Tuesday, August 4, 2015

Market update

Previous market update here

No change in the current market update from the previous one, but we do have a warning (chart below). To be honest, there are several warnings in all time frames, some of the warnings being extreme. But, this market wouldn't budge down. It continues to amaze us.

We don't hold any ST positions as the market did not close below SPX 2095. One of the good things for me personally was that I did not trade much from Dec. 2014 - June 2015 for ~ 6 months, luckily. The last 1 month has been super whipsawy, hence I can understand how it must have felt to have traded during that period. I did not trade, but our staff have traded and I easily understand them. 

Usually we do not do much political/ fundamental commentary 'coz: 

1) Trading is not about talking, it is an art in itself which is based 70% on a) putting the right risk size on the table and b) being flexible to close positions

2) If we start to talk, then we will have to dish out some criticism on someone out there - which is not our wont. 

Out there, I am reading reviews suggesting that the "fear seen among investors now is same as the fear at the 2009 market lows" Oh, really? 

How do you measure fear in the markets? Objectively or subjectively? 

If you poll 100 people on fear about markets, that is subjective. If you look at the data from the market exchanges and derive fear that is objective. 

If investors are fearful of the markets, they should either buy puts or get out of the market, right? We simply don't see any extreme levels of "fear" among investors. If you say there is extreme fear among market participants only 2% off the all time highs, you must be kidding!

Anyway, we do not subscribe to the notion that we are seeing extreme fear currently. Atleast, it is not simply seen in the data. In fact, it is opposite of what is being reported in the interweb.

Chart below

This is only a warning that top is probably in (or close) for this ST frame. This is not a signal, however. Especially in this market where every indicator and signal has been mercilessly trashed. 
It still pays to watch for the warnings, as it allows us to be prepared of the risk that is in the markets out there. Nothing more, nothing less.....


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