Short Term Speculating

Take every gain without showing remorse about missed profits, because an eel may escape sooner than you think. It is wise to enjoy that which is possible without hoping for the continuance of a favorable conjuncture and the persistence of good luck.

Jose de la Vega.

I am reading “Confusión de Confusiones”  a book written by Jose de La Vega about stocks speculating in 1688. It’s in antique Spanish, as you can imagine the reading is slow so I have not arrived yet to that quote, but still, it is as true today as in 1688. Of course you can find the book translated to English but I liked the idea of reading Jose exacts words.  That being said let me present a short term speculating idea.

Take a look at the SPX close in February 8, in 5 trading days almost 5 months of profits are wiped out.

We are looking for a pause in this parabolic downturn, since we have two nearer extreme low lows with at least one day in the middle, next day we go long over the previous low. This is a very short term trade. Our stop loss is a few ticks below the previous low. Next day the SPX did this:

I took two trades on Friday.

Before closing with a 5% gain, AMAT hit my stop and perversely took me out.

I had better luck with CB.

Are we going to a recession in 2018?

That’s a question for economists, being that I am a short time speculator I really don’t have an answer for that, only thing I can do is compare last recessions time with today.

In 2007 we were experimenting the scary inverted yield curve which tends to signal economic trouble ahead. Take a look at the curve on May 23, 2007, 3 and 6 months yields were above 10 years yield, that’s inverted.

At Friday we have a normal up-sloped Daily Treasury Yield Curve, which signals period of economic expansion or so they say. Yield curve rates is an excellent leading indicator.

 

In 2008 we had the subprime mortage crisis accompanied with the Lehman Brothers  and  AIG situation among others. Today as far as I know, taking cyber currencies aside, we are not experimenting any bubble, well maybe in stocks, but is a small bubble.

Anyway a downturn like this with the accompanying volatility does not go away in a few days, a lot of people sold with losses and It will be a time before that money gets confident again and return.  It is a time of opportunities in the short time scenario, both long and short.  Look at the new buildings permit, take a look at the unemployment figures, do your homework.

Thank you God for all the graces in my world.

Shalom Jose de la Vega et al.