Warning: Following my trades may be hazardous to your financial health. See Disclaimer.

Monday, March 19, 2012

Conceding Defeat

Today marked a milestone.  It's a giant failure by my bearish positions held over the course of the past 6 months, unfortunately coinciding with one of the stock market's most violent rallies.

The $BPCOMPQ index, which showed the first sell signal over the past many months, has flashed a buy signal after today's close.

Dr. Fly gave up his VXX positions today for a whopping 17% loss, and went long a few stocks.

Buyanddonthold.com withdrew its sell signal, just short of iterating a buy signal.

End of the month and end of the quarter window dressing are just around the corner.

It's over for the bears.

I am disgusted by the market and its relentless bullying on the bears.

I am disgusted by the politicians and their cronies with their election year maneuvers.

I am disgusted by the insatiable greed of the financial institutions.

I resent all the turns of events that brought about today's defeat.  The biggest culprit of all is this proprietary leading indicator that I subscribe to.

It worked miracles in forecasting trends, market tops and bottoms even during QE's .  Its inventor demonstrated his mastery of zen in obeying the indicator with total faith, even as he was being ridiculed in the forum.  But every single time, he was right IN THE END, and its followers were amazed.   Came Oct 1st, he began charging subscription fees just as I became a believer myself of his leading indicator and his style of total faith trading (euphemism for no stop loss).  Almost to the dime, he jinxed the leading indicator and jumped the shark.  The stock market and his leading indicator literally have gone orthogonal ever since. But this was the hindsight.

For the first time I was fearless in going short.  For the first time stop loss was not a consideration.  And for the first time, I got run over head-on by the market's runaway freight train with no recourse, as I modeled after the master's zen.  The most damning aspect of the proprietary leading indicator as it went orthogonal with the market was that it made me discount the long hedges and amplifies the bearish arguments, AND it made me think "tomorrow may be the doom's day" every single day that it was wrong in the past few months.

To add insult to injury, just as I was about to give up my faith in February, Dr. Fly, who had a stellar 17% YTD return, sold all longs and bought VXX and TZA.  Many bulls also turned bears in this time frame.   I was raised from the dead and continued my quest as a bear (per the leading indicator, mind you).  Instead of taking losses in SPXU and SDS, I started positions in VXX.   As aforementioned, it turned out to be a 17% disaster.

Then over 2 weeks ago, the most trustworthy $BPCOMPQ finally flashed a sell indicator, as did buyanddonthold.com.  I was once again hopeful and decided to withstand the pain a bit longer.  But these signals all got taken away today!

I will begin taking my loss 1/3 at a time.  And then I will cease to hold overnight positions for sometime to come.  The last thing I need should I find myself exiting at the top is to find myself bagholding for the bulls.  The bulls are not on firm grounds, but I am tired of fighting.  Here's the 60 minute SPY chart.

After I liberate myself, I vow I will never short the market (SPY, SPXU, SH, SDS) again --  I will short sector funds instead.  I am disgusted by such ploy as sector rotation.  It's a scam.

No comments:

Post a Comment