Well you can’t say we didn’t see this one coming.
Not Dubai in particular but I’ve been warning for weeks that we have gone too far, too fast and just this Wednesday I pointed out that gold had gone insane(the GLL calls I outlined in the morning post will do amazingly well today) and we pressed our short bets on Wednesday and went over 60% bearish into the holidays. In fact, at 11:56 on Wednesday, my comment to Members was “On the whole, I’m fighting the tempation to short everything…”
Anything could have triggered a sell-off in this market of denial. As Tommy Lee Jones points out in “Men in Black“: “There’s always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they Do… Not… Know about it!” That’s our burden as we discuss the market fundamentals while others party in blissful ignorance – we are the men in black and we do know what’s really going on in the world…
While it may make us overly cautious at times, it also helped us digest our food yesterday and wake up in a great mood today as we are well prepared for this little market correction. I quoted PT Barnum Wednesday and, since my point is made so well this morning, I’ll quote him again because it’s good advice for all traders to follow:
“A man who is all caution, will never dare to take hold and be successful; and a man who is all boldness, is merely reckless, and must eventually fail. A man may go on “’change” and make fifty, or one hundred thousand dollars in speculating in stocks, at a single operation. But if he has simple boldness without caution, it is mere chance, and what he gains to-day he will lose to-morrow. You must have both the caution and the boldness, to insure success.”
Even this morning, as the Dow futures hit 10,200, I sent out a 5 am Alert to Members discussing a trade idea to use the long Dow futures to hedge anticipated gains from our short positions. It doesn’t take much of an up move in the futures to return a hell of a lot of cash and we have a clear stopping line at 10,200 but it’s the FTSE we’re watching…
