Tuesday, March 24, 2009

5 Minute Rule (still long and wrong)

Don't kid yourself, boring is good.

On the heels of yesterday's vertical lathering, whereby Marsyas shorts hung in horror as skin peeled-back from virtually every resistance and wave-count level known to bears, today is pretty much a sleeper.

If I were holding short, only a gap-lower and continued drubbing would begin to suggest to me that I am in a safe place. Anything close to a healthy consolidation, or further market gains (hell forbid) would seal my bitter mood.

But today is about as boring as they come lately, and that is (still!) bullish behavior.

Fortunately for me, as I pointed out yesterday I am an idiot. Anyone in their right mind would not be long this market. And the higher this rises in the face of such stupid actions employed by such stupid officials - well, the stupider I must be to hang-in long.

Fortunately (for us fools), the stock market is not so possessed by reason. It is quite a different organism; quite inhuman. Isn't is questionable then that we should look at it with such a subjective, human point of view? But we are quite like that. The stock market is illogical, unreasonable even (bulls will share in this view), but we want to apply our own logic, our own subjective nature to this grotesque alien organism.

According to most of what I am reading now, it is unreasonable for us to rise further here. We haven't hit bottom yet; they're just throwing money at the problem; the FDIC is now the bad bank; MACD and NYMO oscillators are at extreme overbought levels. I could go on and on - my daily email from Seeking Alpha is just loaded with negative articles today.

So stupid as I am, I am very careful not to short a market where the majority of participants are doubtful or all-out bearish. It is not common that such a majority is bearish and historically it is not a good time to be short. However, when this many are bearish AND the market is rising, well then fools like me long to be wrong.

I can't guarantee I will be long tomorrow, so don't take this text to mean I am anything committed. However I still see reasons to be long and I don't see the point of fighting short simply because the market is so wrong (again, the majority of my bullish bent remains the abundance of strong charts out there, while momentum and sentiment play key roles).

Quick notes: I sold out of that rag-long GS >114. I would prefer to attempt to ride this to the 200-day MA, above 117, but GS had risen 54% in just 11 days and so I am risking missing a further rise while I let it cool a bit; looking for a new entry if/when it sets up.
I also added TWM earlier as a partial hedge. The Russell 2k is the weakest major index on the session, hence I am using that one for protection. If things keep firm, I will let go some or all the the hedge - if things deteriorate, I will scale back on the longs instead.

Total Position: currently 2.86-to-1 net long, (79% invested)

Currently Long (according to size): RJI, ARST, PMCS, WNR, MYGN, IOC, SNDA, STAR, MNRO, UGP

Currently Short (according to size): TWM-long (Russell-2k Dbl-short), AXA, ELOS
(Note: inverse-ETF TWM represents being dbl-short Russell-2000)

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