Monday, February 25, 2019

SPX: A Less Boring "Boring Update":

So far, no matter what has happened, the market has continued relentlessly higher.  This is sometimes called "bad news is good" sentiment.  In this case, not only is bad news good, but also good news is good, no news is good, news about cats is good, and news poorly translated from a foreign language is good (headline:  "Dow Rallies 500 Points on Announcement that China Will Cease Importation of Bite the Wax Tadpole."   Later correction: "Earlier, CNN erroneously labeled 'Coca-Cola' brand soft drink as 'Bite the Wax Tadpole.'  Also, the Dow rallied 7000 points, not 500.").

(Random Factoid:  I'm actually not making up "Bite the Wax Tadpole" as a bad translation for the infamous soft drink:  Coca Cola: Bite the Wax Tadpole?)

Basically, "everything is awesome."  At least as far as the market is concerned.  Which is why we haven't been getting too gung-ho on bear options.  About the most I've been willing to do in terms of bear predictions has been tepid "eh, maybe" calls, such as on Friday:

If bears can push below yesterday's low, they could get something going in terms of a larger correction.

As it turned out, bears were unable to move the market below Thursday's low, because of course they were.  So the "if" part of the "if/then" equation never came to pass, and bulls thus knew they were free to grind the market in a circle for most of the session, which is exactly what they did.

While it's never good to trade "for excitement," trading and charting are two different animals.  Obviously, in terms of only what I publish in these updates, I'm charting as opposed to placing trades WHILE I chart -- and frankly, I find markets like this one incredibly boring to chart.  And not very interesting to write about.  Partially that's because I've learned over the years that there is a great temptation to try to "find something interesting" to write about -- but in the case of a trending market, that temptation can be dangerous, because the fact is, there IS nothing interesting to write about.  Every update in a market like this could basically read:

"Second verse, same as the first."

And I could keep publishing the same chart over and over without even updating the price action, and probably no one would even notice... unless I accidentally spilled ketchup on it or something.

The point is, this is why I've been keeping the updates short for the past month and a half or so.  Because while I've seen a couple, "eh, maybe" moments here and there, for the most part, there hasn't really been much to say.

And for bulls, that's a good thing.  It's probably a good thing for bears, too, because there's nothing worse than constantly thinking that THIS IS THE TOP OMG OMG OMG, only to have the market blow right through it again and again.

If it's at least a tradeable top, that's not so bad -- but in this market, we haven't even seen any tradeable tops since December.  So in that sense, I'm thankful that I've mainly stuck to "boring updates" through the majority of this move (and, as a general rule through the years, through these types of moves).

Eventually, the market will get tired of rallying, and while we don't always catch the exact top (sometimes we do), we rarely get caught looking for more than a session when the trend does finally change.  And as I see it, missing the first session (or even two) of a turn is vastly preferable to shorting the whole way up.

Last update noted that "if bulls can reclaim the channel, then all bear bets are off" -- and bulls are in the process of doing just that:

So all that to say (yet again):  As long as SPX fails to sustain a breakdown, there's nothing for bulls to do but ride the trend, and nothing for bears to do but keep waiting.  Trade safe.

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