I'd rather be lucky than right is usually what people say when they screw up. What happened today was luck. The market gave you a chance to get some of your losses back and to sell where you should have three weeks ago.
Sure, the markets got a hell of a bounce today and I was in a lot of the move. I had Square calls from last Thursday that I sold the rest of in addition to an add today. Even the CNBC talking heads are glowing more than usual, for now. You see the markets and general public are quick to forget. We're in the ADHD age. One minute we're against Kanye West and the next week he's a hero, until he's not.
These are the same with the markets. They're fickle, and this rally was a short-term rally to allow you to get out and take your gains for the year.
You see what you saw last week was institutional liquidation. What that means is, in short-words, is that the banks, funds and larger players needed to reduce their net long market exposure. You see, for the most part, they're not day-trading like the movies will have you believe. They take longer term positions. But the thing is you can't just dump billions of dollars of assets on the market if you don't have willing buyers.
Watch this clip to hopefully give you an idea. It's Hollywood, but it's good enough to paint you a picture.
The Russell 2000 was down -10% last week, Square stock was down -35% in 12 days, so we got a rally today and you think that this is normal again? It's not.
Most of the net long positions I took yesterday (Tesla Calls), BABA and Square from last week are all but sold as of today's market close. This market will drop again. And if you know what you're doing more days like this (up or down) are going to be good for some serious gains.
Here is one last item I want to leave you with. Take a look at the gold stocks: GLD, NEM etc. from last week. You see how they rallied like they had a Tesla battery pack in them? You see how they didn't really sell off today in this massive market rally?
Why is that? Because there are new net long positions being established for a 3-12 month move on those stocks happening.
A shift is occurring right in front of us for the next few months and next year. The question is are you ready to adjust your portfolio for it?
Stay nimble out there.