Just some thoughts about yesterday's reversal...
I can accept that a PPT intervention may have started yesterday's reversal, but I can more easily accept that some big money was doing an allocation shift to tech stocks. At 2:38 or so, what I say was big QQQ and MSFT buys. No matter, once that was done, it takes on a life of its own and does not require any further "help".
I am disappointed that I did not move to buy some longs. I should have seen the importance of the Hound Signal. I did not and that was a mistake. My inaction was a trading mistake.
A number of amateur shorts were caught yesterday. You have people who have never or rarely shorted in their lives glibly commenting about how they are short this and that. You also had at last week's COT, a pretty extreme short position by the small traders in the S&P mini. I expect that will be vaporized in tomorrow's report.
I am being squeezed here as well on my tech shorts. Aside from IBM and QQQ Oct, most were acquired at levels where I don't yet feel any pain. Also, I closed Venture yesterday to do something to lighten up and took about a 7% loss there.
I have made a point in the last few days to mention how I was "fat enough now until we get some confirmation". What was interesting yesterday was that the Voodoo Box was saying very clearly -- "any more down from here and we have begun the tech leg down" -- it was right on the edge of a confirmation move. The market often does this as we know.
Well, we did not get the confirmation and I am glad to have shown enough discipline not to go stupid short. I am about 60% in cash. If this goes against me and I have to close, it will be a sizeable hit, but not devastating by any means.
I continue to slightly favour that the non-tech low is in, but see no reason yet to doubt that tech will yet have another swoon. Still, I won't be stubborn. If a bigger move is afoot, then we don't want to be caught looking the wrong way time and time again because we think we "know" where it should head. That's the mistake the bulls made over the last 6 months and I do not intend to mirror it from here. |
