Sunday, June 06, 2010

A Trader's Guide to Courage (and the first bullish rant here in some months)

Unfortunately, I no longer remain an idiot.

Friday was not the butterfly punch I was defending for, not by the end of the session. I’ve been forced to play some defense.

Still, I’m scavenging observations, thoughts and plots and preparing for when this trampoline next springs in the upward direction; whether that comes with an up-open on Monday or we drop like hell to get things started (or ended!).

I am excited still and I remain in a manic phase. Saliva was flowing freely this weekend, as I brought out the Polyester, woven-Pavlovian, harpooned Woot Suit; saved specifically for high-seas action.

I come to you now, a rarity these days, seething. I’m not out of my head professionally, but it is always important to keep the head in mind; in such a state. I’m using this now as a device, speaking to you. A kind of social interlude, which acts as defense and works to keep myself in-line. I can rant here, peacefully and without consequence (you see I have very little readership) and get the ‘fuck-you, I'm trading it this way’ attitude rooted out of my system. So you see, you are important to me reader, just as everything with energy, in my manic state, is important to me now; for my trading survival. If you disagree with my arguments (you are correct, I’ve offered no bullish arguments yet), you might keep reading anyway. If you disagree - all the better! I need that. I need to know that someone's lunch is on the table besides my own. I hate to be in the chorus, when the chorus is gloomy, and at a time I see winning stocks resisting going down as forces conspire against them and then pop right to highs again as forces subside...if you know what I mean.

Yes, yes, yes, one has to respect the potential downside here. A must, since, well, being (an idiot right now) blind to selling forces when they begin to pick up a certain steam, well that leads to head-loss eventually. No matter just now, what I might think.

So courage aside (bloody courage!), I am forced to be more neutral; if only this moment, I don’t yet know. I am more neutral because burning feet is fine when strolling coals - but losing my head en-masse is not a fate I’ll allow myself to dare. My head stays here. As rabid and crazed as I may presently exist, I will see that my headpan continues on. Let them carry me out of here one day for not being able to hold my own fluids. They will not carry me out because I blew up in a bloody pulp of courage.

You see now why I am so trusted by clientele (ha!). They read this and can be assured, while I am apparently willing to risk their better opinions of me, as a rational and well-adjusted man, they can at least know I will die in a fantastic spasm before they’re under-performing this marketplace.

You however, are not likely my client. And that makes you the enemy as far as trading goes. Certainly, it is a big pool, it is an ocean of funds out there and the chance that your shares and mine directly cross are absolutely tiny. Still, I think of you now as an enemy, respectfully, and I want to take the other side of your trade at the most opportune time; assuming you and I are in such co-operation. Again, this is not personal, but you should know I intend to leave a trail of dead kittens when I am through with you. There is money to be had! Some of it yours, perhaps.

Let’s return to courage a moment (courage is a word a crazy man pulls when describing himself). In and of itself courage is great and I respect a trader with courage; since it is an essential ingredient to success. But I've learned the hard way I have a bit of this courage (bit in half!). That's more of a confession than anything like bragging - since in trading markets courage on it's own leads to disaster. Indeed, like jumping off tall buildings (perfectly possible these days), running across railway tracks (kid stuff, but can you justify the risk/reward?), spear fishing Great Whites (oh such fun, but a nasty hobby at times), etc. etc. etc...courage can be a killer!

Therefore, assuming one is thumbing his nose at the present, larger trend (as I am!), one cannot expect to never get knocked, but he must insist on balance, patience and respect, for a very long time on occasion - until he can see he’s no longer fighting the larger force, but only thoughtful traders like you!

Yes, I have not changed my bullish (deaf)tone. We are near the end of the quarter and there are leadership stocks showing amazing resiliency and I know how those months tend to conclude. Yes, yes, yes, there is plenty for my bull blood to boil over (I might even get to that). And look, if everyone were universally negative here, and I could measure that vs. the overall larger sucking action out there just now, well then I would be jamming short - I assure you! But that is so far from the case. I am getting warnings, nearly universal warnings to keep myself safe from such unsavory waters and from people who generally never see a good reason to sell stocks, indeed - have never sold stocks for good reasons, but now suddenly see fit to convince themselves that there are just too few positives to possibly drive the markets higher over time anymore. That somehow, the long-term just doesn't look so promising - that there is something, well, uncertain!

Yes, welcome to Planet Earth and thank you for the Mesozoic Memo Dr. Welby! We can no longer buy-and-hold simply and fall asleep for 40 years? There is a question mark now on the long term investing dynamic?

Whoa now.

I will admit, there is a tendency to shout louder and more passionately when the market is going against you - when going against the grainy good and suffering blows as a result of it. And I am shouting passionately (my l'esprit de spite, I suppose). But the market is closed just now, so I am free to shout; I am safe. It has always been this way for me. I can control it best, off-time and away from the market, and by using you to deplete it. I would even apologize for using you so, but you have come this far down the page and on your own, so it is your fault entirely! I’m simply preparing for another week of battle. I am free to say anything at all, this early and on a Sunday. Because I will run like hell if the executioner comes for me on Monday.

That's it, unfortunately. I've used what energy I have for you and haven't the energy now to categorize the bullish positives, or hit-list the livelier longs. I might get to it (ha!), but the sun shines now and even pleasantly. The negatives are ripe, as you know. The biggest market in the world is the currency market and the Euro is on a direct path towards par; this, we know so well. There are not even 100 new 52-week lows on US exchanges during the negative chop on Friday, but this should not be important. There are monster stocks (I did refer to that much) right now, coincident with a venerable plea to get yourselves under-invested, "take risk off the table," and change your sheets a little more regularly right now. The NDX, a leading index, is considerably above the Feb-lows while the SP500 and Dow look like they will jig-down below such levels, before we can gauge whether or not they might then return. I have a new CNBC friend, replacing Trish who has become very disappointing to me since returning from maternity leave, but I cannot get into any of this just now so I'll stop teasing; and point you to the under-investment corner - that's where you and all the rest of the investing universe belong now - safe safe safe. Bah!

This remains an interesting time in the market.

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