The trades were near breakeven today on the One Million MNS 105 at -0.0625% and down -$125 on the $250K Portfolio. Gold was the highlight with a gain of +0.5% or +5K in the One Million MNS 105 in the portfolio on the day while the sum of the other strategies put us back near breakeven.
The Stock Index Portfolio 18 hypothetical results were +$1,280 per E-mini and +$126 per Micro. It was a small bounce and we continue to look for a rebound as well as continued research and observation of the market environment post-election.
The market continues to adjust to the euphoric rally last week. It is due for a pullback but the dip buying still comes in quickly. The two best buy signals lately for the stock indexes are:
1.) Go long at the close and exit at the open.
2.) Wait for some fast and steep stop running price action intra-day and work to catch the reversal.
The inability to capture more short signals over the last few years is unusual. In a bull market, there can be some routine shorts. In a bear market, there can be some routine longs. This is based on short term day trading. We have had some profitable shorts this year but the depth and speed of recovery are so quick. The mindset that the market is always supposed to go up remains popular and backed by extreme liquidity even when markets are overvalued and overbought.
Today was the type of day where a gradual pullback into the close after a multi-day runup and very weak market internals would have been natural. The Nasdaq dip buyers jumped in at 1:01 pm EST. The Nasdaq and S&P still closed down slightly (but well off the lows) while the Russell 2000 futures were down more than -1.7%. The VIX also closed down-1.7% in the 14.71 handle. 30 Year Bonds moved lower by -1% as long term yields remain higher. The signals are mixed.
The market is very passive and euphoric. It is easy to assume the market will peacefully move higher and I find myself considering long only strategies. The market has also been contrary and is also susceptible to some downside shocks. We continue to stay with our approach since we do have strategies that can take advantage of either market environment. You might ask why the market would sell off. We never know in advance, and it is usually a surprise.
The tape did have some more subtle selling in it today so I anticipate some potential selling overnight since the intra-day selling was pre-empted and the market did not pullback as much as it need to. One possible scenario is a gap down and continuation tomorrow with a potential V-Reversal.
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