Thursday, February 9, 2012

Random Market Thoughts

Investor sentiment has reached highest level in a long while. Quite frankly, I do not remember when I saw a reading over 50% the last time. This fact is not to be overlooked. All I hear on business networks and read in business publications is that raging bull is back. Folks, we are one bad headline away from selling off hard. We do not even need a headline. I am not calling for a crash, just a run-of-the-mill 4% to 6% pullback to 50 dsma. It is a normal process and is a part of any bull market. It punishes johnny-come-latelies and rewards patient investors. All that talk about parabolic rise to continue is ludicrous insanity. Nobody rings a bell at the top.

Parabolic moves end badly. AAPL is leading it. Many are calling for $600+ price target, justifying it mostly with fundamentals. I respect the company. It is practically in its own class. I own iPhone4 and I love it. But today's $16 move higher feels like a capitulation by shorts and chasing higher by late longs. I would stay away from that stock for now but would not short it, instead, I would short weaker tech co's. I used GOOG puts today to express my short-term bearishness, due to its enormous underperformance vs NDX. Something is wrong with it and AMZN for that matter as well.

Transports are going to lead the decline. They are now disembedded from daily buy mode and will influence all risk assets lower. This sector is one of my favorite leading market indicators. DJT is diverging from DJI. Dow Theorists are taking notice...

And now let's get one thing straight. I have been calling for market decline, to my total dismay, since I got stopped out at 1330 level on SPX. While not being short (hence not fighting), I have been patiently waiting for market to reach today's level to short. It is not the best move I could have made. I should have been long into 1350 level. I missed a move and did not want to chase, it was purely my choice. My outlook was flawed and did not let me think straight, I WAS WRONG.
That was then, and this is now... I am only as good as my next trade. But I am to learn from my own mistakes to be better the next time. My SPX short position (initiated today) is to remain until all scale-outs or stops have been reached. I am a trader. I am allowed to be wrong, but I am not allowed to be stupid or reckless!

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