Cash Is King

Market conditions continue to deteriorate as panic spreads around the globe.

My SPX indicator made a new O, signaling increased volatility and fewer stocks in bullish formations. Buyers should step to the sidelines and wait till the current rush to safety subsides.

The buy write index continues to outperform the underlying SPX, reinforcing my bearish sentiments. A break of the upper Bollinger looks to be in the works, so stay defensive.

Equities have entered a new downtrend relative to bonds, so despite talk of a Treasury bubble, there is no appetite for risk.

The Dow Jones World Index is now below the 10sma, and since the global equity markets move in harmony, buyers should beware the primary global trend.

Fewer stocks are trading above their 50dma amidst rising volatility. Any trading on the long side is best left to billion dollar funds that can provide the liquidity being sought.

Another wave of fear is sweeping the markets, and there is no telling when it will stop. The possibility of another massive bank failure looms; Citigroup can't catch a bid despite a headline deal with Morgan Stanley. SRS and FAZ are the best vehicles for making money intraday, but the incredible volatility requires strict discipline and mental stamina.

No Jobs at $AAPL

Word on the Street is Steve can no longer run the show at Apple. Here's the Bloomberg scoop.

Though this chart doesn't reflect the new low of $76.51, it does reinforce my belief that surprises tend to move stocks in the direction of the primary trend.

Participants long Apple stock are prone to frustration and panic due to the overwhelming downtrend. Tomorrow probably won't mark a long term bottom, but it could be an opportunity to play an upside bounce once everyone stops freaking out.

Apple remains an emotional stock due to beliefs of its fundamental value coupled with its overwhelming technical weakness. This sort of divergence creates irrational participants who become addicted to the biochemical responses that accompany fear and greed. Check out the posts on StockTwits to get a feel for the psychology of interested participants here.

My feelings about Apple have kept me away from this train wreck, but the lesson here is incredibly valuable. Don't let intuitions about fundamental worth supersede the objective judgment of price action.

Quote Critique

"History is a collection of agreed upon lies." - Voltaire (French philosopher, 1694-1778)

Cynicism from an imprisoned drunk drug abuser is generally unpleasant, but it is easy to like the words of this famed Freemason. The conspiratorial nutcase in me screams "Dead On!" but rationally, this quote is snarky wisdom that builds nothing. I believe it, but now what?

Over Trading

Tuesday was a lesson on the virtues of patience and discipline as I unsuccessfully tried to short the market. Things still look grim for the bulls, but there is too much churning for me to make money as I get frustrated switching positions and paying commissions for pennies.

Over trading is more than taxing on my account, it strains my mental stamina. The nervous energy from jumping in and out without the benefit of profits is wholly unsatisfying, and leaves me vulnerable to more mistakes as my P/L goes red.

Thankfully, I have a ukulele by my side at all times, and an assortment of kooky books to thumb through. Sometimes, the best thing I can do to trade is to not trade at all.