Monday, August 8, 2011

Financial Armageddon II??

Was the inevitable simply delayed? Market buckled under the weight of all the bad news, thrown at it from every possible direction. This sell-off is predicting nothing short of a world-wide recession. I have to ask one question: have we gotten to the point of no return because the machines are trading? I have been doing this long enough to see that I constantly trade against a faceless, emotionless, money taking machine - HFT (high frequency traders). This selling has exacerbated the investor sentiment which will lead to recession. We could have escaped it had it not been for this bear market (20%+) sell-off in 11 short sessions. I did not envision such a steep decline in such a short period of time, even though I knew we were heading for turbulent August.
Risk off folks!! Reassess your goals, positions, trading techniques, the whole psyche, and most important - your comfort level. I may have reached mine today. Reason? No place to hide except cash. I am in all cash and will stop blogging until I start trading again. Overreaction? Am I missing the bottom? Perhaps, but I lived through 2008 Armageddon to know how hard it is to trade around that, both long and short. Those who are not familiar, look up what happened to sellers around short-selling bans (we are going to have one now as well, with-in days I bet), and buyers who tried to catch the bottom - one never came until 55-60% was wiped off the indexes.
As I type, Asian markets are crashing between 5 and 9% after being open just 2 hours. Machines do not think, feel, or care - they sell at any price and any level. I am not a machine :)
I choose to preserve my capital, step aside, and observe. Market will still be here when I decide it fits my criteria and comfort level. Be safe... 

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