OK powering ahead and all the Bulls are patting themselves on the back. Don't get to smug just yet Buddy - when complacency sets in and you think you can do no wrong - that is the time to question your thought process.
I have to admit this relentless push upwards has taken the wind out of my sails - as well as cut into my trading stake, but I've been taught an important lesson. Trade the market NOT the economic reality. The market moves on its own steam and is its own beast...
The economic reality is things ARE NOT improving, this market WILL tank in the not too distant future when sentiment darkens and more and more people experience the recession/depression. Sentiment is a key driver of markets and at this point in time people still harbour memories of stocks climbing 20/30% a year and money being made by simply buying and holding.a stock. How quickly they forget the tumultuous drop of October 2008. This to my mind is a warning of what is still to come... be careful out there I believe a topping process is IN PROGRESS at this stage.....volatility is bound to pick up in the next couple of months and when downside momentum gathers steam it will be a frightening sight.
Personally I will be hunkering down reducing shorts and waiting for the topping process to play out over the next couple of weeks. Once I take note of momentum switch to the downside I will go aggressively short - although take note having a solid stomache for shorting is a prerequisite - I learn t this lesson in Oct 2008 where 5% up days on a stock tanking is common place. IF Oct 2008 was a 1 and we are heading for a 3 wave down once this 2 up wave has completed we could see volatility which makes 1 look tame, so be warned.
So for now sitting on my hands and trying to survive with current shorts in hand. Inter-market divergences are starting to happen where new highs are not being confirmed by all indices - a sign of exhaustion. Rolling over is not a synchronous process but a game of dominoes as all eventually topple....
Good trading
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