The lesson I learned was risk control.
After a string of accurate predictions by my indicators, especially the 7/1 sell-off signal, where I put 15% of capital in QQQ puts and resulted an over 20% gain of the total portfolio (the puts more than doubled in 2 weeks), plus the option premium reached 8 year low, I grew over confident of the indicators, and took on more leverage/risk. When the market throw me an extra rally, I had to cut some loss, and get hurt.
My indicators remain bearish though, it is still saying the market should go down.
Friday was a very interesting day for oil, the Exchange increased margin requirement on oil futures, meaning speculators on margin will have to put up more cash or reduce position, normally this should trigger a pullback in oil futures price, but it did not, I think that proves the oil price is pushed up not by the margined speculators, those people truly have money and want oil badly. I think the oil price will shoot up more, easily passing $55 on Monday, and may go to 60 soon. That would be the catalyst to drive stock market down, DJIA is only 140 points above 2004 low, it can break to new low any single day, and other indices will likely join the downtrend to test 2004 lows.
I am still holding short positions but my exposure/leverage is greatly reduced. I will reduce my goal and risk from now on. |
