tooearly,
I love your handle since that is exactly who I am.
I really do not think I saw anything different than what others did. It is just what one want to believe.
I saw a rally broke resistance with authority, stalled for a couple of days at good support and then resume. This same pattern also appears often in bull markets. Velo showed the comparison charts of 1998 and today. And if that is correct, there will be a blow-off top in the next few weeks (just like Apr 2000), then it goes down hard.
So I am asking myself, should I be short at this point? Knowing the low volume 3-day week ahead has a up-tendency?
I saw a market really wanted to go up, ignored bad news, ignored bad earnings, ignored bad bad fundamental. Some say it is due to MF wanted to keep their job. Some say Fed knew something we do not know and is pumping money into the market. But why does it matter? The market just want to go up.
On all the good no bull-shit boards I read, I saw all the gurus are either short or reluctant to go long. This is actually scary, in a contrarian's way. One common thing I have found about them is this: They are more right than wrong but they are also usually early than late. Lately, my only excuse to my wife for losing money is "But Dear, Sew has been short earlier and heavier than I was!"
Lastly, I saw a break out in the last 2 days with good volume in almost every stock. When the volume is low, I heard the rally is unconfirmed. When the volume is high, I heard there is going to be a blow-off top. The funny things is, the market does not seem to care. It continues the unconfirmed rally and then do a blow-off top. You TA people are all correct "eventually", but being too early did big damage to your account.
Now the market is running toward the next resistance at 200MA which happens to be the neckline of the grand multi-year head and shoulder. I saw this possibility 2 weeks ago but could not trade with it. Why? because the technical indicators are giving me bearish divergencies.
During the last 9 months of trading, I found myself reluctant to go long even though all the evidences are there. I am not a perma bear, and do realize there are strong bear rallies. But whenever there is a sign of weakness, I would go short without any hesitation. I would do better if only I am willing to cut the loss quickly. And I would do much better if I could even ride on some of these bear rallies.
Another thing I learned but have a hard time applying is this: Keep it Simple. What's new about that, you asked? I found I have the tendency to use too much technical indicators, sentimental indicators, think too much, read too much, try too hard to find the true direction. But the hard truth is, I was only looking for support evidences for what I "wish" for my existing short position.
Oh, well, if I just remember the following:
- there were 40-45% up days in the last 2.5 years
- get out of bad positions quickly.
- forget the price and ride the bull once in a while.
then I think I can be just fine.
yu |
