"I think we are in a great position to take advantage of short term movements and next week we should be in EXCELLENT position to enter new shorts, add to existing ones and basically be in the right spot at the right time as everyone else gets whipsawed in some extreme volatility!"
As I'm waiting to hear Boehner and watch the market's reaction in futures, I'm FORCED to watch CNBC, they were just saying they thought the Dow was going to hit all time new highs being something like 84 points from that mark.
Friday we held calls, looking for early price strength in the market this week, we got it on the open, we got out at exactly the right time and now the volatility and the real danger of the snake swinging violently from left and right is more important than ever ESPECIALLY with BERNIE in front of Congress tomorrow, today is not the day I want to chase ANYTHING; if it's not in place by now, then we missed some serious red-flags, but I do think those who need to get repositioned will have time.
Remember, we never chase, we never have chased and there's good reason for that, we let the trade come to us. Bernie is going to want a controlled burn so if he comes out tomorrow and reassures the market, we may have a 200+ point move to the upside which is EXACTLY what we want to short in to- chasing takes away your edge and puts you in danger of being on the wrong side of a move like that which is entirely possible, this is why we build positions when we see the red flags.
I think there are a few things we need to look back on that led to this which is the breaking of the back of the trend.
There are a ton of reasons and red flags, but some of the more recent include the fact that we KNEW as of Sept. 13th when the F_O_M_C announced QE3, that there was something different, that there was something the market didn't like and unlike the previous policy accommodations, this one had already been priced in.
Very recently the change in volatility, this was one of those things that few people notice, but it is always the things the crowd misses that make you money.
Of course the leading indicators, credit especially have been flashing red lights, but the worst most recent event and this goes straight back to September 13th, were the F_O_M_C January minutes as we expected.
In any case, it's easy to get all worked up about a day like today, just remember in a down trend you'll have just about as many up days as down days, it's the few big down days like today that make the trend. Also in a bear market you will see some of the sharpest counter trend rallies you've ever seen so we have to be prepared for all of that.
For now I wouldn't pop the corks on the champagne, I wouldn't take victory laps, I'd continue to be cool, unemotional, look at the data, look at where the opportunities are and take those trade (which are always the hardest, they'd be like buying today which I would have if I had any signals that said to do so), but that's when you have the best positioning and the least amount of risk.
For now I'm updating the day's data, taking a look around as usual, going for a walk if need be to clear my head or any emotions because a day like today does feel good after building the case for so long, and remembering that we are in a VERY volatile area that can and most certainly will swing both ways violently.
As I've told many of you individually, most of the time you don't even realize you are in a bear market until after looking back.
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