This morning I wandered down to the office like I do many days, at around 8:30am. After all, I AM TRYING to be retired and I spent my life getting up for the stock market openings at 6:30am in this time zone. It’s nice to take my time getting out of bed, having a decaf or two, checking the news, having a relaxing breakfast and easing into my day.
When I arrived at my desk this morning I noticed something with respect to the 38 futures markets that I have on one of my screens. Of the 38 items, 31 were down over -1% for the day! These markets include stocks, bond, metals, energy, softs, non-US currencies, meats and grains. The NASDAQ NQ futures are at June lows, Crude Oil is down over -6.2%, Unleaded Gas is down over -6.1, Platinum is down -4.8%, and Lumber is down over -4.7%! These are absurd price movements historically, but the reality is that is what was on my screen when I sat down to pen this “Thoughts” post.
It got me thinking about what I call balance in trading and reacting to the markets, rather than trying to predict what the markets will do. In this instance today that I’m observing, the markets seems to be saying, “We are panicking about what might be a doozy of a a bad economic period.” Markets are spooked get into prolonged down trends and there’s not a lot of light coming from the end of the tunnel. I try to be just an “Observer” and watch what is going on rather than getting sucked into the emotion of volatile markets. I have a plan and I run the plan.
Most of you already know that I lean towards the trend following side of trading strategies. Over various markets and various time periods, I measure the current trend today and simply go with it. After all the time I spent researching various strategies that I would use, I now have 9 strategies, and looking to add more with additional automation. After all that work spanning years, and all the creativity that I could bring to the situation, why would I question the trend being down right now? It just doesn’t make any sense. I need to keep my mental processes balanced and execute my trading plan flawlessly. There’s little room for second-guessing or angst.
The hedging page at enjoytheride.world (https://enjoytherideworld.odoo.com/hedging) talks you through my own hedging strategy designed for my portfolio, NOT YOURS. My Sector ETF timing strategy kicked out the last two positions this morning, so I am now at 0% long that strategy. I can’t find any upside momentum ETFs in the screens. I’m short cryptos and NQ futures (chart above) in my short-term (9-day) timing strategies. I am getting zero trades on a very short-term counter-trend stock index strategies, because stock indexes are showing no signs of bouncing in the up direction.
In short, the vast majority of everything on all my screens is pretty much heading down right now. Tomorrow may indeed bring something different, but for now I simply go with it and listen to the markets telling me that I should be short the down moves. Soon enough these same markets will find their footing and switch direction and I’ll go long when that happens. In the meanwhile, I watch the economy start to melt down and try to enjoy the ride.
Thanks for the kind words, Charles!
The best advice comes from market legends. Pay attention to Tom Basso. I am a portfolio manager with $50mm under management. He knows of what he speak, folks. Watch our interview next week.