Trypophobia - Fear of Holes Making Trading Difficult
n. An unusually strong fear of, or aversion to, holes, particularly tiny holes that appear clustered together.
All the news over the weekend was bad. More and more rumblings out of Germany make an Italian debt calzone explosion all the more likely. When the sovereign debt was thrown at a banking collapse it was the last line of defense. Unless you think there is another buyer out there?
With that in mind markets are looking set for a terrible open tomorrow in the US. European markets took big hits today and many banks had their stocks halted. In short, things are a dangerous mess.
Early last week I wrote that there was the best environment for long positions in weeks starting after Monday's big rally. It held a few days but my line in the sand number of S&P 500 at 1180 was violated on Friday. No reason to try and be aggressive here at all, there are holes everywhere. As a really loss averse type trader I have trypophobia, I fear holes. I fear waking up and being unhappily surprised in the morning. This makes me quite boring, but it also means I don't get blown up. I am very comfortable with how my long term account is set up, even in this market. My trading account has been cash for weeks, and I don't know when that may change. Maybe after a huge wash out that never seems to happen.
Why not go short? Shorting is dangerous, even in a downtrend. Two great write ups on this can be seen here:
Shorting is a Blood Sport via The Reformed Broker
Why Shorting is Difficult: A Lesson From 2008 via Robert Sinn
Big money will be back in the game this week. The FED meets in a few weeks. I imagine the rumor mill will be running full time between now and then. Only the very nimble daytraders can carve this market up right now, for the rest it's a hard spot.
Last time I am going to mention this but mutual fund REDEMPTIONS are going to be a major issue going forward. More and more money is leaving the markets and I cannot blame it for walking. The FED still has yet to grip that many have been cleaned out 2-4 times in a decade. Give them 0.01% return in a checking account or money market and they see that as solid. Interest rate games are for books and fairy tales, not this world at this point.
Twitter front page tonight:
Have a good night.