The drop was arrested with OPEC & Bullard Jawboning. ‘More QE, NIRP’ ‘Everybody is Bearish so therefore the market has to rally’ These have been the incessant cries of the Bulls.
Well, shockingly the Bulls got their wish.
This counter-trend rally has gone on far longer & has rallied much higher than I anticipated. I admit that the market amazes & humbles me constantly.
However, nothing has changed. The fundamentals only continue to deteriorate further every week.
Of course, I wish I had done some things differently. I wish I had covered all my shorts at the lows & had the discipline to stay away from the market for the past month to let this rally play out. You know, hindsight trading is 20-20 but that's just not how we trade, that’s not how we live. We live in real-time, make our decisions in real-time based on the data that is available to us at the time.
I don’t regret holding short throughout this rally because I know I did a few things right:
-I did in fact reduce my positions at the lows & pulled out some money, locking it up as cash in the Bank.
-I didn’t fight trend. Sure, as it turned out it was lucrative playing cowboy & buying this market as it looked ready to fall off the cliff. However, I learned from my experiences calling the top to the market for the past few years that it is best to trade in the direction of the long-term moving averages. For now, price remains below the down-sloping 200dma.
*You know what, looking back on it. Perhaps my swing-trading strategy will use the 20 day MA as the dividing line. When price finally got above the 20 day, price really started taking off. 20day or 200 hour...
-I know that when it does crack it will be some sort of exogenous overnight event. I will never forget the August crash where the Dow fell over 1000pts in a span of hours! Blackswan event risk is off the charts in this environment of decaying macro-fundamentals & credit-contraction.
-I also know that down-drafts in the market are far more violent than the rallies. Once Bears take back control it is likely that we see this multi-month rally give back the entirety of it’s gains in a matter of days.
It is obvious what’s going to happen. By now likely most of the Bears have covered & the Bulls have been emboldened chasing the algo-grind higher. Upside is extremely limited.
Let these fools chase. This rally will be but a blip in the big-picture Deflationary Trend.
The Bulls are playing counter-trend roulette & by my count, they are about five-clicks-deep...