What to Make of the Market Here

I think I covered a lot of this ground the other day and maybe now it is playing out. There is tremendous psychic value in preparing mentally for a decline when odds of one are pretty good and after a 40% rally. The green shoots sentiment was bubbling up pretty good there for a while. I thought that excitement was overdone, and if the market goes down to 700 on the SPX then I imagine that the fear (or whatever other feeling it might create) will be overdone as it was a few months ago, in my opinion.

Not to be a wise guy, but the US financial system and ordinary way of life was perceived to be in serious jeopardy. We have all sorts of problems the magnitude of which are quite bad, and if you think of policy in terms of either speeding up a fix or hindering a fix we might all lean toward hindering right now, but there is no need to stick a fork in the US -- even if the SPX does break the March low before this is over.

I will continue to say that the better way out for most portfolios will be with more foreign exposure. The US probably creates a drag for a lot of countries, yes, but it will not cause all countries to grind to a halt.

At this point, down a ton from the peak and churning around for a while now, I think it makes sense to still have some defense on and also start to think about adding to themes you believe will be important over the course of several years. I've got a couple of things mostly figured for the next two or three purchases when the time comes, have cash built up (a little less than I did earlier), and now a full starter position in SDS (recall I added some a couple of weeks ago).

There is one reader who keeps posting asking what I'm going to do now that we are below the 200 DMA again. He also asked what I would do before it went below. A few things: First, I will not front-run anything I might do for clients in a blog post. Second, we are not handing out fish here - do your own work. Third, I just added some SDS a couple of weeks ago.

No one should copy anyone. This means you should not copy me. I don't have all the answers. I have the framework for a strategy that I have been working with for a while now and while you can look at my quarter-end videos to get a sense of how it has gone, do you really think you are helping yourself if you copy someone else in the middle of the event?

That is just not what my writing is about. For the rest of you, thanks for indulging me with that.

Comments

[Robert Mart...:]

Roger: You are right: It's stupid to copy someone else's trading strategy "in the middle of an event." The time delay caused by communication destroys too much alpha. When I follow others, it's for strategy, not tactical trades.
Thanks for your post.

Jul 10 08:30 AM

[Pauly B:]

I agree, the more I follow someone it often ends up not being right.


I now just follow the money, or in direct terms I follow support and resistance, what the candles look like, and try to figure out where buyers and sellers are.

Jul 10 08:52 AM

[enigmaman:]

No matter what the so called experts say , the bottom line market always boils down to these three simple scenarios. Are your ready " The market will go up, go down or go sideways" thats the three choices we have to select from, you can chop it, dice it, put it under a microscope, read tea leaves, it really doesnt matter because nobody really knows what the future brings, its all a best guess, cross your fingers and hope for the best. My simple thought is this- We are headed into uncharted territory, the information/news we are receiving is un-reliable, gov spending is untenable, people are hurting and very very frightened because there is no place for them to hide from what they see heading there way, Im waiting it out, a bench warmer because there are no do overs.

Jul 10 09:50 AM

[kagame:]

stop using ultras! get in the 1x short on margin instead. good grief people.

Jul 12 04:08 PM