Thursday, May 20, 2010
What I'm stating is that we are probably due to a reversal because that just what happens in markets. A true market is not one-sided like the market we experienced over the last 14 months. It waxes and wanes. It oscillates. Like a tidal wave of fear and complacency we have ups and downs. Many have forgotten that and now the fear is here we must remember that we need to buy when we don't feel like it and sell when we are most jubilant. In fact, I was selling my options today that were going higher as the market dropped. (I won't mention the name of what I was buying because I firmly believe that that trade will reverse and if you bought it, it would be like playing with a loaded revolver). I didn't want to sell at the close today because the greed within me was telling me that it just might go lower tomorrow, but the conservative manager within me was planning on scaling out so I could reverse when the market started showing a trend to go higher. If we have continued weakness --- I'll probably be shorting, but I'll be closing out all trades by the end of each day.
Ok, here are a few charts I'm looking at....
Financial Conditions Index - Update
My friend Guy Lerner at http://www.thetechnicaltake.com/ is still suggesting that there is time to go on this decline. I would not bet against him, but I certainly am cautious especially since I've done pretty well on this decline.
Be safe and conservative here, no reason to blow your foot off. If you have questions, let's discuss it, leave a comment!