Tuesday, February 5, 2013

Stock Market Poem

I placed a short SPX trade on close today. I am either incredibly smart or incredibly stupid. Only time will show...

Three weeks ago I decided to cut my SPX long at 1472 and wait for a pullback to the upper 1440s to buy, and then look for a trip above 1500 after that. Obviously, there were no credible pullbacks (or they were too shallow) for me to buy - the stock market went straight up without me. But now that my price target has been reached, and the fact that it was done in such a chasing pattern, I think that this parabolic rise will end badly. Many charts are now in hyperextended mode and are gasping for air, so to speak. At times like these I go against the grain. While I was flat, I knew where I would short, and so I did today. It would have been nice to ride the last 40 SPX points up, but one has to have a trading plan. I followed mine, even though it was flawed. I admit that I was wrong.

After I shorted SPX on close today, I decided to write a poem about it. This was not done to praise myself or display an act of bravado, but merely to have some fun. I hope you will enjoy it...

Just like trees which don't grow to the sky,
The stock market reached its previous high,
This is where double top formed before,
So I sold SPX at the close therefore.
Bulls are in charge, they are running the show,
Bears have no might, their morale is so low,
They failed to bring the stock market down,
Ben Bernanke is still the sheriff in town.
But I have a feeling that this is the time,
When smart money scares the ones who are blind,
For they can't see beyond the end of their nose,
How far and how fast the stock market rose.
This trade is not easy, it's against the grain,
I placed it despite the urge in my brain,
To buy on a pullback and look for new high,
As taught in old textbooks, which I'll try to defy.
Complacency punished, patience rewarded,
And after this trade is herein recorded,
You know that I look for a pullback no more,
I now see SPX falling hard to the floor.

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