I’ve been a bear for awhile now. My personal feelings toward the economy had nothing to do with that fact. I was bearish, because the market told me to be bearish. The market is now telling me to show some respect to the bulls. I’ll stop spitting in your face for now.(Your lucky) I see many stocks in the process of bottoming out here. This has yet to materialize in the SPX, simply because the garbage stocks are pulling it down. It may take awhile for the index to bottom, but good buys can currently be found.

I bought MSFT and a little RIMM.

Keep in mind, I believe this is a temporary bounce.(If one at all) Stay nimble.

UPDATE: Liquidated my MSFT and RIMM position. I’m going to sit this one out.

I’ve told you not to bet on a bounce. I’ve told you we are all completely screwed. Just except it.

I’m also still holding my CMG short, not as large as I wanted it, but doesn’t look like it will bounce. I have played with the idea of another GMCR short, however that thing is currently on crack and I would like nothing to do with it. I will be looking around for further shorts. While knowing, we will bounce.(It’s close, I think)

UPDATE: Covered CMG. I felt the need.

UPDATE#2:I’m looking at some key names that look very attractive at these levels.(MSFT being one)

When I look for a market reversal this is what I look for.(Daily charts) HERE. If the market gaped lower before open and you see one of these bars, it’s an even stronger indication of a reversal. This bar signifies a interaday reversal. Bears opened the market lower, a bottom was found and the bulls rallied the the market to close. There are many examples of this on the SPX, HERE. (Keeping in mind if the market gaped UP, before this bar, then everything is fucked)

Obviously, this is only a small addition to your trading arsenal. I would suggest using this in conjunction with some other form of buy signal.(Personally I wouldn’t use “oversold”, but that’s just me) I would also strongly recommend the use of a stop loss, set at the low of the reversal day.(Just in case Mr.Market is feeling psycho) As always, keep important resistance levels in mind.

Moving on to the market. I have been seeing many people buying Friday, expecting some type of reversal. Personally, I do not see a reversal in the cards. I see a day of indecision. Generally, when I see a day like Friday I will look at the previous market movement to determine our future direction. The market has come along way since the breakdown from that bullshit “triangle”, as mentioned previously(HERE). In my opinion, the market has fulfilled the need to consolidate, before heading lower. I see no indication of a bottom. Actually, I’m expecting we sell off very hard next week. (If we move up Monday, I would be forced to show some respect to the bulls, till then I will be spitting in their face.)

In an effort to screen the short term noise, I have been watching the weekly. This is the chart I’m watching, HERE. Obviously, this chart is extremely bearish. We broke above previous resistance, then retested and moved away. Now only a few weeks following the test of support we are now back again. In my opinion resistance/support is great when it is tested and price quickly diverges from it. When support is tested a multiple times, it is MUCH weaker. On the daily chart, I can see three other tests of this area.(Making this support level laughably weak) I will not be taking on any long positions at this point, due to the sell off I can see materializing. If the SPX were able to move above 1,230 level(approximately) then I would be forced to take a second look.(on the long side)

With the above said, I have a pussy position. Going into close on Friday, I decided(for reasons still unknown to me) that I wanted to limit my exposure. Don’t ask me why, Friday was fucked. I was holding a large short position in CMG on Friday. That position is now much smaller and I’m pissed off about it. I still believe CMG sells off HARD on Monday, but I’m moving on. I also believe GMCR sells off further, except I covered my short.(at a large profit) I will keep an eye on further developments and shorting GMCR again, is not off the table. I still believe DUG moves higher, but it’s been giving me trouble recently. I’ve managed to pull off several small profitable trades, but not that large profits I was looking for.

In closing, everything is fucked. I can see a large sell off in the future. Knowing this, I would be forced to show respect to the bulls if they can rally with conviction on Monday. However, I don’t see that as being possible. I’m still of the opinion that any rallies should be taken as an opportunity to sell. I will be watching the situation closely, waiting for a bottom and preparing for a short squeeze. Until then, we move lower.

I’m a visual person, therefore when I was first introduced to the markets, technical analysis made sense. In the beginning, I didn’t know what I was looking at. I knew green was up and red was down, but that was it. I wanted to know more, while at the time I was seventeen, with no money to speak of. Obviously, trial and error wasn’t an option. I needed a way to learn as much as I could and without the capital. My only option was reading.

I started taking books out from the library, trying to decipher what they were talking about. It took awhile, but I picked it up pretty quick. I could draw a trend line and understood(or thought I did) what a uptrend/downtrend was. I continued reading books like Schwager on Futures: Technical Analysis, Technical Analysis of Stock Trends, Long-Term Secrets to Short-Term Trading. (Larry Williams is a genius and one of my trading hero’s. In the same ranks as Jesse Livermore.) By no means is this a complete list of books I’ve read. Only a small sample of a few favorites.

I learned a lot from reading but as many have said before, you can’t teach someone to trade. I could tell you every mistake I’ve made, yet you would make them all yourself. The important thing is learning from those mistakes. Easier said then done, I know. I made many mistakes on Friday. I was whipped back and forth, like flag in the wild. The adrenaline started pumping and before I even knew it, I was trading on “feelings” and ignoring the market completely. I was short, turned long and short again. All within a span of 30-mins. Fucking crazy. Fortunately enough for me, I was able to snap out of my trance quickly and mend my mistakes without damage.(A trance similar to the one degenerate gamblers must get)

The most important thing technical analysis books seem to skip is risk management. Risk management was something that took me quite awhile to learn. There was a time, I had such confidence in my trades that I would make “all-in” bets. Sadly, when you make those types of bets even when you’re right, you will get stomped out. Being right and getting stomped out has to be one of the worst feelings in trading. You start to get angry at the market, while it wasn’t the markets decision for you to take on more risk then you could handle. It is always your own fault. Trading is a constant battle against yourself. There is no battle against the market, or other market participants. Get that bullshit out of your mind. Trying to become master of your emotions is your ultimate goal.

When you start to realize the ultimate goal of trading, money will come easier.(This took me quite some time to realize) Stop allowing your stupid fucking theories to take control. Realize, the market will take your theories and shit all over them. Market outlooks mean nothing, feelings mean nothing and what others think means nothing. The market is the only thing that you need to listen to. The market is the only thing that matters. When I began to see the reality of trading, everything was much simpler.

Please, do not confuse the above. I’m no expert. I’m constantly trading and refining my skills. I’m not a sole technician either. I learned quickly that, the best strategy is a mixture of fundamental, top down and technical. The fundamentals tell of positives or negatives in a business, while the technicals tell you when to take advantage of those positives or negatives. (The best current example I could give would be AAPL. I can see negatives in the future, while the technicals have only just recently confirmed this.)

In closing, I would like to say one final thing. The most important thing is determination and self discipline. You need determination to push forward in the face of bullshit and you need discipline to stay on top of your game. Without determination, chances are great that you will give up. Without discipline, chances are great that you will not improve. I would like to remind everyone, that I have both an unlimited amount of determination and a godly amount of discipline. I will achieve the ultimate goal of trading, it is an inevitability.

Thank you for reading my non-sense! 🙂

I will post my take on the market tomorrow.(Obviously its going to be bearish, but I’ll tell you why)

I will be watching this chart, HERE.

This is one of the many “high flying” stocks beginning to breakdown in my opinion. I know what your thinking from that chart. It looks as though CMG has/will bounced off support. However, in this market looks can be deceiving. I’m looking around and everything is screwed and your telling me CMG is going to move higher? Highly unlikely in my opinion. This leads me to the title of this post. I will be trading the fear. People are expecting CMG to bounce off support, while I look around and see no overall market strength to support a bounce. If support were to fail this would enact a huge level of fear. Instantly, strong positions in CMG would look weak and fragile. I will be in the shadows, waiting for the greatest nightmares of CMG stock holders to materialize.

I have taken a short position in CMG and will be looking to add. I’m also following Priceline, although I missed my short signal on Thursday and have been reluctant to short after missing it. My strategy is to play the breakdowns. Once again, DO NOT BET ON A BOUNCE.

P.S If CMG were to bounce Monday, I would be forced to cover.

UPDATE: I’ve also covered my position in DUG for a small profit. I want to limit my exposure.

UPDATE#2: Trimmed my CMG to next to nothing. I want to sit this one out. Although I do believe we move lower, being a pig is never a cool thing.

I got completely head faked today. I’m not going to bitch about it, shit happens. This market is out to screw you, so be extremely careful. Risk control is currently my number one priority. That said, this market is on cocaine. Keeping risk low, while still trying to bank coin is becoming more and more like a tightrope walk above a volcano. Do not confuse a momentary lapse in my judgement for losing money. My GMCR short from Thursday did extremely well. I’m also holding DUG, I repurchased my long position after realizing I was being crazy.(It’s currently taking off from my AVG price of $27.52)

Don’t think I’m alone in this category. Look around, you’ll find everyone was head faked.(Except HFT programs, they know the future) I considered buying SDS, but decided to cool my head. I’m now holding cash and DUG, while looking for other opportunities.

I cut my GMCR short in half, and cut my DUG long by 70%. I went long SPY. I’m now net long. I would like to be short for Monday, but would like to protect myself in the mean time.

Shit is happening fast and its hard to navigate while posting. I could be out of my SPY long in seconds. Who knows!!!

UPDATE:Cut my entire GNCR short. I made 4% on that trade, not planning on being a pig any time soon. Keeping whats left of my DUG long, but watching it like a hawk.

Sold my SPY long, going to look for some shorts, while staying mainly cash. Trying to avoid getting killed here. Jesus.I believe a move to $123 on the SPY is reasonable, and probable. Yet, I don’t feel the need to hold some bullshit positions while I can look for better things.

I don’t believe the bulls are giving enough respect to the bears at this point. Everyone seems to be expecting a huge bounce.(Possibly we get to 1226 before getting rejected) I will be taking any opportunity to sell the rallies.

If you were wondering, I’m still holding my GMCR short. I will also be looking to take on a long position in DUG. Updates to follow.

UPDATE: I HAVE TAKEN ON A LONG POSITION IN DUG AND WILL ADD MORE ON DIPS.

UPDATE#2: DUG LOOKS TO BE BREAKING OUT HERE.(Watching the BS 5-min chart**HEAD FAKE!**) I CURRENTLY HAVE A RESPECTABLE POSITION, BUT WOULD LIKE TO ADD MORE.

UPDATE#3: I JUST CUT MY GMCR SHORT POSITION IN HALF.

Trade this market like a psychopath, zero emotion! The only thing that matters in this market, or ANY market is price action. Price action doesn’t hold any close friends and listens to no turkey gods, or forecasts. Price action doesn’t care about a bullshit position you hold. Watch price and learn to trade with the price, not against it. Price moves lower, you short. Price moves higher, you buy. It’s simple.

“When the trend is up, buy the dips. When the trend is down, sell the rallies.”

I’m printing money. I covered my IWM short and DUG long this morning.(HERE) My timing was sublime and dodged the short lived market rally. I got hugely sidetracked and tried going long into this shit storm.(WTF WAS I THINKING?) I was spared any large embarrassing losses, and got out with minor scratches that healed instantly, much like Wolverine.

After, re-learning an important market law(AKA Long-term > Short-term) I realized there was much coin banking to be done. I shorted GMCR(HERE) and continued to bank coin the entire day. I added to my short position on strength and could not be happier with my current position.

GMCR will gap lower tomorrow, it is a statistical inevitability. This is easier then a first grade math question. “We go lower?” My reply: FUCK YES. If you have a long position, I will be hunting you tomorrow. Hunting you with a dirty aids infected knife. Ready to cut your leg while you walk by a bush, unknowing of my presence. I will not try to kill you instantly, rather watch from a distance. I will watch, as your cowshit positions explode like some shitty AIG derivative.

While killing it with GMCR, I decided everyone will drink water tomorrow. I’ve decided this because, I shorted TEA. You can drink water tomorrow or possibly cat piss, but not tea. I took a small position. While, I believe TEA has experienced a failed break, I could be wrong and I would like to keep my face. Long term, I love the idea of TEA. People need something new, MCD’s has been giving away so much free coffee that they have saturated the market. It’s no longer “cool” to drink coffee. Again I return to everyone drinking water.(FYI, I have since covered TEA as I don’t like the R/R)

Currently, my view is bearish to the extreme. Much as in October, when we stared death in the face and instantly rallied for a month. I believe we do a 180. Stare life as a king in the face, spit on it and crash for a month. Who knows.

I will be looking at Monday, as the turning point. We already know what will happen Friday.