The problem with the market over the last 3 years now is that it has seemed to not really adhere to any 'typical' logic. I was listening to CNBC today and a guy had a really interesting note about how typically every CYCLICAL (not secular) bull market since 1900 has had at least 1 10% correction contained within it and I think it was 3 5% corrections. We haven't had any of each since the 2003 lows. I think that's why Ralph Alcomporah (named spelled wrong I know) and many others like him have been calling for this correction that would set up this major buy.
I think though that many thought it would happen right out of the gate in mid Jan going into the 40 week cyclical low in Feb. But that didn't happen. That's really what my position has been based on. Poker is correct when he says that you don't get major rallies off of mid running oscillators. You really need a washout event or capitulation event to start rallies. The two big ones last year were April and Oct.
So, today's action spoke volumes I think with the DOW rising and the Nasdaq reversing pretty hard. But the DOW Transports got crushed today too. That's not a bull market.
So, that kiss of death trade proved accurate it seems as caught by Poker. Good call.
I posted my sell on my Q calls (2900 at .95) when I saw the Nas stop at 2322 and the Q's reverse off $41.90 while at the same time the DOW climbing. It was a very obvious sign that we are going to be getting this correction sometime soon. I could be wrong, but so far this year hasn't played out as planned. We have too many tight fisted sellers that have yet to be spooked. And markets don't go up without weak hands being scared away.
The Nasdaq always leads the market and I know the clammoring about how this year is going to be big cap's year because of valuations. But when investors feel like it's safe to risk money, the Nasdaq casino is the place the big bets are put because money wants to make big money and even with undervalued DOW stocks, there's only a limit to their potential because of their size and floats.
One thing I've learned over the years is that it's NEVER DIFFERENT THIS TIME as is ALWAYS claimed. It's always the same. It just takes longer sometimes to play out. I think those over leveraged in real estate are going to learn that this time it's not different either. I feel bad for the suckers buying gold too. Gold has always been a loser investment except for maybe a few times in history that were very specific events. I can't believe how many people want to sell me gold. If it was such a great investment, you wouldn't need to push it so hard.
So, for now I'm all in cash. The next option cycle starts next month and I will post an explanation of spreads that I think many on here should follow and stop the gambling trading. There's a reason why many lose money actively trading and it's usually because the odds are not on your side. There are too many pros on the other side of your trades that eventually will take your money. Spread trading takes that away and you become the minority trader who has the odds on your side.
I have to go to the hospital tonight for a few hours and I'll be back later tonight where I'll post probably late tonight how it works and then I'll start posting my trades. The goal will be a slow 4 to 8% or so a month on every option cycle. By doubling your account every year, the power of compound interest will quickly take over and you'll see that within 3 to 5 years, a small $10k or so adds up very quickly into the hundreds of thousands. That's what I did and how I did it. Once you get there, you realize that 5% or so a month becomes a full time income if you want that to be. The daytrading is just for fun. Although I got impatient today and lost $450 in the YMs. You gotta pay the rent sometimes! But at least it's with the house's money!
See you all later!
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