Am I the only one overwhelmed with reading bearish articles? Of course the post-election sell-off didn’t help but as a trader I do not try to figure out the future or trade based off economic data or the effects of political decisions. I only look at charts and indicators. As observed by most traders, many charts are broken and the breakout trade is a tough one here.
On the flip-side there are many respectful traders that I follow that post reasons (macro & technical indicator related) for a bounce and I have to agree. One indicator that I like to pay attention to and have written about before is the McClellan Oscillator (free in many charting packages). I have previously wrote about it back on June 20, 2012 and July 24, 2012 showing areas where we have bounced. Usually I like to focus on the -200 level for a bounce but the -150 level (on a closing basis) has also proven to be reliable. I have included a 1 year chart of the $SPX with highlighted areas of where we fell below the -150 level (yellow line):
It is not my point to make a call of the bottom or a bounce for that matter, but I believe the odds are in the favor of some long positions. I also think it is a late point to short the market and it may be a sound strategy to dip into some long positions based on your watchlist and theory of “a rising tide lifts all boats”. In my opinion the winning trader here is the one that understands trade and portfolio risk. I would be comfortable putting on 1/4 positions here and if they fail (stopped out), the overall loss is acceptable to the portfolio. Remember no one is forcing you to trade, if you are uncomfortable then stay out and study past trades or continue your education.
I personally attempted a long position in $AAPL via an option spread back on 11/6 and knowing the publicity $AAPL gets you know that I am underwater. I went into this position accepting a 100% loss on the option spread as my ability to monitor the market would be limited. Even though I may take a full loss on the option spread, my overall portfolio loss will be around -1.5%.
**Today’s Near Death Experience**
Today while working out in the garage I was on the chest portion of the workout performing reps of 12 within the set. This is when the craziest thing I have experienced happened. While I was on the descent of my third rep, my bench came completely apart at the weld where it adjusts for incline/flat/decline. I was performing incline and went to decline instantly. At this point the weight bounced off my chest and I still don’t know how but I thrusted with my hips and arms and got the weight over my head (just barely avoiding crushing my head) and then fell off to the side.
This all happened in less than 3 seconds from break of equipment to me laying on my side. When I got up all I could think was “what the hell happened and I wish I had that on video”. Below is a picture where you can see the weld break and the now detached bench on the side:
Near death may be a little much but a possibility and definitely a grape-crusher. Please don’t make fun of the rug I have there. Gym mats are to be ordered soon.