We’re at a point in this tape your ego will start talking to you, letting you know how smart you really are over others and this will lead you to festoon your accounts with losses largess.
It’s true — we are extremely oversold and under these conditions we can rally very hard off the lows, which makes it hard to short. On the other hand, something might break causing a domino effect and washout of stocks, making your dip buying excursions painful.
The answer to this tape is obvious: trade small. I promise you there will be better tapes. Even if you miss some massive melt up; I promise you there will be low hanging fruits.
In order to catch a mean reversion rally you must be willing to put yourselves out there to withstand the fires. This means taking losses while waiting for things to turn.
An alternative position is to wait for a fat pitch. Your most important job is preservation of capital. So many of you digusting fools throw that concept out the window as soon as you begin believing God himself is talking to you, offering up stock tips.
Many of you right now are reading this saying “this fucker doesn’t know what he’s talking about — stocks are soooo cheap right now or OMG stocks are going to crash this time for good — what a fool.”
But you can all suck a bag of dicks, knowing that The Fly doesn’t draw down, rarely gets fooled, and is generally right about these things way more often than not.
My advice to you now is to reduce your footprint in the market or if long to hedge your longs until this squall passes. This is most likely the last big sell off for the year — but that doesn’t mean we’re about to enter a bull tape either. Shit is fucked up and stocks are merely reflecting that.
Be quick and try not to believe in your own bullshit for more than a few hours.
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