Bear With Me

(Note to my readers and purchasers of my book - - Amazon is finally letting you review it! So if you've got it - - or if you just want to pretend you do and want to do poor ol' Tim a favor - post a review! It's free, it's fun, and you'll feel good about yourself!)

This week was awesome. An absolute delight (well, kind of - more on that in a moment). This is the kind of week we bears love. The beauty of falls is how quickly they happen. The fraudulent bulls (redundant, eh?) have been skittering around talking about a "melt up" in the market. What utter crap.

I checked my records, and I've marked with an arrow the day that our Australian friend (well, at least he wanted me to think so - - I doubt even Aussies say "mate" every third word) left his wimpy voicemail deriding me for my blog. You remember him, right? The fellow who told me his girlfriend thought I was dorky looking? (And I didn't even know right hands could talk!) Here's what the market has done since he left his message:


There is divine justice in that. When the bulls become so cocksure as to take their valuable time leaving hateful voicemails (anonymous, naturally). In his clumsy English, he muttered something about a blog he likes where the permabull was "absolutely brilliant." Yeah, well. There ya go. I hope you loaded up on S&P calls they day you left me your voicemail, you complete twit.

The mainstream headlines show how biased the world is against us. Just check out this headline - "worst" week. Come on! It was the BEST week! That's like saying a rainy day is "bad" weather and a hot, sunny day is "beautiful."

Ya know what? I happen to love rainy days. And I hate hot sunny days. So let's stick to the facts, shall we? If the day is sunny, it's sunny. Not nice. And if the market is down, it's down. There's nothing "worst" about it. I am personally thrilled to pieces.


I haven't done this for a while, but here are all my positions. The ones in bold are options. The ones not bold are straight equity. Every one of them is a put or a short with two exceptions - Bowater is a long, and Sears Holding is a call. (And, huzzah, Sears managed to go up, even today!)


OK, now here's where I beat myself up and tell you what a complete idiot I am. One of my four golden rules of trading is Never Do an Ad Hoc Close. Now, what does that mean? Simple. A position is closed if it is stopped out or if it reaches a pre-determined target price. If the position is going my way, lovely - just tighten up the stop.

What I don't permit (theoretically) is on-the-fly position closings. But, on Tuesday morning, half an hour into the trading day, that is precisely what I did. The table below shows the profits I missed. The sum on the left is the profits I missed just today. And the sum on the right is what I missed since Tuesday. That's right - in just over three trading days, almost $300,000 in shoulda-been profits was missed out. Yes, ladies and gentlemen, I am a fool.


Enough self-flagellation. I had a good week otherwise. (Even though I'm still an idiot.) I have one chart here that provides a good case for a bullish bounce on Monday. Here's the S&P 500. It's hitting a major Fib level. And it's hitting the topside of that former resistance line. And the Chinese freak-out might take a break. Now, I have a buttload of Russell puts right now, so I don't want a bounce. But it could happen.


Most of the index graphs I have from here on point to plenty more room for declines. I'm not going to provide much in the way of stock charts today. I'm really charted out from this week. You should spend your time buying my book and reading it, don't you think? Anyway........

Here's the NASDAQ Composite. Plenty of room left on the downside of this channel. Man, I can't believe I dumped those $MSH puts. OK, OK, I'll stop.


A longer view of the $COMPQ shows just how sick this miserable index is.


The $NDX is somewhat similar.


And here's the $NDX on the long view (if any of you are n00bs, click the image to see a much bigger version).


The $OEX is at the midpoint between its Fibonacci retracement levels. (Don't understand what I'm talking about? Didn't I mention you should buy my book? Ahem!)


The Major Market Index ($XMI) could be argued as bullish. It had an explosive rise following the breakout above that horizontal line, and it's just about done fully retracing it. If the market does bounce, this would be a great short-term bullish play.


BP, which I've mentioned countless times, is swooning.


Umm, gosh, just one stock chart. Well, look, like I said, I'm charted out. But I have to piss and moan about something. And it's kind of relevant. Bear with me.

This has to do with FX trading. As you know, I've been hawking shorting the New Zealand dollar big time. And I haven't checked, but I'm pretty confident this has been the best performing currency play anywhere in the world recently. So - thank you, thank you, happy to be of service. However............

FX trading is highly leveraged. And the weird thing is that if you get pushed into a margin call, your broker (or at least mine) closes 100% of every single position you've got. So you can have a million dollars worth of positions spread across ten currencies, and if you get a $50 margin call, they will immediately close everything out! Is that outrageous, or what?

So, of course, that's what happened to me. Yesterday I shorted a bunch of NZD/USD. I woke up this morning to see it had completely collapsed. But did I have a profit? No. I had a loss. How, beloved Tim, is this possible? It's because my broker closed me out when the NZD tiptoed a little higher, closed my position, and then it collapsed into what would have been a multi hundred percent profit in one day.


The downward-pointing arrow on the left is a profit I did enjoy. The downward-pointing arrow on the right is the one I got cheated out of. So - you FX traders - is this the case with every brokerage? Let me know!

But there is something technically interested. Look at how the NZD plays off those Fib lines. I mean, my God, is that incredible. It's practically supernatural! And the marvelous way this exotic currency behaves makes me even angrier, since I totally understand this market, and yet my stupid broker's policies cheated me out of a lot of cash. Grrrrrrrrrr.

Anyway, I was wishing for a market that would start to pummel the bulls, and for this week at least, I got it. We bears have been cheated repeatedly out of our market, and I have been humbled enough to say it could happen again. This could be just another trick. And volatility might get pushed back down into the single digits. And we'll all be sitting on our paws again.

But, I've got to tell you, it's a fantastic change to see the bulls suffering. No one deserves it more, and no more deserves less pity. The bears are the ones with brains, and the bears.......for just this week, if nothing else......have bested their inferiors.