Bullish on market, and on inverse ETFs

Say what?  I know, you’re thinking “what kind of crazy position is that”?  Well, if you understand market-imbalance, then you can play the short side while still being bullish, and playing the bull side.  “Bull side”… well, that’s a misnomer; I wish there were another word I could use, but I guess “bullish” will do.  For the rest of this month and perhaps until summer, I think it makes sense to play this tape as a large technical bounce.  I really miss those days where I could research up on a company with earnings going through the roof, and finding out the story behind the trend.  For now, buy-and-hold is destroyed, and fundamentals have taken a back seat to Government policy and economic reports.  Who cares if a company has 150% YOY growth when unemployment is moving up at an accelerated rate?  Everyone wants to destroy all the bullish sectors- people are searching for any reason to short Healthcare, or School stocks, and will make a calculated effort to do so.  “So what if enrollment rates in schools is hitting double digits, I want to short the whole sector just because its one of the last to pullback and EVERY sector will pullback.”  …what a loser way to trade, but since that’s the name of the game, we adapt and try to find a way to play it.  Even if it does pullback, I think the idea here that I’m trying to emphasize- that traders are now ignoring fundamentals is a growing trend.

And what’s up with these commercials by Schwabb and ETrade, telling people to open up their trading accounts and “take hold of their portfolio themselves”?!!  Gee.  I wouldn’t be surprised to see a new idiotic trend- people who shouldn’t be trading (ie, retired folks just learning how to use the internet) trying to trade.  This is the most difficult time in history for someone to attempt to become a trader… this will only create more volatile waves for me to surf.  Whatever.  I just wish these commercials by Schwab and Etrade were a little more responsible in their campaign message, because trust me, if they were after your best interest, they would have told you to go to cash a long time ago.  Or maybe be more like Fly, and just straight up tell you how inadequate a trader you are.  Lol.

… seems like I went a little off tangent there.  What was my post about again?  Oh yeah, getting bullish on the market and the inverse ETFs.  Well, this is obviously a short term play.  I will continue to build long positions on every pullback, because somehow I feel like if the bulls want to pull out an epic squeeze out of their pockets, then NOW would be the time.  And yes, those pullbacks along the way up will be VERY IMPORTANT.  Why?  Because that will keep the VIX stabalized.  Every pullback will make the VIX move up a bit, and that’s critical, because I do not want to be long a market with the VIX too low (ie, low to mid 30s at the moment).  Anyway, while holding those longs, its a good idea to “bet against yourself” on those pullbacks, meaning, at least for me, I’ll be getting long the inverse ETFs taking advantage of the selling imbalance on those stocks (remember, the inverse ETFs is a contrarian tool for me, and like puts/calls, they have an implied premium and discount depending on the speed of the market).  So, be quick, and if you’re long, play the inverse ETFs or bear ETFs intraday to hedge or “buy time” on your long position.

There are a lot of swing long setups there that are developing that can be played in a technical bounce scenario.  For those subscribing to The PPT, I suggest running a screen that searches for improving technical scores and hybrid scores as your first test for stocks.

Remember though, this perspective is totally from a traders view.  If we find an extension to this rally, then treat it nothing more than a technical bounce, and realize that that is VERY BEARISH on the longer term.  Playing this textbook folks.  New bull markets never magically begin at the bottom of bear markets.  They come after long periods of consolidation and kind of trickle up until everyone dumps the old bull market leaders, and starts putting money to work into new creative and innovative companies that are feeding a demand.  As long as the market is played strictly from a technical point of view, I can tell you it will be very dangerous for our stock market… if people just throw money in and out and in and out without actually investing in technology, creativity, and earnings, then the bottom is NOT in.

See you on the streets!

-gio-