By Gavin M.
It's no surprise that I'm a permabear. I've been very vocal and 'in your face' about it. BUT, given the 160 point rally in the S&P 500, why am I still profitable? The answer is simple: I am not stupid. What do I mean by this? I am a daytrader. So I short each day when I see things to short BUT I never hold on to that short unless there's conviction. In addition, in situations where I AM WRONG, I take my losses and move on. I don't hope. I don't pray. I don't sit on it waiting to be right.
We are now at 2070. Hard to believe 4 weeks ago we were at 1890 and people were convinced the end is nigh! The market has been like this for the last 5 years. As a student of the market I know or at least I think I know what their tricks are.
I would never ever go against central banks. Their influence still reigns supreme in these bipolar markets and you, as a trader, should never ignore that. I cannot stop laughing at the unprecedented 'shadow' intervention they did in the last 2 months. We had the ECB yesterday and China overnight cutting rates. We now look forward to more dovishness from Yellen next week and the BoJ. What does that tell you? GO LONG or GO HOME!
Remember what I keep saying - only until the central banks have fully exhausted ALL MEASURES do I know the game is over. Until then, as a shorter, I need to get in and out quick. I need to learn to adapt and put on the bull suit when needed. Because as they say, when in Rome, be a Roman.
We continue to guide our clients correctly to ensure that they remove any biases and follow money flow. We told them the short game was over as soon as we recovered and stayed above 2000. If not for VRX over the last 4 weeks, I truly would've been forced to go long the SPX to feed my family.
Just to close the week w/ some humor - I wonder how these people are doing now:
I haven't written anything in awhile because frankly, what has changed? What has changed since Black Monday in August? NOTHING. We are still in the same type of environment where the markets continue to hope against hope that bad data after another will lead to more central bank stimulus.
Can you blame the market? Of course not. It's the same thing as giving heroin addicts what they need the most - more heroin. You really think they'll give up the free supply so easily? What makes this circle jerk so ridiculous is that the central banks love the center of attention and wielding the power over the global financial markets. You can, in a way, say that the 2008 recession has put them up on a pedestal akin to rock stars. This is something they never felt and now that they've tasted the fame, they don't want it to end.
Before 2008, I am quite sure 90% of the global population did not know what a central bank was nor what they do. But after the experimental policies set forth by the CBs, they've become infamous. So here we are - a status quo wherein traders expect the central banks to be the buyers of last resort and to save their butts whenever things get bleak.
So in the end, after 7 years, has anything really changed? No. Carry on. The farce must go on.
Have a great weekend everyone!
Traders from Equity Sense will be writing on this blog on positions and other market-related things.