CARNAGE: This is What Will Happen Next

Relax. You will survive this squall just like you’ve survived all the others. I bought the dip this morning, left for 3 hours, and was entreated to relentless selling and losses — with a drawdown peaking at -4.5%. I then doubled down and tripled down and cut those losses — but it wasn’t enough so I cleaned most out towards the end of the session, hedged with TZA and some NUGT, and left myself with 47% cash.

Why?

I’m still +1.7% for the month and if I rode into tomorrow with the lunatic portfolio I had — I risked losing those gains. Today was a very bad day, but predictable. I should’ve, could’ve done a million things differently — but here I am. I can only deal with tomorrow and my sense is — we are on the precipice of a scare. The market WILL NOT collapse — but a scare.

Look, we’re still 4% MTD for the IWM, more than 1% above the normal gain for the month.

Because of today’s insane 6.2% CPI numbers, rates and gold soared. I am not sure if this is the moment for gold — but the action today was constructive so I positioned into NUGT for tomorrow. If we bounce and all of the finest stocks ramp again, I’ll cut loose my TZA and commence to buy stocks near their highs. However, my sense is we draw down another 1-3% from here, especially in light of the over-performance of stocks like TSLA. Too many people are concentrated into too few places. If we drop another 3%, the IWM will be BELOW the average return, setting us up for a leisurely Xmas/Black Friday rally. Do not expect much of anything for December, a month renowned for fuckery and false starts.

Today’s move in cryptos was disconcerting. Nevertheless, I am long BITO calls for the holiday rampage to $100k and will stick with it no matter what.

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