Wednesday, May 26, 2010

Madness, as you know, is a lot like gravity, all it takes is a little push.

So the hysteria in the market comes from the euro - but not much as changed in terms of actual macro risks - the flow of funds are now at stalemate, and last night saw some interesting developments.

sp500

The sp500 was sitting at 1040 just before I clocked off, already 30 points off the last close and I was thinking, this might be the perfect time to start adding some longs.
I did back up this thesis by going long NCM(gold) on the asx200 - but I would've picked up a lot more alpha had I cashed in on the current market panic of the North Korea tensions (link)
I played the position a little under tone of scared money, as I hedged the position with a short in MQG. No matter, base hits is the way I'm going to play these scary turning points.

Some signs of volatility that may indicate the bounce (link)

another technical reason why upside risks are more likely in the next few days (link)

A lot of people are sitting there wondering what tomorrow will bring, or so caught up in the past of the painful yesterdays - the key is to remain present with the now, and start adjusting your portfolios with strategies that best capture the uncertainty, not a magician prophetic all-long or all-short prediction position.

The season finale of LOST was a disappointment to a lot of viewers as it left many questions unanswered;
Why is it that people are so scared when things are unknown to them, all they want is a template for living life with all the questions answered on the click of a finger; otherwise manic depression and hell ensues.

A great work of art leaves things open to interpretation, poses questions that go unanswered, creates patterns that are maybe meaningful.
The mystery of the show is what made the show, just as the market uncertainty IS THE ONLY REASON WHY WE CAN MAKE MONEY OFF IT.

Risk defined at it's bare essence is the unknown variable, the mystery that keeps us searching, and those that handle the unknown variables with dispassionate rational and strategy will remain in the game the longest.

think about it.