Thursday, February 16, 2012

Still in an uptrend

The market did not close under the TA so the uptrend continues. All the recent volatility could be considered a correction and while the market is overbought, it can get even more overbought but chances for a big correction remains. Which brings me to my next subject, somebody posted on the comment section the fact that I have been wrong in the last few weeks in calling a top. And he is right, I thought we would be in a deeper correction at this point. However, no one can consistently call tops and bottoms, if I was able to do that my name would be God. What I do try to achieve is being mostly right, as in more than 50% right so I can make money in the markets. I can read technical indicators, count waves, and provide information on where the trend is and based on that enter favorable trades. As a trader, it is my responsibility (to my hard earned money) to have the equivalent of "situational awareness". I need to know where the trend is going and what are my odds should I enter a trade based on technical indicators. So while I've been calling for a top in the past 3-4 weeks, the market has been bullish per my Trend Average indicator to the left which clearly tells me this trend has been in force since 12/21/2011. I could have followed the trend and not trade against it but it is my belief that when odds favor a reversal one has to be alert and try to pre-empt the reversal. So using the tools I have and the skill I've developed over years of constantly looking at this stuff, I entered trades with a bearish bias. And the results are posted right here:


Most of the money I've made this year (excluding the Santa Rally) has been ironically against the bullish trend by betting bearish. And the point I am trying to make is that it is up to the individual to make money. The tools needed to make money are freely available but you have to have some skills or at least pay very close attention to do well. One can't expect me or anybody else to hand over the tops and the bottoms, the stock market just doesn't work that way. If it was that easy 90% of retail traders would be making money instead of losing it. I took time to write about this today because I think newer investors/traders need to be aware of the odds and whether they are willing to take the risk. And the person who posted just reminded me of how frustrating it can be when things don't go your way.

Anyhow, I cashed out on my VIX position early morning for a nice profit and raised stops to break even on my shorts which eventually got stopped out at 1353. However, I re-shorted at 1355 and should we gap up tomorrow I will be buying back my VIX position at a much lower price than I paid couple of days ago. All trades are on the portfolio page.

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