Bears Getting Killed

by Olivier on October 27, 2011

Easy headline choice for tonight’s post. The markets gapped up and then basically kept going up all day. Now comes the tough part of the analysis. This market has simply been way stronger than I had expected. Whenever that happens it is time for me to pause and reflect. It is time to reassess the situation and ask myself if I am too bearish or put another way if my bearish bias is the wrong way to approach the current market.

There is no right or wrong answer in my opinion. The markets have been extremely tough to read and plenty of seasoned traders have been staying aside for the various reasons I’ve talked about in the previous months. Another thing one has to keep in mind is, that being a trader means you will encounter hot streaks and cold streaks.

To make a long story short, the market’s strength is too strong to ignore. It certainly doesn’t make sense to fight this market. This could keep moving much higher than most people think. On the other hand we could still face a situation where the market is trying to lure back in as many traders as possible before it turns down again. There is simply no way to tell what will ultimately happen.

So you might ask: What exactly is your point? How do we position ourselves? My answer would be: My job is to constantly reassess the current technical situation. Am I being objective? Am I nimble enough? Do I adapt accordingly? Basically this post is not trying to give any answers regarding positions. I’m just writing about my inner dialogue as a trader.

Conclusion: My job is to listen to the markets and keep an open mind. My job is also to check if I do so objectively or if I have a bias that is negatively impacting my trading. Then I need to get rid of my opinions, put my ego aside and adapt to the new situation. No excuses. For the time being I will keep trading smaller positions than usual without publishing them. If you follow my public list and monitor the component changes and the annotations it should be pretty obvious what kind of sectors I like and which stocks I am focusing on.

Administrative note: My current hosting plan needs to be upgraded. The change will most likely take place Sunday night. According to my hosting company the website could be down for up to 6 hours. Sorry for the inconvenience.

Experienced traders control risk, inexperienced traders chase gains. – Alan Farley

My public list with all my charts can be viewed here:

Buenas noches!

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