The Long And Short of It

Since mid-September, I have been in favor of the continued market momentum upwards as laid out in my posts. Yes I was looking for eventual pause that I did get but for a very brief period of time. And we were back to races after that. As laid out in posts after that, I decided to honor the momentum and gave up on looking for a bigger pause at least for the time being.  While I cannot predict the daily market movements by any stretch, I have been clearly favoring the upside for the time being.

Ergo, the long and short of my current portfolio is I am more long than I am short.

The Path of Maximum Frustration

The market does in fact seem to be following a certain kind of script. Trouble is many traders are still using the old playbooks as Scott eloquently points out in his post. Long time readers know that my own consensus studies are not just based on the popcorn investor’s sentiment but also take into account the behavior of mommy’s basement trader. I will continue to provide more info on this in later posts, but in general, I get success in my trades when I am able to accurately guess and play upon the path of maximum frustration for the retail traders.

So right now, my guess on the path of maximum frustration is that the markets should continue to churn higher. It should further shake off the retail traders in the first week of October. This should be about the same time when relevant indicators drag into considerably overbought territory. When we get our pause in early October, it is quite likely that it would be viewed as a “healthy” pause. Me, I will completely scale out of most of my longs at that point to regroup and study again. So this has been my game plan and now you know it. Let’s see how this baby plays out.

Parting Thought

The macros look ugly. I fully agree with viewpoints including Dr. Fly’s about concerns on Euro trash, Yen threats and current valuation of tech stocks. I am trying to figure out what is the time frame when the negative effects from these factors come into full play. In the absence of a major catalyst or discovery of a new shoe dropping, the momentum takes priority over short term. Momentum is upwards.

StocksRider

If you enjoy the content at iBankCoin, please follow us on Twitter