Today provided a much needed relief from my state of being at “all time low”, even if only temporary. Rumors about postponing tomorrow’s EU Summit, and the fact that MMM and CMI missed earning estimates helped the morning red gap. But I wonder if the real reason was due to profit taking after the last 3 weeks of rally (a whopping 17% on SPY!) before the market-shaking event coming from EU tomorrow! Had I thought in this line of logic, I could have done all in yesterday (yeah, right!) Anyway, SPY down almost 2%, ending the day at the low.
Psychologically, the bulls may have suffered a blow today. But technically, the bulls are still standing upright. The gap support from two days ago and the October up-trend line have not been breached and can hold a bounce. But I am taking note that SPY closed below the 200 day EMA and the horizontal support from the August high.
I took off what I added yesterday to raise some dry powder. It’s a natural defensive mechanism. Heck, after yesterday, I can tell you that the fear in me is greater than the greed in me. Still, I’m 70% short, down from yesterday’s 80%. Based on my studies, yesterday’s high has to be retested if it were to be a major top which I want it to be. So I have to prepare myself for such possibility (and even worse scenarios as well) and to add to my short positions accordingly. It’s a balancing act between capital preservation vs. glory, fear vs. greed, etc. So I won’t be able to maximize my return should the market turn straight south from here. I’ll have to live with that. But I have to survive and prolong this game until the tide turns for the bears.
Following this long term indicator that I subscribe to has somewhat limited my trading mobility — I am afraid to go long for the past 6 months because the indicator has been trending lower. So as I stated before, all I can do is to trade small positions for kicks and “psycho therapies”. So if my core short positions lost $4,000 yesterday, I’d find some comfort if I day traded a bit and profited, say, $150.
Today was a good day because not only did my core short positions bounced from the dead, my day trades also went my way. And I did something that was hard for me to do — shorting after SPY has already gone down 1.58% for the day.
The first short which was a mistake due to the proximity to a horizontal support and I quickly covered (wisely, lol). I shorted again 50 minutes later which also happened to be at another horizontal support, but it was on an L1 entry on the 20 MA. Small scalp but this kind of plays help keep my hands tied from messing up my core positions — my temptation to liquidate too much too early or averaging down too often and too recklessly, etc.
Portfolio Value: $128.800