Below is a chart of the SPY Please take special note of the two supporting trendlines I’ve drawn. They are BOTH anchored to the same starting point, which is the Covid crash bottom. Their other anchor points are different, however. One is anchored to October 6 of this year, and this line has been broken and we are beneath it at this very moment. The other, lower line is anchored to the December 3rd low, and by its very nature and definition it is unbroken.
Here is a close-up view. Take careful note how today’s low almost tagged this lower line. In other words, it was respected as support yet again.
This insight on my part led me, as my premium readers know, to do something which is the moral equivalent of arranging a trip to a NAMBLA convention, which is to actually go long.
Now, in the spirit of Mr. Nixon, let me be perfectly clear. My big account is still 100% bearish, HOWEVER, it is 25% cash now. So I’ve backed way, way off. My other account, a smaller personal one, is 100% bullish now, although it was 100% bearish this morning. I am long January IWM and QQQ calls, and as I type this, they are both profitable.
I have no intention of being a long-time bull. Indeed, I am 99% sure that Monday will not end without me being out of these things. We’ll see. But the bottom line is that I’ve dialed back on the raving bearishness and am even specifically long. I’d like to see some of the really battered stocks go through their predictable bounce-backs, like AMC (shown below) before I turn up the heat again.
