The markets have changed in character. The BTFD crowd is having to deal with recency bias this morning year. During the market run-up every pullback saw immediate investor demand to get “in”, resulting in a rapid V-shaped recovery. Once the market bounced everyone chased it higher and higher. Now, much like Pavlov’s dog, everyone is conditioned to buy the dip.
Notice your own conditioning.
Being net-short I have noticed that I’ve been extremely fearful of a rip-your-face-off rally (due to my own conditioning). However, we have seen a consistent amount of supply hitting the tape this year during setups that until recently would have led to multi-day rallies.
This is the sign of the bear.
In my opinion it’s time to put away the toys like the FANG stocks, or the Biotech names; use them for speculation only. If you’re not into shorting, it’s time to play the capital preservation game.
Shorting has gotten a bad rap lately; I’ve heard commentators describe ‘how hard it is’, and how ‘it’s a losing game’. Give me a break. Learn to use options so that you can only lose what you have put at risk, then give it a go. At the very least you can employ an inverse ETF into your portfolio when the S&P 500 breaks under it’s 200 day moving average on a weekly closing basis.
The bottom line is that you should have noticed a change in how the markets are trading. The typical setup over the past few years is no longer working. Notice your biases and trade smaller until you have a feel for the market.
If the S&P 500 cannot get above 1,950 we are in a bear market. I hate how it sounds, but that’s my “level”.
Follow me on Twitter @Dyer440
If you enjoy the content at iBankCoin, please follow us on Twitter
looks to be having a notably hard time rallying….
Like uncooked pasta – Nothing’s STICKING!
Been buying dips …..
…. in TZA, DUST.