This is today’s daily chart shortly after the open.
I’m blogging now partly as a way to sit on my hands before my liquidating get out of control. At the top of this rebound where the 50 EMA was tested twice, I was a bit over 40% short via SPXU. I was reserving a lot of powder in case the rebound ventured into the yellow zone, which was more than likely. Mentally, however, I actually preferred if the yellow zone can be spared. I’ve suffered through the last 7 weeks of tumultuous price action during the never ending flagging where so many times I could have taken profits and re-short at better prices. But I didn’t. Mainly because my entries were so bad and the profit wouldn’t be big enough to justify the risk of missing the boat to the down side. Also, I felt ever more vulnerable because I haven’t done well this year and my portfolio was on the low side to begin with. But in holding on to the non-trivial short position, my portfolio value had sickly breached new lows many times. I simply could not stomach the market going higher, even though I was only partially loaded and had plenty of powder.
The past 2 days I finally got some relief. Yesterday was the highly anticipated FOMC announcement. The market had been rallying into the date of the FOMC meeting, expecting QE3 or rate Twist. It was more like the latter, and the market sold off almost 3%. Overnight, global recession was forecasted; as a result, this morning the market had a red gap of nearly 3%.
To liberate myself a bit from the last 7 weeks of torment, I let go of 25% of my positions at the open. So I’m now about 30% short.
Portfolio Value: $135,500