My wife has likened my following the proprietary long term leading indicator, which I currently subscribe to, as following a cult. She’s seen me suffer time and again this year having being on the wrong side of the market as the market did its whipsawing all year long. She’s pleaded me to ditch it and just day trade. (Btw, I’ve been counting my blessings — how many wives ask their husbands to day trade ?) But I’ve told her about its amazing calls in the past — unless this time is different. But the verdict has not been out. Yes indeed, I do feel like a cult member, relying on blind faith and ignoring advice of bystanders. My best compromise has been to cut down my position size, and I was fortunate enough to be able do so last week during the Thanksgiving sell-off.
This morning when I woke up, I habitually checked my Android phone for the pre-market. Oops, SPY up 1.5%. My heart sank and I whined as I painted a mental picture of SPY breaking out of the wedge. My wife heard me and questioned if I was still in my long term short position. Yes, I am afraid so I said. She asked if I had added more these few days as the market bounced hard (2nd biggest weekly rally in history). Yes, I am afraid so I said. She became furious and said I was hopeless. She ranted for another few minutes but I didn’t really listen. I was depressed. I was on the verge of losing the blessing from my wife. If that happens, that’s the end of full-time trading.
I had a brief thought of going in big on possible exhaustion top, but at this point while mentally bruised, I dare not do anything drastic. I added a laughable 100 shares of SPXU just to make a statement. I also added 500 shares of SDS in my IRA account. I day traded lightly and took the afternoon off. As jinx would have it, the day turned out to be owned by the bears.
The intraday chart began very much like yesterday’s chart except for the color of the gap and that the bottoming pattern failed as the breakout of the magenta line failed (see the circled area). This was encouraging for the bears but at this time the financials XLF was still up 2.20% — strength in the financials were not what bears wanted to see. At this point, I called it a day and took my boy and my parents out for a hike in the park.
Coming back I was surprised to see the market weakness at the close. Of course the first thought was that I could have done well had I doubled down my SPXU holding at the open had it not for the depressing conversation in the morning. But then I remembered that my new plan had been to keep the position small, as I ride out the current call per the proprietary leading indicator. I’d just be low key and preserve my capital.
According to chart patterns, today the bears did very well.
- The 200 day SMA test failed (125.89, not shown).
- The back-test of the broken up trend line that formed the symmetric triangle failed (see daily chart).
- The break-out of the down trend line that formed the symmetric triangle failed (see green line on both daily and 60 minute charts)
- The 3 day up channel failed (60 minute chart).
- The up channel since the Thanksgiving low was broken (60 minute chart).
- The test of year-to-day break-even level also failed today (dotted horizontal red line on the daily chart).
- And we have a dark cloud hanging candle on the daily chart, following a doji (see daily chart).
$BPCOMPQ (see below) was on the verge of crossing up but the sell-signal persisted. News-wise I wasn’t sure what happened. May be something to do with the GOP trying to block the liquidity swap this morning. Whatever. For now, at least things looked hopeful for the bears and I get to enjoy my weekend.
Portfolio Value: $129.000