As the US stock market corrects…
US indexes are largely intact, and that includes NDX, even as everybody hates Tech now. SOX is intact too, but as we’ve noted for weeks in NFTRH, was vulnerable to correction of its own overbought excesses (especially by the sexiest Semi leaders like NVDA and AMD). SPX is nose diving for a test of its SMA 200 and so is the Dow, which poked through the SMA 200 but so far maintains a higher low.
The problem comes in when you consider areas that are well along in bear markets, like Cathy ‘no longer sporting’ Wood and the Cloud/SaaS/Remote Tools stuff as everyone – and I mean all those fund managers momo’ing and FOMO’ing the cyclical/reflationary/inflation stuff – chases what is hot today at the expense of what was hot yesterday (well, a lot of yesterdays ago).
The market is in motion and I just love that. What’s more, certain legs are getting kicked out from under the market’s table, like the small caps below. Am I making money at the moment? Ah, no. Not at the moment. But I am not losing much of it either. Just twittling the portfolios to the best of my ability, balancing and looking ahead.
One thing I did do today was short small caps (via TZA) as IWM was pumping up to the breakdown point. Due to a personal psychological vulnerability as an active bear I try to only short setups. Today presented a setup on the early market rally. Per the NFTRH Trade Log…
So far, so good to the tune of an 11% gain in-day. But more importantly, and regardless of what it does from here on (as with two other short positions I have), it gives me peace of mind, along with those high cash percentages.
The goal during market upsets is always to feel like a predator, not a victim. Oh, and also to not be caught listening to automatic thinkers or promoters of any given ideology or set-in-stone plan. The goal is to be awake and thinking for yourself. Other than that I have no strong opinions on the matter.
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