Yep, sucks to see what I believed to be heading into yesterday, and still very much still do, good swing short trades like QQQ & SOXX/SOXS go underwater so much in a single day but I will say this: I have been trading & investing for many years, even decades, and one of the things that I’ve learned is that you can make the same percentage gains in just days, weeks, or months (depending on the time frame that the trade is based on) when shorting stocks, commodities, etc. what took weeks, months or even years to make on the long-side when shorting as stocks almost always fall much faster than the rise (just pull any multi-decade chart & compare the corrections & bear markets to the proceeding rallies & bull markets).

The other thing that I learned is that successfully swing and/or trend trading corrections is not as easy as trading a bull trend in reverse. During corrections & bear markets, volatility expands sharply which means that the counter-trend rallies are often much faster & stronger than the corrections & pullbacks in a bullish trend. As such, one either has to be extremely nimble (covering shorts & reversing to long actively while using multiple time frames & being very vigilant of the much faster-changing technicals vs. a bull trend) –or– less active/nimble traders should allow wider stops than one would during a bull trend to avoid frequently stop-runs that will shake you out of the trade in the early stages, quite often just before the leg down resumes, leaving you to miss out on the bulk of the downtrend that you were positioned for.

Wide stops can cut both ways as some times. e.g.- Corrections that look to have a lot more downside may fall short with a resumption of the uptrend, resulting in a larger-than-usual loss. Therefore, I found that it helps to keep your position sizes smaller than you might during a bullish trend. That allows one to use larger stops in percentage-terms but not risk any more $$ loss than they might normally on along-side trade due to the reduced position size. On the flip-side, since the gains on shorting corrections & bear markets typically come much faster & can be much larger in percentage-terms over the same time period as long-side trades, with the “faster” and larger percentage gains on short trades resulting in comparable total $$ profits.

Thanks for the vote of confidence although oddly enough, I prefer it when almost nobody agrees with my positioning or analysis. You are most certainly correct that the volatility that we’ve seen not only lately but since the initial “shot across the bow” back in late Jan/Feb of 2018 is indicative a bull market top/early bear market. I’ve heard it argued by those that belive the bull has plently of room to run from here that the very big swings since the start of 2018 with the market essentially trading sideways & topping since then is & will prove similar to the 2015-2016 volatile sideways consolidation, which was followed by a strong resumption of the bull.

Only time will tell where the market goes from here but there are fundamental reasons why bull markets & economic expansions have ALWAYS had a limited shelf life & always will. Regards, as an active trader, I’ll let the weekly, daily & intraday charts be my guide & determine my positioning (long or short) regardless of my long-term views although those do factor into my analysis in determining how & when to selectively accept or dismiss certain bullish or bearish developments.

Funny how over the years I’ve repeated warned that confirmation bias can be one of the most debilating & costly flaws for a trader & yet at the end of the day, to a large extent, I acknowledge, accept & even embrace it at times (e.g.- dismissing yesterday’s “just too bullish to mean anything but the correction is over” rally as well as the previous strong rally off the Aug 5th lows).

p.s.- Very true what you say about never “keeping it short” after saying it will although short has come to mean 20-minute or less as 30 & 40-min videos are not unusual. Get me talking about the stock market or trading, especially with no one on the other side of the conversation to interrupt or cut me off & I could go on forever as I absolutely love this stuff. Thx for your feedback.

I just sat and watched my positions go red in QQQ.

So, on the week, not that much has changed.

Interesting to see where we close this week.

Randy – thanks for the continued excellent analysis you provide.

I see nothing wrong in your analysis. It simply takes time and patience for things to play out. Frankly, I’m hoping these markets will jet to new highs where I could build more of my long Vol trade. I doubt that I’m going to get it anytime soon.

I’m writing this to give you a big vote of confidence. These are treacherous waters and your navigation has been superb.

PS

Almost every time you say it’s going to be a short video, it’s a long one. You should just give up.