Well, THAT was a shit sandwich! At least for any bears besides me. Jesus!
I was watching the CPI release with great anticipation. You can imagine how I felt when I saw that think spike go raging higher on the screen. It felt like an OHLC bar was being shoved through my stomach. So it seems that the Sloper verdict about how tame inflation would be was on-the-mark.
The only things I did right over the past two days were:
- Dumped my SPY puts yesterday at a profit;
- Wasted no time dumping my IWM puts at the opening bell this morning at a smaller loss than I would have endured;
- NOT deploying more cash into positions, and instead tucking it back into the safety of my checking account, where the mean old bulls can’t get to it.
All the same, the day was nothing short of brutal. Just miserable.
I must trot out the Frightful Prospect again, thought, because it’s EXACTLY WHAT HAPPENED. In fact, if we can just assess what’s happened so far, this post gets an A+. If the market keeps going higher, well, I guess I’m a dead man. But – – for the moment – – this post gets the Pulitzer Prize for charting.
Let’s look at the key chart, created on July 21, and in particular the White Line From Hell:
I have painstakingly recreated this chart, but with up-to-date information, and using the same colors. Check it out:
Keen observers will notice a new element on the lower chart, which are the white rectangles. These are crucial. These represent THE PRIOR “LOWER HIGH” WHICH WAS BROKEN BY THE WHITE ARROW FROM HELL. In other words, the exact spot where any surviving bears would have stood up from their chair (unless they had a standing desk like me, in which case they would have simply stood up taller), stared straight ahead, and stormed off.
And that’s precisely what happened. We blasted higher all day, closing with a flourish above the prior lower high.
So I’ll just say this……….the Frightful Prospect was indeed a “lightbulb above the head” moment, and it has transpired perfectly. But if we don’t start getting some selling here within the next five trading days, particularly with the launch of Bear Force One on Wednesday morning……..….I SURRENDER!!!!!!!!