THE BEAST IS RUNNING AWAY FROM YOU FOR A REASON
I added some SPXU to the mix today. I'm done with adding short exposure for the time being.
I don't usually add into declines like today. However, these aren't usual circumstances. Therefore, I am acting in unusual ways in order adapt.
I wanted to elaborate on my Quick Thoughts article from this morning. I have an illustration below that will help demonstrate my thinking.
In short, there were too many eager sellers (myself included) waiting for 1220-1240 as a point to either lighten up longs or get short. The market, in its infinite wisdom, knows this. It also knows it doesn't have the power to move up through that level and punish investors so that it doesn't make itself into easy prey.
So what does it do? It runs away. It runs as fast as it can to the downside. It doesn't give sellers a chance to get in at anything resembling advantageous pricing.
That kind of running shows the markets hand. It tells you, as an investor, that the market finds the downside a bit too valuable to give away cheaply. It's giving you long side exposure as cheap as you want for a reason here. It's not because it loves you either.
I wouldn't be adding if I didn't think the downside was significant...even from here.
click on chart to enlarge
SPY
