Monday, September 19, 2011

Bloodsport Psychology (battle for investment survival)

While I didn't exactly turn bearish today, I did get religion.

Generally, when a market breaks to the upside, coincident to a majority of participants being skeptical, if not downright bearish (left-out in the cold in either case), a market en route to considerably higher prices will not let folks into the new, exclusive club so cheaply (or to cover shorts at lower levels).

I don't want to make too much out of this, but I was not happy for you last night, knowing you were going to get a chance to buy the market today at more more comfortable prices. It's nothing personal. I've learned to stop grabbing for shares when those left behind can suddenly get them easily (assuming they want them).

My buy-only spirit, in a tricky market like this, is dependent on you not finding an easy entry. I don't trust bargains, I don't like reasonable values and I sleep better at night after paying more for stocks. I can take a really deep nap in fact, to know you're not getting shares so easily.

Today's session was not like the gap-downs last week (nor the week before, snort!). YOU DIDN'T WANT TO BUY those gaps, right? This weekend though, even while you still contend the world to be a financial shithole, you felt genuinely desperate (pros especially) to get a piece of this charging market. You were keen to buy the dip, this time around.

Further troubling (besides the fact that treasuries did not let-up their gains, coincident to stocks recovering; very important), you got giddy rather quickly when those longs you stepped into at lower prices today were coming-on again and charging (with you on board this time). My favorite CNBC head (super secret SW), was essentially cheerleading with an hour to go in the day...coincident to the highest TICK reading I can see (since before the origin of this bounce in August, at least).

This is the religion I'm talking about. I'm actually quite spiritual when it comes to the miracle of how some in this game can lose money so flawlessly. Mind you, in my business I have to compete against real machines. Machines which get only-better at this game vs. me. As I am not going to win that match (not in the long run, certainly), I have to take cues from the humans. The best edge remaining for the likes of me.

I'm close to flat now (after churning TWM incessantly today and aided by the comeback in individual position prices). In this regard (not counting surprise individual blow-ups which have a way of arriving very soon after one insults his peers), I've locked-in for now the post-speech gains you wanted no part of (that tawdry evening of September 8th, for the record). And I intend to act more like a coward until you are sufficiently punished once again (yes yes, nothing personal).

If you want to win at blood sports, or the market in this case, every once in a while it is better to let the other guy make the money.

Your turn to shine.

As for today, I hedged things off and began unloading names at the same time. I may change my mind, but I don't expect to be especially aggressive again before late Wednesday; further if I don't have a decent read on things.


Follow @Centrifugal to fade trades in real time (don't get mad, get even!)

Current Total Position: Equity accounts are 1.21-1 net-long, 62% invested (down from 4.49-1 net-long into the weekend; 6.8-1 net-long Thursday)

Current Longs (according to size): LVS (11.8%), LO (10.4%); UAN (7.6%); NUS (12.2%), SIMO (4.9%)

Currently Short: Russell 2000 index via TWM-long (20.1%)
...due to relative beta vs. current longs, weighing SDS at 1.75 x's (not 2x's) in the net-long calculation.

Futures: Out remaining 5% tonight, Dec Russell 2000 mini, 691.55 ave (entered 10% late today, 704.10)

...super secret sw

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