From the Trading Desk

Weekend Update: Resilient Market Continues To Frustrate Bears

When I went to bed on Thursday evening I was slightly disappointed thinking my hedges might miss as the futures were at their lows of the session. By the time the market opened my hedges filled and the market started to sell off which made me feel a little better. Obviously, however, I would rather see some green as I am heavily long. Well, following a few stop runs for profits on most of the positions, the market started to find a floor and marched higher into the close with the Nassy and Nassy 100 closing at the HOD and the DJIA and SPX closing near the highs.

There was a clear laggard on the session and that was the Russell 2000. This lagging, along with the recent hedge signals I have added in my portfolios, and the extremely bullish sentiment is definitely enough reasons to speculate that this market wants to move lower in the short-term. That being said, how many times have I said that the past month? Yet we continue to just keep on marching higher which is why I continue to give precedence to new long positions when they trigger actionable high potential reward to low inherent risk signals.

At the same time, I am definitely going to continue to take my hedge signals when I receive them and will happily cut my losses when they fail. Why will I be happy? I don’t mind losing a little bit of money to make a lot of money in my other long positions that are outperforming this overall market uptrend. When the market does finally decide to sell off–by the time it is clear–I think it might be too risky to take new short positions or hedges so I will continue to take those signals and cut my losses until they work. When they work, they work. The market has been a very extreme beast the past few years, up and down.

To sum it up. I feel the tape is heavy and that sentiment is completely out of whack which should lead to lower prices in the short term. Despite this, I am going to continue to take new long signals until they stop working and producing solid returns. I am also going to continue to take hedges when they trigger and will simply cut my losses until the market finally does inevitably trend lower. If the market starts to trend lower, my hedges will produce solid gains and my long positions will either buck the downtrend or will hit their constantly rising profit/sell stops.

That is my game plan going into the new trading week. Have a great rest of your weekend and I look forward to seeing everyone in the chat room during the pre market on Monday. Great luck this upcoming trading week. Trade intelligent. Aloha.

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