We have a problem and they’re trying to steal our shares. I started off the session about flat and dipped down to down 50bps at the lows. Then markets flushed out and bottomed. The subsequent rally enabled me to rebalance my portfolio, tailoring it for a Trump win in November. And then I got greedy and took at $SOXL trade near session highs. Shortly thereafter, pandemonium broke loose and markets cracked lower.
It wasn’t long until I was down a staggering 5% on the position, which comprised of 5% of overall assets. I took the L and moved on and began to hedge. I leaned in heavily into $SQQQ because fuck the Nasdaq. Traders were in disbelief by late afternoon because all of their gains had been absconded with. At session highs I had gains of 130bps and instead closed the session almost exactly flat. Juxtaposed against some of the more aggressive allocations, I am happy to have escaped with my scalp.
Into the bell, I closed out the $SQQQ and took a 5% floater in $UVIX, in the event this collapse blossoms into catastrophe.
It’s important to note the level of the volatility index is above $17. This has been suppressed by the Federal Reserve since 2009; but every so often it lights up amidst panic and fear. We could be diving back into fear soon, since losses amidst the hedge fund favorites are mounting. It should not amuse you to learn shares of $AMD are lower by 23%, $ASML 19%, $MU 18% and $LRCX 17% all within a fortnight. At this juncture in the rut, we are teetering and it can go either way. It would be reasonable to assume we bounce from here and live to fight another day. But it’s always tenuous at the crossroads and it quite literally can go either way, small selloffs begetting larger one’s transmorphing into routs, leading to disaster. I have traded catastrophes my entire adult life, having been born and bred into the fires, accustomed to its heat and unaffected by their aura. It is the single best thing that I can do, trading into the fires and profiting from them and coming out the other end a champion.
History will repeat itself again.
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