I think this period of indecision might actually be coming to an end. For weeks now it has been difficult to pick a direction because the momentum has been too hot on the long side to enter but the momentum has also destroyed the shorts. Other than my irrational long shorts and a few “junk long” positions, I’ve been on the sidelines.
It looks like we may be getting an opportunity to start making directional trades again. I can’t tell you what direction, but what I can say is that the QQQQs are trading sideways and burning off price momentum. This could resolve itself with a breakout over the July highs or it could be a topping pattern before a drop.
For those looking to pick a direction, at least it provides an opportunity to manage risk. From the long side, the market is shifting out of the overbought range providing more upside potential (purely on a price momentum basis). On the short side, there is plenty of room for the market to drop.
At least the paralysis should be over. Now we just need to get the direction right. I’ve been enjoying this period. While my small portfolio is not bringing in huge gains, at least I am back to making profits on a consistent basis like I did from January-May. I think I may have broken my June-July losing streak. August is looking like it has a really good chance of being a green month.
My only trade today was that I got stopped out of FIRE at $19.50. I’m currently 12% invested with a slightly negative delta.
