- John Maynard Keynes
ref.:http://en.wikiquote.org/wiki/John_Maynard_Keynes
On Thursday, the Dow busted its highs and then quickly reversed with volume on the downside. The weak bounce into 12N had little volume, so I went short the Dow (and the S&P500 for good measure) right around 12N. Nice entry. Superior risk/reward over some other plays that I considered (including financials) and the market went my way the rest of the day and it was a nice easy ride down. Don't you love it when a plan comes together? I mean it was picture perfect distribution day with bearish engulfing candle that swallowed the last week's worth of price action and destroyed some bullish price patterns in the process. And I was feeling rather pleased with myself.
Then, the payroll numbers hit @ 8:30A on Friday. Bizarrely strong considering the fiasco in Washington, but I don't pay too much attention to fundamentals. Bond market tanks immediately. Dollar is flying, but fades intraday. Equities dip slightly then recover fast and level out until 3:30P. Financials absolutely ripped higher.
Perhaps I should have covered immediately. Perhaps I should have gotten long something...anything really. Instead, I just watched my gains evaporate and come just shy of my stop (Thursday's highs). And while I was watching the market (equities, bonds, currencies), my thought was "are we really doing this? really?" Are we really going to have an accumulation day up here after we just ripped almost non-stop from the October lows? Yup.
I stopped myself out today (Monday) and flipped long (small) in regional banks and solar. My losses were small (because I had a good entry). And it stings giving back those nice profits - especially since the odds of getting an accumulation day after a distribution up here were extremely low. But it would be far worse to stubbornly hold onto my position when the market is doing the opposite of my expectations.
Repeat after me:
"The market can remain irrational a lot longer that you and I can remain solvent".
For more charts and to read a disclaimer, please visit my public chart list on stockcharts.com...
http://stockcharts.com/public/1109955
No comments:
Post a Comment