The market cratered today. Then it caught a bid. When you see a small rally like the one that started at around 1PM today, you ask yourself if they are just covering some shorts to book short term profits or is it a bottom? No one knows. Actually it was better than a small rally.
I got long today, not because I was trying to pick a bottom, I always tell you to wait for a follow through day to confirm the action.
However, we were soooooooo oversold I laid in some longs. Today could have been capitulation because at one point decliners led advancers by a 30:1 margin, that’s off the charts madness. Also, relative strength on my indexes got stupid low.
These are the indicators I live by and they have served me well. Does it mean I”m right this time? No
Lets get something straight. My macro view has become very negative. I think we are near a recession and the world looks like its collapsing (wait until Europe starts acting up again). In my view, we trade these oversold conditions. Emphasis on “trading it”. I will be more active this year than last year or the year before, because I think the personality of the market has changed, and it will require much more attention.
Buy and hold is relative. It depends on your entry. SPX 666 and I will hold all day, at all time highs…..not so much. So trading levels is key.
I dont know about you, but I’m exhausted. I’m turning in early after I finish sipping this delicious Jamison’s. I also have an appointment with a futures contract very early.
Please check the P&L tonight as it has been updated and stops have been adjusted.
Have a great night.
Joe