Must…. Stay … Short

Hello every buddy.  FINALLY I’m back.  Sorry I had to take off so suddenly.  I had to drop everything and take care of an emergency.  Real stupid stuff.  Timing for me is unopportune on these things… everytime I get caught up in something that pulls me away from work, the market is finally going my way, although the way is still narrow.  The trick here for me is staying the course.  Isn’t that weird though?  I’m sure this happens to a lot of you:  You are forcefully pulled from your trading desk for a few weeks, then you come back and you’ve noticed you’ve outperformed yourself over that period versus the times you over-analyzed things.

Okay, now for some over-analyzing… I’ve already counted at least 3 significant relief rallies within 3 months nicely spaced out, which to make a long market story short, means the market is getting weaker.  What I was taught from my mentor that was difficult to accept, was that sometimes rallies are signs of weakness.  What a paradox.  But it makes sense if you broaden your trading horizon.  Look at where we are right now… barely above 10k on the Dow.  And we’ve had rallies from 10 to 10,600 back to 10, back to 10,600… it’s a market treadmill, and if you’ve been trading within this range you are getting tired, and in that sense too many rallies can be a bad thing.  It’s like sprinting too many times in a long distance race.  This is a timer’s market, and if you don’t have that skill then keep your positions small.  Over the years I’ve used the VIX to time the market quite well, but had to dump it for a few months because the market was totally screwed up, I can’t really explain it without writing a novel.  The good news is that the VIX is back to becoming a very reliable indicator in market’s that require precise timing.  I hope to share it more often because it can really step up your game.  Right now the VIX is gradually heading to 30, which kind of tipped me over to the short side.   It still has a way to go sitting at 26.70.   So exciting!

Anyway I’m getting a billion phone calls so I have to run away to Star Bucks or Borders for a while.  I tell you, I just want to move to East Asia where no one knows me, trade stocks in the late afternoon, play around until the sun goes down into the ocean, then play around some more, that kind of stuff.  Instead, I’m stuck in Hawaii.  Crap.