So the markets do go down!
I remember this part of of the business. It used to happen all the time until 2012.
Last Monday, the bearish feeling was creeping in. I was on alert. The price action was the biggest reason. While I do not make a habit of shorting stocks, I decided to get long volatility by shorting $XIV. I posted the trade on Stocktwits. I covered this position on Friday and a lot of people caught a huge trade with me (should have held the last piece!).
I chose volatility for this trade because of charts like this.
We have been on borrowed time for this current price decline.
Ivan and I have been very strict about our model portfolio for the SL50. We don’t chase markets and we cut and run by a firm set of rules. The results have been very good.
My own hedge fund came into 2014 light on equities, but long a wide variety of stocks. January has seen a ton of changes already. Thank goodness for coffee, natural gas, Google and the $XIV trade. I am already out of $RH, XLF, $WETF, $AAPL and should have sold $GOGO. I still may.
Is it the empty cities in China?
Yellen over Bernacke?
The Argentine Peso?
I do know that the VIX (Volatility) is always 10 in Tuscany.
The trader in me is looking to the long side at the moment to make a few extra dollars. This is one reason (Jack is an awesome follow):
The last few weeks have seen winners turn to losers and new positions get stopped quickly. I hate it, but the market could care less. You fight it and you will lose over time.
The markets may turn tomorrow or today could be the last great day to sell.
Back to work.