exact top.
7. Keep an open mind, I said this before, why fix on one thought only, if I'm not feeling comfortable to join the crowd, I can be on the sideline.
8. I will add to puts again, but only when I truly think it's another extreme case, otherwise, just wait, I have enough puts already.

What, when and how?

I could not be more on the wrong side the last two days. I keep the shorts and puts on Monday, figured it's about time. And yesterday and today's market rallies push me back to the wall.

1. Let's be real, the good earnings recently were due to lowered expectations of analysts and companies lowered guidance, S&P500's earning growth rate is in single digit in 1Q. And why the market quickly recovered from Feb.27th sell off and shot to new highs?
2. I think it's not a if, it's when the market will sell off again.
3. Do we push to new highs before we sell off?
4. Do we slowly edge down? Once you realize it, it's already too far.
5. I don't know the answer. I've been dead wrong since April 20th, the day I started to add DIA puts and DXD. Yes, I have multiple chances to even take a profit, but I didn't, and see them slipped into red quickly.
6. Today I played DIA puts again, and quickly exit it in a small profit. I want to keep the cash so that I can survive this relentless marching higher.
7. Added a small DXD again today.
8. Maybe my read on the market was way off, all things considered, it's still not overvalued?
9. I know we'll have a big sell off, I don't know when, and I don't know how it's going to play out?
10. One thing worth knowing, 1982 is the bottom of a great new bull market, it got a correction in 1987, and the top was 2000. And if we're in a new bull market, then 2002 is the bottom, and we're 5 years into this bull market without any meaningful correction.
11. People said 3rd year in the election cycle is always great to be in stock, so was 1987.
12. So maybe it's still a few months away from the 2007 crash? If you check the 1987 chart, we had a several months correction (8%) from April to June before market moved higher to the Oct.1987 crash? I thought history won't repeat itself.
13. I'll reduce the shorts and puts whenever I have chance, at least to be on the safe side. Now maybe not the best time to make money (via shorts), but to not lose money (via shorts and market move higher).