Great Call Flawed Execution
Let me precede this post by openly stating that in general there is no such thing as making a ‘great call’. Well there is and then again there isn’t. Now that I sufficiently confused the heck out of you let me try to explain. You may recall some of my past write-ups on volatility, market cycles, as well as knowing when to be active and when to be sit on your hands. A very simple way of summarizing all of the above is that there are periods I would refer to as ‘easy time’ followed by the more mind numbing ones which test not only your patience and testicular fortitude but also your ability to stick with your script.
Assuming a solid understanding of how the tape flows, how volatility flows as well as affects price movement, and perhaps a bit of natural talent, it is quite possible to predict medium term turning points within a margin of a few days during easy time. So great – if that’s all it takes we’ll all be billionaires by Christmas, right? Well, the only problem standing in the way of spending the remainder of your existence attending Las Vegas pool parties is an annoying little detail: Easy time only occupies about 20% to 30% of market time.
The remaining 80% is spent screwing around, either correcting or sucking in hapless retail runts in preparation of the next shake out. In other words – preparing for easy time.
By my personal definitions the short before the sell off on November 10th was a pretty easy call. We had produced a ton of context and the timing was perfect for the shake out. A few ticks higher would have shifted the odds into a short squeeze scenario.
Similarly the bounce on the 16th was in the vicinity of long term support and the short term context was favorable. Some may disagree and I would love to take credit for having a crystal ball but in this game it’s all about probabilities. And at that very moment in the early morning on November 16th the odds supported a bounce, which fortunately transpired.
Yesterday’s call was a bit of a crapshoot as there was less context. It was more of a hunch but it was backed up by sufficient daily and short term context. Of course proving that the Mole indeed does not have a crystal ball I put the stop for my clever little hedge a few ticks too low. So it’s fair to say that I nailed the highs – with my stop 😉
Yup, it happens to all of us – so next time it happens to you smile and remind yourself of the fact that you are in good company. Heck, I should print t-shirts! Or perhaps given the recent thread on birthdays bedpans with Evil Speculator logos on it may turn into a seller.
Anyway, easy time is officially over as we are now in corrective mode within a high volume range just a day before participation is about to dry up. So if you wisely put your stop a big higher than the Mole then I suggest you do nothing for now. The context on the daily is a bit iffy – we may hold here but given the lack of participation it’s quite possible that the kiddies not invited to the Hamptons are going to have themselves a bit of fun.
Not much out there today but I managed to scrape together a juicy setup for my intrepid subs:
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