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.
- Today when I saw the Dow gave up 100 points and turned red, I calmly started my action.
- Sold ONXX, ONXX calls, most of URZ. All at a loss.
- Added MZZ, QQQQ puts. And at the end of the day, they're ahead.
- 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.
- I need to be fearful, being shorts for so long, and once I started to change, the market turns.
- And today I quickly switched again. I don't know this is right or wrong.
- We have so many one day wonder (down sharply) and got reversed the next day.
- I could not wait. I just reversed myself one more time, to the short side.
- Either I have the trait of a good trader or I'm just insane. Am I reckless?
- Yes I still have cash, but is that enough?
- 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.
- 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:
- Today I read a news about world weather this year maybe bad, flood, hurricanes, drought etc.
- 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.
- Heavy floods could be potentially disastrous as populous cities such as Nanjing, Wuhan and Chongqing are situated along the river, according to the paper.
- 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.
- 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.
4 comments:
TA display more negative divergence this time. it may be a start of correction back to March low. We'll see confirmation if there is no huge rally tomorrow.
I empathize with our position. Been there, done that, and I'm sure it will happen again in the future. Minimizing emotional trading and maximizing a principled approach where you have strict buy an sell criteria produces green charts over time.
Understanding cycles and leveraging that understanding simplifies investing. For example, take natural gas. It has very predictable cycles throughout the year. Last year we escaped with nary a hurricane. This year looks like it might be a more normal year. There are few factors that will hold natural gas back at this point and plenty to push it to the upside. I love NGAS, EPEX, and CHK in this space.
Keep posting and we'll continue to learn and improve our strategies over time.
Thanks,
David
The market goes up, but you can sort of feel the tremors--or maybe I've invented a new psychosis. Really, house prices tank by 10%, unemployment rising, but the market rallies on a multi-billion dollar purchase of a sugar-water company. Good sense has left the building. I'm still predicting Dow 12,500 by the end of summer.
The week off will do you good. I've watched these markets go up, down, and sideways for 40 years and there are just times, such as this era, when rationale and logic are no where to be found.
As the old saying goes: "Bull markets make geniuses EVEN out of idiots." Trying to make sense out of insanity and running hither and yon and reversing trading decisions on a daily basis is a one way ticket to the nut house.
At times like these, I just sell down to my "sleep comfort level", stay with some income stocks and basic core positions and wait and watch til my particular rationale and stock picks start to behave the way I think they should. You don't need to catch the bottom or top 20% of any move. Plenty of money is made catching the middle 40-60% of any move.
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