The market is starting to look very oversold. That’s not to say that it can’t get even worse from here. But, it’s starting to get extreme on the downside, just like it can get extreme on the upside.
One sign is to look at the leading stocks in the leading sectors: ag, oil, steel, coal. They were going great, until they weren’t. This is a typical example of when a major downturn is approaching “the bottom”. Everyone gets taken out behind the woodshed. No one escapes punishment. This is an indication that the market is “washing out”, e.g. capitulation on even the strong RS stocks. I’m seeing this happening with my “fuckus stocks”, much to my chagrin. However, the silver lining is that there is a potential reversal in the making. You take what the market gives you.
Don’t misinterpret me. I’m not calling a bottom here. Just being on guard for a bounce, which could be major—and playable.
I’ve trimmed positions on [[SKF]], [[DBA]], [[FXP]], [[SRS]] and [[SDS]]. Also I’ve covered 1/3 of my short position on [[MA]]. This is also the time when I’ve loosened the stops on the the strong RS stocks (aka fuckus stocks), because I don’t want to be stopped out early, only to see them rebound.
Finally, I’m sitting on lots of cash and starting to make a shopping list.
IF I get confirmation of a major reversal, my game plan is to get positioned in leveraged ETFs to get immediate exposure to the upside, playing the initial bounce. Then when the rally fizzles out, look to get short, turncoat-style, thus leaving the suckers holding the bag of shit again. All this is simply a moral decision on my part to do this. You see, it is immoral to let a sucker hold on to his money. He must be de-banked. Egregious, indeed.
Developing….
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