When the market moves against you, you need to make an educated guess if this is just part of the normal process or you are missing/overlooking something.
Situation: No material change detected. No improvement in the indicators.
If the market moves higher, than depending on the status of my indicators, if they improve, then I would have to take my losses and retreat, if they continue to show weakness and deterrioration, I will add naked May Puts.
“..The first crucial observation is that high risk market conditions like we observe at present come with an “unpleasant skew.” If you look at overvalued, overbought, overbullish, hostile yield conditions of the past, you'll find that the most likely market outcome, in terms of raw probability, is a continued tendency for the market to achieve successive but slight marginal new highs. While this movement tends to be fairly muted in terms of overall progress, it can be somewhat excruciating for investors in a defensive position, because the market tends to pull back by a only a few percent, followed by bursts that recover that lost ground and achieve minor but widely celebrated new highs. That is the “unpleasant” part.
The “skew” part is that although the raw probability tends to favor slight successive new highs, the remaining probability tends to feature nearly vertical drops, typically well over 10% over a period of weeks. Frankly, I thought we had begun that process in the decline from the January highs, but much like we observed in early 2007, that initial decline was quickly recovered and followed by a restoration of overvalued, overbought, overbullish, hostile yield conditions. Eventually, of course, the outcome for investors was very bad, but that in no way rescued us from discomfort as the market approached its final peak in 2007. I suspect something similar is at work at present, but we will take our evidence as it comes…”
I guess I should have known they wouldn't stop until they hit 11,000… Art Cashin needs a new hat now! LOL
The frustrating part is that once they reach that level, I don't believe they will start selling off immediately. They held 10,000, and fought the bears until they rose above it.
Just seems like they will keep going if they secure 11,000… what's next, 12,000? Or should we just go on up to 20,000? Man! The disconnect between the stock market and reality is larger then the Grand Canyon!
You're right on that… one red 10 minute candle, and back to green we go! You snooze… you lose! I'm still short, and will have too ride it through the move up to 1191… if it gets there?
I think the opportunity to get out has come and passed but I prefer that we having a raging bull day so this strength can end for a while. Hopefully Carl is wrong on the day.
Maybe the Fed meeting tomorrow will be the reason to sell? Don't know now if I want to get out on a dip and wait for 1191, or ride it out if it gets that high?
If the move likely to come tomorrow then I will probably hold on to the put spread. Is there a level that we need the market to close below today to favor the down move starting tomorrow?
use the google translator on the page red it is on the left column
When the market moves against you, you need to make an educated guess if this is just part of the normal process or you are missing/overlooking something.
Situation: No material change detected. No improvement in the indicators.
If the market moves higher, than depending on the status of my indicators, if they improve, then I would have to take my losses and retreat, if they continue to show weakness and deterrioration, I will add naked May Puts.
With expressed permission from http://www.hussmanfunds.com :
“..The first crucial observation is that high risk market conditions like we observe at present come with an “unpleasant skew.” If you look at overvalued, overbought, overbullish, hostile yield conditions of the past, you'll find that the most likely market outcome, in terms of raw probability, is a continued tendency for the market to achieve successive but slight marginal new highs. While this movement tends to be fairly muted in terms of overall progress, it can be somewhat excruciating for investors in a defensive position, because the market tends to pull back by a only a few percent, followed by bursts that recover that lost ground and achieve minor but widely celebrated new highs. That is the “unpleasant” part.
The “skew” part is that although the raw probability tends to favor slight successive new highs, the remaining probability tends to feature nearly vertical drops, typically well over 10% over a period of weeks. Frankly, I thought we had begun that process in the decline from the January highs, but much like we observed in early 2007, that initial decline was quickly recovered and followed by a restoration of overvalued, overbought, overbullish, hostile yield conditions. Eventually, of course, the outcome for investors was very bad, but that in no way rescued us from discomfort as the market approached its final peak in 2007. I suspect something similar is at work at present, but we will take our evidence as it comes…”
I guess I should have known they wouldn't stop until they hit 11,000… Art Cashin needs a new hat now! LOL
The frustrating part is that once they reach that level, I don't believe they will start selling off immediately. They held 10,000, and fought the bears until they rose above it.
Just seems like they will keep going if they secure 11,000… what's next, 12,000? Or should we just go on up to 20,000? Man! The disconnect between the stock market and reality is larger then the Grand Canyon!
The $DJI has found it's old dance partner from Nov. – Jan.
http://www.flickr.com/photos/47091634@N04/44936…
Don't feel bad – I have been riding it short forever!
You're right on that… one red 10 minute candle, and back to green we go! You snooze… you lose! I'm still short, and will have too ride it through the move up to 1191… if it gets there?
I think the opportunity to get out has come and passed but I prefer that we having a raging bull day so this strength can end for a while. Hopefully Carl is wrong on the day.
Maybe the Fed meeting tomorrow will be the reason to sell? Don't know now if I want to get out on a dip and wait for 1191, or ride it out if it gets that high?
If the move likely to come tomorrow then I will probably hold on to the put spread. Is there a level that we need the market to close below today to favor the down move starting tomorrow?
here's some really nice steak for all you bears…
$VIX gapped up while indexes gapped up…
Why was that? Hopefully you didin't forget about this chart
http://www.flickr.com/photos/47091634@N04/44935…
it gapped above it's weekly TL
Thanks Sun. Feel like I have been climbing on a straight uphill incline for months.