The Low Down
When life looks like Easy Street there is danger at your door.
We sit in the car outside your house
I can feel the heat coming 'round
I go to put my arm around you
And you give me a look like I'm way out of bounds
Alright team--I gotta come clean. I've clearly been early with this latest zag (longtime readers know that I'm always early) but I still must share what's on my mind. At the risk of pissing Hoofy off in a big way, I want to say that I'm a scared bear--and I'm not talking about the upside.
My fear is that there is a downdraft coming that will make the last sell-off look like a walk in the park. I can't tell you from where it will begin and yes, there's a chance that I'm dead wrong. Nobody knows (with certainty) what WILL happen in the market and this isn't an advice site--it's a community of sharing. With that said, I will offer that I feel this in every inch of my trading bones and I'd be remiss if I didn't express it to my fellow Minyans.
Obviously, as we've learned, timing is everything and that's never been more clear than during the last week. However, I humbly maintain that the recent action is a classic bear market rally and the very fact that so many people disagree with me illustrates that point. Grizzlies are filled with broken promises and false hope and, with the benefit of hindsight, I don't believe that this time will be any different. Could I be wrong? Sure. But I will always be honest.
This is a trading diary--not an investment diary--and as such, I'll continue to take our journey one step at a time. It's never been my style to stand at a level and stubbornly battle the Minx--I have too much respect for the process and understand that my role is one of a pawn. What I will do, however, is trade around my positions with a particular bias and currently, that bias dictates that I scan my screens for cheap downside paper in a smattering of sectors. The financials are a particular favorite as I feel there are structural flaws in that industry.
While this last rally surprised me, I believe it's a blessing in disguise if approached properly. Please, though, I won't accept "thanks" if I'm right or "blame" if I'm wrong. I only share my process and thoughts with the hopes that they add, at some level, to your process and thoughts. My only point is, please, take a deep breath and hard look as to your needs, wants and financial horizon. Nobody is bigger than the market--but with a little luck and a lot of help, we may just find our way to the other side.
I hope this finds you well.
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