If anyone has a time machine they can let me borrow, I'd like to zip back to February 5th and cover all my short positions. In the nine days since then, pretty much all my profits from the waterfall drop in prices have been gutted by the relentless upward push in the market. I'd really like to have those profits back. Maybe now that the Fed has made its surprise announcement that it is pushing up the discount rate, Friday might give me some relief. We shall see. As of this writing, the /ES is down nine points.
Prior to this drop, the S&P itself is exactly at the 61.8% Fibonacci level, as measured from the 1/19 peak to the 2/5 trough. This might represent a turning point, although the market has barely even paused to take a breath during this run-up. Since the interest rate party seems to have been declared over, this might be the sea-change we've all been anticipating.
Not surprisingly, the VIX has been getting clobbered. It has gone from about 30 to 20. Those who bought options during the early February plunge are probably hating life right now.
One thing I've been struggling with for the months is the opposing views that I have with the precious metals bulls. A lot of my favorite folks – including Gary Savage and Market Sniper – have been very clear in their bullishness on precious metals. I don't like having views opposite those of people whom I admire and respect, but I just don't see the bull market that they do. The $HUI, shown below, seems to be history repeating itself. It seems to me that precious metals are setting themselves up for a big plunge before long, just as they did back in 2008. I am presently short GDX (as of today) and SLV (as of yesterday).
Anyway, I've been doing a lot of soul-searching lately about my trading tactics, since the evaporation of my early-February profits has been distressing. I consider myself a nimble trader, but to have to flip from bullish to bearish and back again every few days just isn't my style. I'm a swing trader at heart, and this market is very hostile to swing traders right now. At a minimum, I think I'm going to hold a far small number of much larger positions, so I can "change horses" much more feasibly than before. This is a topic I've been pondering basically non-stop the past week, including when I'm skiing down a mountain. I am completely absorbed by this topic, and I hope I can see my way to a logical resolution.
