The Wing Thing
From our family to yours, fare ye well!
And the sun went down as I crossed the hill
And the town lit up and the world got still
I'm learnin' to fly, but I ain't got wings
Comin' down is the hardest thing.
At the risk of beating a dead analogy, I can't help but (again) offer that our current juncture is a high stakes game of Minxy musical chairs. I "see" the potential for one more blowoff rally -- particularly with the Dow Jones/BKX breakouts -- but when the music's over, Mon Frere, there's gonna be precious few seats. How you choose to play that, and whether you trying to capture the incremental upside is a decision that only you can make.
As I write this, I can't help but think of a similar conversation we had last October when I smelled a stiff rally but chose to wait for the final push lower (before buying). As the only thing that differentiates mistakes from lessons is the ability to learn from them, I'm determined to use that experience as a stepping stone (in reverse). Hence, my current approach has been to add downside puts into rallies and define my long side risk with tight stops. If the market rips higher, I can "roll my stops" up. If we melt, I'll stop out my long risk and/or let my gamma kick in to the downside.
I know this may not offer the "insight" that some are looking for, so let me phrase it another way: I have very little doubt that a sharp sell-off is "out there," I'm simply struggling with the timing and price points. As the brazen bulls beat their chest, my crosshairs are searching for the whites of their eyes before I unleash hell (think Gladiator). In the meantime, I'm playing RELATIVE longs vs. absolute shorts and trying to humbly find my way.
As the BKX retests 800 we head into the home stretch, I'm gonna juggle my hats and play trader. I sincerely hope you found your way today and if not, that you've got the balance to keep it in perspective. It's certainly easier said than done, I know, but that doesn't mean we can't try. One of the beautiful things about trading -- and life -- is that we're offered constant opportunities to right our journey. And for that, my friends, we should all be thankful.
Have a peaceful night.
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