Thursday 6 June 2013

First Meaningful Pull Back.

It has been a while since my last post. It is simply a function of lack of time. In the mean time, I have somehow managed to send the Weekly newsletters to the subscribers.
I was hoping for a market TOP around 1st week of May and accordingly we went long VIX (UVXY) and short Emerging markets and other sectors including Finance.
However, there was an over-shot and the markets kept going up till May 22nd. Obviously, there were some doubts amongst the subscribers. I kept stressing that the correct has simply been delayed not cancelled. And we kept hanging on to the long VIX and short everything else trade.
Yesterday and today we closed our positions. We made a tidy little sum on UVXY and peanuts on others. But at least there was no big red anywhere.
Now we are taking a new position for a short term trade.

I think we are in the process of a giant TOP forming which will take us till the end of summer before we see any major correction.
For now, I think the short term correction is over and we will see another bounce soon. How far it will go is a question of time. But if it fails to make a new high, we have problem. Big problem or little problem, I am not sure at this time.

We stayed away from Gold and Silver because I think the cycles did not bottom. Nor for that matter the cycle for Apple and we will see more downside for Apple as well.  We are waiting for more favourable time to go long PM sector.

We play the game by the seat of the pants. And we always correct the course of action as we go along. We cannot be correct 100% of time. For e.g. I am holding grain ETFs for few months now and I am under water, although not by much. But I am holding onto those positions for longer term. And that is where I find most folks have problem. Committing to a position for long term. May be we got brain washed by leveraged option trade, when we start expecting instant results. We get impatient and when a trade initially goes against us, we get scared. The cycle of fear and greed plays on.

Hope you guys are doing great.
Trade safe.


  1. i am a bear---have been for 15 years. Makes it hard to be bearish when you know that 70-90% of
    market is always bullish. what I mean is the money power is always leaning bullish. 401 funds,mutual funds, pensions, fed intervention
    (for 15-20 years) and etc. It seems that the bears know when support should be broken but the bulls with their money power know where the bears are hiding---make them cover shorts. I suggest the bears go long at bear support levels. Bears can't win with the money power of the bulls.Eventually when the money power (bulls),fails then the bears have a chance---right now the probability is null.

    1. We need to separate our belief from trading.
      I don't believe this market either.

  2. Hi BB,

    good to hear you are busy, but like many, miss reading your entertaining and informative post...

    Just wanted to share that Bradley trend has tracked well this year--long since late December--and currently predicting major trend change by 22 June...same timeframe as Uncle Ben's next meeting and OpEx.

    Then again, maybe nothing will happen...and Uncle Ben really will be the most powerful force in the universe. We'll soon see...

    take care--best to you and your trades


    1. Hi dc-bear,
      Nice to hear from you after long time. I am glad that your trading results have been great.
      I think we are forming a long term top and we may see one more major upside in late summer but I am taking it by the week.
      I think it is too risky to be long equities now.
      Trade safe and take care.