NOTHING PUTS THE MARKET IN FOCUS LIKE EMBRACING EVERY BIT OF RISK
Market tops and bottoms are tricky affairs. I've been attempting to roll along with major tops and bottoms since the late-90's. I've tried trend trading, breakout systems, fundamental trading etc. However, my greatest challenges and most substantial profits have always come from picking important tops and bottoms in the market and individual stocks. It gives me the greatest pleasure and fear, thus creating an incredible amount of focus that forces me to get better.
When I am in the process of "going through it" as I am right now (by going through it I mean attempting to pick what I think will be a significant top or bottom while experiencing a drawdown as a result of being early) I literally perform exhaustive research in an attempt to solidify my hypothesis and also to disprove my hypothesis. Nothing gets me in the research zone like wanting to be right around important turning points. As a result, my attention to research hops on board a rocket and takes me to places I haven't been before.
Perhaps that is why I enjoy trading around points like this with volatile instruments such as TZA and FAZ? It must be similar to what those who climb mountains, cliffs, or jump out of planes must feel. Of course, with this endeavor I am sitting in an office chair. However, the amount of focus and attention is a big reason adventurers do what they do.
With every successful and unsuccessful attempt I make at points like this, I become that much better. The challenge comes with the fact that with each twist and turn in the market, it adapts to my getting better and becomes more elusive. It's like a hybrid version of the Predator that Arnold Schwarzenegger killed before he was sleeping with housekeepers.
With all that said, I have found nothing in my research that is dissuading me from my positions. In fact, what I have found only creates greater confidence that I will be correct. At a maximum we are within 150 points on the Dow of consolidating, with short downside bursts for the remainder of January. That's at a maximum. The more likely scenario is a drop into February. The strength of the downside will be very informative and tell traders all they need to know about what to expect going forward. I'll play it as it comes.
Look...there hasn't been an important market top in the history of the world where the charts haven't looked promising, as they do now. There hasn't been an important top where the fundamentals weren't improving in some shape or form, as they are now. There hasn't been an important top where the bulls haven't been absolutely confident that the markets were going higher and bears have fallen silent, as they are now.
On the flip side, during late September to early October all I heard were bearish notes. Not many people expected a massive move up to occur. The charts were ugly. Europe was breaking down. Our economy was tanking. There was going to be a recession or possibly depression. Here are some of my tweets from September 24th:
I was all alone then too as I am now. There is tremendous downside in this market, only it has been masked by seasonal optimism, pretty charts and selective data comparisons. Amateur hour extends into February...research is about to be shredded. Position yourselves accordingly.
