Attached is the closing statement for EOD today â account is up $607.80 (both realized and unrealized) or ~ + 6% since inception yesterday, July 30th, 2009
Long-term Market View I have an extremely bearish view of the market for the next 12 - 24 months. I am sure you have read all the gloom and doom stories that US is bankrupt, that this is the end of the world and China will take us over in 10 years or so. I would advise to gloom and doomers not to underestimate the power of American ingenuity, work ethics, and ability to fight back like hell when cornered (as we are now) ... but, (yes there is always this nasty "but"), I am still bearish for the following reasons: Recessions and bear markets are healthy. They flush out the excess out of the system and let the economic system rebuild itself, ruthlessly kill inefficient companies and industries, leave behind uneducated or under-producing people. Only after the excesses of the past manias are done with and forgotten, the growth and prosperity returns. There is a good reason why the average bear market historically lasted for about 1.5 - 2 years - this is how long, on average, it takes for the economy to rebuild itself. Sometime recessions are shallow, sometime they are long and brutal - it all depends on the magnitude of the previous booms and government interventions. The reason I am bearish long-term is because of the massive government stimulus plan. Obama's stimulus plans (yes, I think there will be more than one down the road) , socialistic idiocy and inherent inability to be fiscally responsible, will delay the recovery by a number of years. Government's desire to "fix" the economy to me seems as ridiculous as trying to fix the law of gravity. The laws of economics are natural laws, and cannot be changed, even if they inconvenience some brain-dead politicians. The bottom line is we are currently living the consequences of the deflated credit and consumer spending bubbles that have lasted for decades. Yes, it would have been a long and severe recession to flush the problems out of the system naturally without government "help", but it would have been over in two - three years. With the current government intervention, pardon "stimulus plan", the process will be longer and more painful. This is not just a political rant, this is a long-term trading plan. I know that the government plan is going to fail as it goes against the laws of economics. But I have to put my personal feelings about what current Obama administration is doing to the future of my child aside. My job as a speculator is to take advantage of the situation and to squeeze as much profit out government's stupidity as possible.
My game plan is that an attempt on SPX 1,000 should be shorted. Playing it with NQs â shorted at 1,622.50. The chatter this weekend about the possible tax hike is huge IMO, this is âanti-stimulusâ, and letâs face it, expectations of stimulus was most likely driving the market in the last 3 â 4 months.
Nice set-up on NDX 60 min chart for those bearish on the market: trendline is broken, attempt on 1,630 failed (for now). If we manage to break local support at 1,602 â 1,603 we may finally start multi-day decline that I have been waiting for.
I tried, unsuccessfully, to increase my short position today, but lost 3.25 NQ points in the process â small price to pay in trying to establish a countertrend short position in this market. Still have 1 NQ short from 1,625.50, currently under water by a couple of points. As such, account is back to initial balance of $10K that I started with last week. The majority of the indicators that I use are bearish, but the price action does not agree. I will evaluate on a day-by-day basis and mange my positions accordingly.
The market is clearly trying to kill the last bear standing. Today was the second day I tried picking a good level for a short position, but got stopped out, and currently is 100% in cash. Account is ~ 1.6% down from the inception.
For personal reasons, I did not post trades yesterday. The worst possible thing happened two days ago. As I was trying to time the marketâs turning point, I was scaling into NQ positions. I managed to get two contracts between ~ 1625 -1627, and got stopped at 1631.25, which tuned out to be almost exact market top so far. In addition, I tried to play the bounce on the long side yesterday after morningâs selloff and lost as well. I re-shorted 2 NQs at pretty unattractive levels â average of ~ 1,609, considering where markets subsequently traded, and currently holding two short NQs from this level. In summary, trading was poor so far, and getting stopped out at the exact market stop is emotionally destabilizing. If the market turns from these levels, and goes to back to retest the lows of March, I will nominate my trade of being stopped at the top of the market as the dumbest trade of the year. Execution statement from yesterday is attached.
Attached is the account statement as of yesterdayâs close. My attempts to short the market are marginally positive â nothing to write home about, but it is nice to see some gains in the account.
For about a week, the indicators that I use turn more and more bearish, while the price action keeps staying bullish on SPX and DJIA. Nasdaq was much weaker in the last couple of days, and I took advantage of some short opportunities (statement attached). Even though the market still creeps up, I will not go long, and prefer to stay in cash until I am comfortable to pull plugs on a short position again. Currently SPX, NDX and Dow are short-term bullish. The game plan for today is to wait and see if the market reacts over exuberantly to the upside to the Fed announcement this afternoon and to fade the move. I will be closely watching Treasury bonds and USD for clues before I jump on a short position. Currently staying 100% in cash and salivating to go short at higher levels.
Attached is a statement of the closed trades since inception; I currently have no open positions and account is 100% in cash.