Going long was the wrong bet. Heading into the close,
all indexes are at the lows of the day. DJIA -220 points.
SPX -1.3%. Nasdaq -1.7%. VT (global
market) -1.2%.
I plan to close RYRSX (2x Russell 2000) end
of day for a -2.8% hit. The Russell 2000, which went straight up
following Trump's election, has given up all of its out-performance and then
some. The YTD return on small caps is now 0%. The energy sector,
which also rallied hard post-election, is now off -20% since early
January.
Investors accustomed to buying dips may try to bounce the numbers
in the final minutes, but what I'm seeing is a clear breakdown in appetite for
risk. I don't think it's a buying opportunity.
More like -3.6%.
ReplyDeleteThanks for the heads up.
ReplyDeleteThe 'bounce' in global indexes today (especially in emerging markets, up +1%), is probably just enough to panic traders who shorted Thursday's brutal close...before resuming a downtrend. I would even assign 1-in-3 odds of another 'V' move. Dip-buying has frustrated bears so many times over the past eight years that it's difficult to bet against it. I'm actually tempted to open a position in the total stock market (VT/ VTWSX)-> currently up an anemic +0.25%.
ReplyDeleteFrom a personal perspective, it's difficult to play the short side. For one thing, it requires opening positions ahead of a downside move, as corrections tend to be fast and furious. If I wait for the beginning of a decline, it's already too late. The 'waiting' can also be painful, which is probably playing out for many shorts today.
The prudent move often comes down to doing nothing.
Unfortunately, SPWR did not continue its ascent and instead dropped down to its previous support level. I have a feeling that this support will be broken tomorrow. Maybe after that, when the traders panic, it will resume its uptrend. But for now its chart does not look good, and so I just sold at $8.81 the trading shares I picked up at $9.24. Will re-enter when the cart improves.
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