Saturday, December 10, 2016
Full-time stock trader. Follow me here and on 12631
Joined Apr 1, 2010
8,862 Blog Posts

All the News That’s Fit to Print Gaps


This news-driven market has delivered again, with central banks around the world making moves to increase liquidity in the global markets. The major indices are up over 3.5% across the board as I write this, and bears who were feeling pretty good with the futures down last night have seen their portfolios take a sharp turn down a one-way street into an unfriendly neighborhood. If nothing else, the action this week shows you that just because this market has been largely unfriendly to longs, it does not necessarily follow that shorts have had an easy or even fair time either.

That said, I am overall still fairly skeptical of markets gapping in either direction the way this one has. Just as a down 3-4% brings out the cockiest of bears, a day like today brings out the same qualities in bulls. Rather than getting swept up in the emotions of the moment, which can run high on a dramatic gap higher like this one, the better approach is to focus on whether you are seeing setups that fit your style. I remain troubles by the lack of high probability long swing trading setups, but that can change within a few days of action. Most issues are seeing huge gaps higher on their daily charts, adding to the sloppiness of many of those technical patterns. It is a plus to see the VIX back under 30, but staying below that level has been a tough nut to crack.

As 12631 members know, I walked into today with 14% of my portfolio long, 4% short (AAPL), and the rest in cash (82%). The cash level will stay high until better setups emerge, regardless of whether that means long or short.

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  1. jg

    any thoughts on ovti?

  2. hockey guy

    @chess.. does the very high breadth on the s&p both today and monday not speak to very positive momentum or reversal??

    • chessNwine

      It helps. But that does not fix the sloppy chart patterns just yet. This is still end of month possible window dressing and with this news out today I suspect the savvier bears are stepping aside until December.

  3. En1gma

    Today’s rally was horseshit.

    However, the markets can stay irrational longer than your portfolio can stay solvent. My portfolio is 70% cash, 10% PM and 20% short.

    This just points to a more dramatic and surprising collapse in our immediate future.

    I plan to have my portofolio wrapped in gold plated burlap before this happens.