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This morning, I had short positions in Noble, YangZiJiang and KepLand which were mostly at the money. However, when I opened my screen this morning at 8.30am , I noticed that the SIMSCI futures had surged ahead. I had already placed my stops a long time ago, but I was afraid that they might get gapped through. Surprisingly, and thankfully, the STI opened flattish, giving me ample time to cover my shorts. I managed to escape with a 3% drawdown on my portfolio. However, on hindsight, I should have reversed my positions and gone long. That was a mistake on my part.
Some people have emailed me asking why my positions this time were smaller compared to my shorts the previous months. At this point, I would recommend readers to refer back to my previous blog posts, for example this post on seasonality. Although written 2 years back, it still remains highly relevant. https://synapsetrading.com/2011/06/market-seasonality-and-statistics/
In my private forum, I shared with my students the possibility of a bull flag breakout, but to be honest I wasn’t expecting such a powerful move. We suddenly see an influx of bullish news about the EU “resolution”, but don’t forget that the real issues have not been dealt with yet, and have merely just been postponed.
Will we be seeing further upside? Very likely, based on the price action. It would aim to test the previous swing high of around 2900-2910, however we need to be very careful now because today’s bar was a climatic bar, which has a tendency to short-circuit moves. I would be waiting in cash on the sidelines for the next big move. Good luck trading, and remember that trading is not about being right all the time, it is about making money and keeping it! Cheers!