09Feb1:48 pmEST

Cold, Hard, American 100% C(r)ash

During the late-morning swoon spilling over into the early-afternon portion of the session, I decided to close out my swing shorts and move to 100% cash in my trading account inside Market Chess Subscription Services

To be sure, a loose and sloppy close today would draw analogies to the crash of 1987, in terms of the weakness leading up to that crash and the subsequent panic over the weekend helping to ignite the crash.

However, it is worth remembering that market crashes of that magnitude are extremely rare events throughout history, especially when all major indices are still sporting rising 200-day simple moving averages--Typically, a crash is a higher probability bet after a prolonged bear market to actually get us closer to a cathartic, bottoming moment. 

As I write this, I see the indices are bouncing well off session lows. If bulls can sprint back over $256.60 or so we may very well see a late-day reprieve in the form of the market punishing shorts who perhaps got a bit out of line pressing near those session lows. 

Nonetheless, I am not prepared to call a bottom or anything close to it, just yet. And thus the full cash position after closing out AMZN and a few other shorts I had been eyeing for quite some time to come in after extended uptrends.

Potential market crashes always carry a certain allure, especially when we have seen such a prolonged uptrend with low volatility. But I suspect we would need to see a wild close today for there to be a more serious consideration. 

As an example, on the Friday before the 1987 crash, the Dow fell 4.6% on record volume. At the moment, the Dow is off by less than 1%, and volume is not very overwhelming yet. Again, much can change from now until the closing bell.

But, ironically in this day and age of Bitcoin mania and fiat hate, moving to cold, hard, American cash seems to be the play for me into the weekend. 

A Shady Throwback Saturday Night at Market Che...


This website is intended for educational purposes only. | © 2018 MarketChess.com | All Rights Reserved | Website design by Saco Design | Superpowered by Site Avenger

mobile site | full site