Chasing Your Own Tail

Over the past year we have seen a many traps and tribulations on the equities side, most of it lacking any sense of meaning or direction. Our patience has been stretched, minds confused, fragile egos and opinions bruised, and most certainly a many trading accounts have been heavily eroded in the process. One would think that at some point there ought to be some type of resolution. Well, think again!

It is strange that we, traders or investors alike, always seem to be waiting for that perfect market, one that just so happens to be in line with our perceived ability to extract that mighty coin from the market we so rightly deserve. Which represents not only a substantial level of ignorance but a tremendously arrogant mind set as well. I have presented this basic tenet here on many occasions but apparently its simple message bodes repeating:

Markets are going to churn. They are going to mess with your mind on so many levels that it pales the machinations of even the most machiavellian psychopath in comparison. Always expect the worst. Always expect to be wrong. Expect to lose. And once you do, brush yourself up, smile, and try try again.

You may think that the topic of this post refers to this mess of a market we have found ourselves in. Well, on the surface that’s most certainly the case but I think by now you’re getting a sense of what, or who, I’m really talking about. Which is us of course – you and I and everyone else out there acting as participants. Because if you’re reading this chances are you are a human being** and most certainly at least one of your boundaries has been pushed to the max over the past year. It feels like we are chasing our own tail whilst getting nowhere. But are we?

It is true that the market has not been moving in a singular direction for more than a few days for quite a long time now. But should it really matter? Should we not instead simply adjust our trading approach in response? Which, to our own credit, I believe we have have done here at Evil Speculator. Of course this is a bitter pill to swallow and by all definition not a very popular one. It’s much easier to continuously peddle doom and gloom (ZeroEdge) or fool yourself into believing the tail of an eternal bull market (Fed & Wall St.). Sometimes markets just remain range bound for extended amounts of time. They’ve done it before and they will do it again.

Your take away message: Reality is a dish regularly served but rarely consumed.

Alright, back to the task at hand. Anyone caught short over the weekend (is anyone still holding positions past Friday these days?) will most likely wish they had not as all signs point toward the potential of a pretty nasty short squeeze today. I cannot promise you that we won’t see yet another fake out lower but at least at this writing the most convincing scenario appears to be a resolution of that 100-hour BB squeeze to the upside. Which of course means I need to get positioned here with a stop a respectable distance away. The chart above shows where I’m getting in and if you’re more lucky then good for you but make sure that you place your stop at least 15 handles away in order to compensate for increasing intra-day volatility.

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** If you’re reading this past 2025 – never mind.