Yesterday I posited myself a man of industry and took to the market with designs to invest in “the best” concerns. I leveraged long in only “the best” stocks and was fastidiously entreated to ruinous losses today. At first it was slow and then all at once. Losses were moderately painful at 1.6% by lunch, only to accelerate into hell by 2pm to -3.7%.
Having only “the best” stocks I was then give a fork in the road.
1. Do I hold and pray for the best and let myself piss in the wind, not knowing where the wind is blowing?
2. Reduce longs and hedge to moderate volatility?
I chose the latter, because I am the smartest person that I know. I am now down 1.9% for December and I hate myself at the rapidity of the unraveling. I wanted to be normal. I envisioned myself voting at shareholders meetings and laughing alongside fellow shareholders. Instead, I am back in the trenches, a slave to intra-day trends — scared and afraid to expose myself to this cunt of a market.
I pared off the worst of my positions and the one’s outperforming and stepped in and bought UVXY and a 20% position in TZA. I furthered my plan by buying dips in SAAS stocks and that’s pretty much where I am planting my flag — long SAAS, long volatility, short IWM. My best guess is for a 30-50bps move in either direction by the opening of trade. Once I have a better idea where we are heading, I will tilt my bias towards that direction.
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The UVXY is interesting, it went up to 21 today, but mostly it’s been headed down after the monthly OPEX generated gamma spike and there doesn’t seem to be anything in the way for a Santa rally. But of course … who knows…
The worst possible event for equities from here is if we start getting a bear market in stocks but the economy is – generally speaking – fine with it. Not getting much stronger, mind you. Just meh and getting slowly better.
Employment numbers have been looking good in terms of putting up regular gain. Big miss last week but reason to think it’s stats problems with upward revisions coming. We’re way below the labor market of 2020 of course but there’s no easy path back to there.
And commodities are HOT.
No weak economy -> gas stays on commodities -> people sell stocks / bonds to buy stuff -> more gas on commodities -> …
Le Fly is really good at what he does. I would have said, “do nothing, go eat a sandwich and come back in a few days”.
I’m selling on tomorrow bounce in order to lock in the gains for the year. Done trading the year. Time to enjoy the holiday season. Working during this time of the year is for pikers only.