The benefit of getting back to keeping a trading journal is that it lets me reflect on myself three times a day, keep my thinking as clear as possible, and align my actions with my intentions.
Yesterday, I didn’t buy back any of those stocks—SOXL, INTC, or LITE—just because they had bounced a little. I’m still holding only SPCX and NVDA, because I understand these two and feel confident about them. Last night, both QQQ and SPY hit their sell-high lines, as did many individual stocks. This kind of price action shows that the market is still very weak, and we could see new lows ahead. It may be hard to say the market has stabilized before October 29. The midterm elections on November 3, along with the CPI and PPI data in the days that follow, will also be crucial. This weak, bottoming-out phase could be the most painful and difficult stretch of the year—worse than the downturn in July, because this correction has barely had any bounces, whereas in July, after at most three down days, there was always a big rebound.
We may have to wait at least until the midterm elections are over on November 3 before a bottom is truly established. As for the economic data that follows, the market has probably already priced in the fact that it won’t be good. After all, the probability of a rate hike in December is now 75%, and by then I expect it will be at least 90%. At that point, most of the bad news will likely be priced in, and the decline will have run its course. The market may chop around near the bottom in November, with a genuine big rebound beginning only after the December rate hike. My spring will come in January–March.
Yesterday, I didn’t buy back any of those stocks—SOXL, INTC, or LITE—just because they had bounced a little. I’m still holding only SPCX and NVDA, because I understand these two and feel confident about them. Last night, both QQQ and SPY hit their sell-high lines, as did many individual stocks. This kind of price action shows that the market is still very weak, and we could see new lows ahead. It may be hard to say the market has stabilized before October 29. The midterm elections on November 3, along with the CPI and PPI data in the days that follow, will also be crucial. This weak, bottoming-out phase could be the most painful and difficult stretch of the year—worse than the downturn in July, because this correction has barely had any bounces, whereas in July, after at most three down days, there was always a big rebound.
We may have to wait at least until the midterm elections are over on November 3 before a bottom is truly established. As for the economic data that follows, the market has probably already priced in the fact that it won’t be good. After all, the probability of a rate hike in December is now 75%, and by then I expect it will be at least 90%. At that point, most of the bad news will likely be priced in, and the decline will have run its course. The market may chop around near the bottom in November, with a genuine big rebound beginning only after the December rate hike. My spring will come in January–March.