Friday, March 8, 2013

Bulls claim the week

It's never funny to lose money but this is exactly what happened this week. After a "sell" signal that looked pretty convincing bears couldn't not move SPX further down allowing bulls to re-claim the trend. 

The whip-saw was pretty bad because I waited for bulls to close above the most recent high (1,530) to cover my shorts. The new "buy" signal was actually not that bad, around 1,515 for a 20 points whip-saw but I didn't believe it and waited for a few more days. 

This is not the first and certainly not the last whip-saw I am going to encounter. Now I need to move on  and reinvest on the long side. It's easier saying this than doing it since after such a whip-saw and market advancing 200 points since the last bottom I am not that confident that the rally will continue. According to TA the rally is going to continue but at the emotional level I find it hard to accept this fact. Emotions are always bad when playing the stock market but what can we do, they are part of us and we cannot get rid of them just by snapping the fingers. Last time something similar happened, in 2010, I hardly had the courage to re-invest on the long side and lost a big chunk of the new rally. Eventually market corrected bellow the level I exited but on short term that was a lost opportunity. 

What is curious about this rally is that the dollar also rallied since the beginning of February. A strong dollar is usually bad for the market but exactly the opposite happened this time.

In conclusion, I am out of the market right now but not long yet despite the fact that all the charts are screaming bullishness. I may go long a little bit but most likely I am going to be a spectator for a while and re-invest on the long side after a real correction.

All the best!


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