I've never seen this in my 8+ years of trading. The stock market continues to frustrate and perplex.
Many traders are caught in the expectation of a bearish turn, as the market presses towards new, and frankly unheard of, highs.
A Zero Sum Game
At Adaws Capital, we trade the options markets, typically focused on the S&P, the Russell 2000, and a few derivatives of each. To the uninitiated, the options market is known as a Zero Sum Game. In a Zero Sum Game, one trader will lose and one will win. One trader gets to keep the other's money. I would like to think that's us, most of the time.
For traders like me, it's a blast, as I enjoy the process, and the stress associated with it. I actually, really do. Experience has taught me to manage my expectations as I hedge daily risk by offsetting my positions with other trades.
To be fair, retail traders aren't necessarily as fortunate.
Bears That Won't Go Away
Many of them are getting crushed in this hard press upwards. Even many super traders are getting tired of the push upwards and spend a lot of their time blogging about it, letting us know it's unfair, unprecedented, and annoying that the rest of the world doesn't seem to know the rules.
Because of this, many day traders are genuinely confused. The reasoning is multifaceted, but the biggest concern is, we've never really been here before. The S&P is approaching (again) it's all-time high, and although we didn't cross that line today, we're close and will surely (probably) do it soon. This makes it very difficult to predict the next moves.
Will the S&P hit the 2000 mark as seems inevitable, or will it be held back by the pseudo predictability and self fulfilling prophecy of technical analysis? I say "yes" to the former, and "I doubt it" to the latter.
In Uncharted Waters
It's true. We've never been here before and the global market seems to love it. At Adaws, we're in it for the long haul, so I guess we'll be learning a lot over the next few weeks and months.
I should be happy I've got great trades on, because, for the most part, my risk is very well managed. Interesting days, certainly. Stay tuned, because I'm fairly positive it's about to get ugly, especially after Christmas.
Wait a minute. Did I just say that out loud? What was I saying about technical analysis and predictability? Oh yeah... that.