Closing my SPY Put at the open. Being short is being stupid. I made that mistake many times in 2009 2010 and 2011. Election year is bullish year so I am not gonna be stupid this year.
I bought a SPY Call after close on Tuesday - Feb 128. Figured I would buy the dip seen at end of Tuesday. Bears are fools including the old Lester. The new Lester will only play long.
Not good folks, not good! Lester is hands down the worst I have ever seen. He is never right acting purely on impulse no better than a degenerate sports gambler. This doesn't necessarily mean the bulls are doomed this year, because he can and has in the past flip flopped, but so long as this is his disposition right now, it's quite bearish for the market in the medium term. I also noticed decisionpoint.com, the charting service I use, has issued a LT buy signal. Jesus these guys that been atrocious. They use mechanical models which have been an absolute disaster. This same model issued a LT sell signal at around 1150 back in the summer and a whole bunch of shorter term buy and sell signals most of which were a bust as well. We have the VIX back at 20 as well. All the pieces of the bear puzzle are in place except for inflows and long exposure from NAAIM and I suspect in the next week or 2 that will be in place as well.
US economic data has been coming in consistently better than expectations and so far the US economy has been able to be decouple from the woes in Europe. But is this just a last reprieve before it gets sucked in the weakness that appears to be infecting not only just Europe but Emerging markets as well? Well, regardless of whether this turns out to be true, in the IT, the market appears to be just about ripe for at least a major retracement. The "good news" last week on employment may finally cause any weak would be longs who are on the sidelines to throw in the towel and jump in. Once I see that, I'm going to drop the hammer and buy index puts.
Doug Kass has turned bullish too. That makes me very nervous. Here is a guy that went on TV calling for down market in October of 2010 exactly 10 days after the famous David Tepper's CNBC interview. He was also calling for the bottom in the summer of 2011 which didn't pan out because the real bottom came in October. The guy just makes bad calls after bad calls. Yet he gets away with it 100% because nobody on CNBC has the balls to challenge him out because of his affliction with Cramer. What a joke of a network.
ReplyDeleteI've seen Kass have his fair share of both good and bad calls over the years. Trying to constantly fade guys like Kass won't be effective. Sometimes you'll win other times you'll lose.
ReplyDeleteThe best thing to do is separate the facts from the dogma when you read what other people have to say and then come to your own conclusions on the facts.
I've come to realize that in end you have to be your own guru and that means the willingness to bet against some famous talking head who's had a hot hand if your outlook is in opposition to him. If you ever find that you are constantly hesitating and second guessing yourself because of reading opinions of other people then it's best you don't so do. If that happens, it also may indicate that you truly don't believe in yourself or your "system".
In the end, you have nobody to depend on but yourself. Learn from others and if you have method that works, stick with it no matter what anyone says including me....and so always feel fee to tell me if you disagree with me....it would be helpful for both of us to discuss our differences and I will never take any offense so long as you don't call me an f'n moron or something like that ;)
Yea fading Kass will be hard. Unless of course we get a massive spike in inflow, I doubt the market will top out in a major way. So frustrating when you see the shitty market action yet everything is rallying. I am an idiot for sitting there and watching the solar names for the last 2 weeks and not pulling the triggers.
ReplyDeleteUntil we see evidence of people chasing the market it`s going to be hard to see a big sell-off otherwise everything else seems to be in place for at least a sizeable dip. I`d say we need to see at least 10 Billion in inflows if not more before we can get a drop of 100+ points. The latest NAAIM stat released today shows only a modest rise in long exposure from last week to 49%. That`s neutral. Fundamentally speaking, the news has been pretty good with spanish and italian bond auctions gone well, payrolls were good and earnings still appear to be holding strong....bears cant seem to catch a break.
ReplyDeleteBut if and when we see people finally give up and chase the market I think we will at least get a solid pullback. In the meantime, I`m still willing to pull the long trigger on stocks if I see the set up. If you feel uncomfortable going long because you worry about a correction there`s nothing wrong with a hedged approach like say, buying a long date OTM index put. I myself will end up doing that if I feel uncomfortable with my `naked` long exposure. Right now though, my exposure is small enough such at I`m willing to be naked :)