It Just Ain't So

"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." -Mark Twain

One concept which we have been discussing frequently inside Market Chess Subscription Services has been to not assume support. Oftentimes in a bull market, it becomes commonplace to aggressively buy "support" and assume an imminent upside reversal, especially with options and other higher risk instruments. 

However, the case of BABA is a good example of how quickly that mindset can become perilous to precious portfolio capital, as the stock's gains in May have been entirely forfeited now, and price has yet to find anything remotely close to "support." Again, support is only potential support until we see actual signs of buyers presenting themselves in a meaningful way. 

And as markets become a bit less accommodating to bulls who buy every dip it may be worth keeping this concept in mind, especially with the hoopla surrounding the run-up that BABA had in May, with many declaring the stock to be a new market leader.

They knew it for sure but it just ain't so.