I went to sleep last night expecting to lose 1-2% today. I woke up to “green as fuck” futures, only to see the market melt away like a chocolate bar in a prison yard. Lo and behold, I get back from the beach, spending the day tossing my kids into the water, and we are rallying hard into le bell. Either way I try to slice it, today was a fucked up day to be long, seeing big reversals to the downside in CLF, SHLD and a variety of momentum stocks.
Tech stocks, as well as small cap, best represented by TNA, are being pummeled. Basically, investors are still nervous about the state of the U.S. economy. Take a look at TLT and FXY for evidence of “de-risking.”
Until we see rates go up and spreads widening again, the markets will continue to remain under pressure. Today has all of the ingredients of a uber “fuck you, you’re dead” rally to the upside. However, once again, it failed due to investor pussification. If forced to guess, I’d say we’re still going higher, despite today’s reversal. I know it makes little sense to stick with a market unable to hold gains for just one day. But this bottoming process shit is a process, not an event. After all, if the market reverses and trades up, monster gains will be had, as opposed to near term limited downside, in my estimation.
Today’s purchases of EWZ, SHLD, DE and CIEN were ill advised. I got caught up in the moment and now suffer the consequences. However, it was a reasonable bet. Nevertheless, I still hold about 45% cash and will leave it intact, until I get settled into my next destination, further up north.
NOTE: I will be traveling most of the day tomorrow.