Because of expecting the markets to go down, I sold a lot of stock shares and I am very closely watching the markets to asses if the y will go down from here or up instead. Here is chart of S&P500 covering the last 30 days. I used the so called candles; each represents index movement per single day. White candle means the index closed that day up and red means down. The thin lines sticking from the candles mean that the price moved to that point (up or down), but then retracted, to the fat portion of the candle. I made oblong teal color (random color - no meaning) oblong circle around one of the white candles (on July 3). This was potentially very important day. Why? Because there is only puny tail on top of this candle. This kind of tells us that the market was not sure if it will go up or down the next day. It went down the next 2 days (red candles) and I started thinking that the so called blow off top I was expecting could be starting. Blow-off top means MAJOR! reversal in direction. But the two red candles have thin tails at the bottom, meaning the the market kept recovering and not closing at the lows of the day. SO - NO Blow -off.... And I kept being fully invested and kept watching the action. On July 10 the market look like crashing, but recovered very serious way = very long tail on the bottom. This was signalling upcoming reversal and potential for the markets to continue past the high point seen on 3rd of June. If one follows the news, the next few days would be understood: days of indecision. Many of the candles have tails at both ends. Then on July 16th I did not liked the white candle; the tail was longer on the top, signalling potential reversal. I got ready and when in the early morning the futures were painted red, I sold in the morning of July 17. I wrote about the red and white candles couple days ago; basically the market is not sure what to do. Everybody is saying that the markets must go down, plane was shot down, etc. On the other hand people started getting into stocks (too late again) in big way, Yelen saying everything will be honky dory, etc. Anyway - why I put this chart there and wrote down here my thoughts? Because so far today, the S&P500 reached the high from July 3rd and then started going down. This could be the reversal I am hoping for. I should make it clear : the reversal will happen, and the more it is delayed, the more it will be brutal. On the other hand, I do not see the future and could be totally wrong. But I always trust myself in my areas of competence, and therefore to play it safe, I am sitting in cash (if it could be called such, because we still have a lot of money in stocks, including LNG, INO, and others - total of a $xx0,000. I mention the LNG and INO because both of them are like that pink bunny. But I decided today to buy some LDG puts to protect the downside - as I wrote, the tax hit would be high if we sell the shares. I did not bothered to check my spelling and diction. sorry.
Posted on: Tue, 22 Jul 2014 19:54:09 +0000
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