The ugly came back today with a vengeance. We started the day with a big gap-down open on the indices and we never looked back, as we have now pretty much fully erased the oversold bounce from earlier this week. Volume picked up today as we took out last week's lows. There's absolutely nothing good I can say about today's action.
We're learning now just how much of a disaster the European Union really is. We saw it today in the earnings report of STD. Tomorrow, we have the big annual jobs report on tap. You know, the one that may have underestimated job losses in the past year by about a million or so. :-p Stupid birth/death model, but I digress. The market is clearly not expecting anything good there, either.
We're getting more and more oversold as we approach various support levels. The action definitely got ugly today, but if there's even a slight upside surprise tomorrow morning, we could have a snap back higher.
I made no trades today because I was in meetings most of the day. CBI is now a bit disconcerting to me, though. It bounced a bit this week, which I expected because the volume on its first selloff leg really wasn't that fierce. Today, however, marked a noticeable surge in volume as it sold off. That said, it held the 50-day EMA. CBI is holding tough. If it drops below this week's lows, however, I'll sell and take my loss.
Pretty much every short I mentioned dropped hard today. Too bad I wasn't in any of them. That's the thing about shorting versus going long. When you short, the declines are much quicker and much more vicious once they start, whereas going long usually entails a gradual grind higher. It makes sense if we think about the emotions involved. Either way, it's fear. When a stock is rising, one fears missing the profit, but when a stock is dropping, one fears the loss of capital. Obviously, the latter's going to be a more powerful fear because in that case, you lose money versus in the former where you simply don't win money. Losing is not the same as not winning. It's the way our minds are wired generally. So, the downdrafts set in much quicker and are much more violent. That means I have to be a bit more willing to be anticipatory with my shorts, rather than reactionary. Shorting isn't simply the inverse of going long.
I'm actually pondering a format change for the blog and my general approach. In a nutshell, I've realized that I have trouble trying to watch so many stocks for short timeframe trades and I've realized that I have an easier time if I focus on the indices. It narrows down my universe for daytrading and short timeframe trades, which is very important for me because I have a tendency to try to watch everything and subsequently miss everything. So, I'm considering shifting my focus on short-term stuff more towards the indices and picking stocks more from a longer-term perspective. That was part of the original goal of the blog, anyway. I'll probably shift it to picking a new longer-term stock play each week while updating daily about the current picks and the action in the indices. So, the watchlist will probably be pretty well cleaned out and rebuilt again.
Position: Long CBI
Disclaimer: This is not a recommendation and is presented for informational purposes only.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment