Models are bearish, prepare to sell in May

Greetings lads,

Floods coming.

And I woke up in a calm mood.  Then I read blogs by my favorite trading psychologist Brett Steenbarger and a zen-like state washed over me.

There will be no mixing words today, the models are bearish.  Everything is aligned to expect downward action next week.  Literally, everything.  From visceral cues like the moon and May and 60 years of Korean conflict ending, to 30 different data points we observe every Sunday as part of the Sunday Strategy Session.  To exacerbate the situation, we have a Fed rate decision Wednesday afternoon and employment data Friday morning.  The gambling halls down in Chicago are favoring camp unchanged heading into Jerome Powell’s third meeting as Chairmen of USA’s Federal Reserve, an establishment that remains at the head of the free world, for now.

I initiated a bearish bet against Canada Goose recently.  It has been wrong so far.  You will find no shortage of stock market commentators who can point to the left side of a price chart and tell you what happened and why.  But rare is the anticipatory eye for charts.  We have discussed failed auctions many times on this humble blog, including a promise I made to myself and the reader in 2014 that we will never miss another failed auction.  There are 59 posts in my archive that reference “failed auctions”.  In practice, to trade them, requires stepping in front of a potential locomotive strength counter force.  If you trade a failed auction after it confirms, you will miss a bulk of the move.

Anyhow, failed auction theory and some other things are what put me short $GOOS.  For a long-form of my reasoning why, you can click here.

Listen, I will not be selling any of my positions in May.  When I buy a stock, it isn’t in an attempt to take advantage of some capricious price oscillation.  I do it because I love the company’s mission and trust their management team.  And I marry that company, many companies, like some kind of Mormon polygamist whose only wives are immortal corporations.

Anyways I know most readers of finance blogs are not really interested in my ethos.  They just want to be told which acronym to buy or sell, assuaging all responsibility for the win/loss onto someone else.  Fuck, that sentence makes me angry.

I truly believe that if you are reading my blog then you are the type of person who wants to own the responsibility of their financial well being.  Otherwise you wouldn’t stick around through my far-out Sunday diatribes.

What I will be doing ahead of May, and as soon as Monday morning, pre-market (I do need to wring my hat Sunday night even looking at Globex, thank you) is hedging.  First using futures, then inverse ETFs.  I am not sure which ones yet, and I am open to suggestions.

In fact, I would very much appreciate if you would tell me in the comments below what your favorite bearish ETF is.

Models are bearish lads.  Historic rhythms are curiously cautious.  Trade accordingly.

Exodus members, the 180th edition of Strategy Session is live inside Exodus.  Go check out all the specific cues we are watching this week.

 

 

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