Regular readers know that I’m fine with other points of view, but not rudeness — for instance I have a lot of respect for Aki and am glad he’s here, though he and I have very different political views. However, the above comments did prompt me to ruminate over the last few months. So, mostly for my own benefit, here is a kind of recap:

The reflation trade was a good short when I called it at the end of May and first week of June. It was vindicated with a nice fall into the first week of July, but has since rallied back and is setting up an even better short (since guys like JB above are now so confident). Anyone who was short stocks, copper, oil, silver and went long bonds and the dollar from early June did very well (every asset named here did what I said it would). Since then, the strength of the recovery in commodities and the new lows in the dollar have surprised me, but that’s what stops are for.

The bond long from early June was a particularly good trade, as bonds rallied nicely from exactly when I made the call to sell TBT and buy TLT (the day the 10-year touched 4.00%). I made very nice gains on my calls and 10-year notes. Bonds have retraced much of that rally, but remain above their June lows, and holders of TBT are still down about 7%. That was one that actually worked out perfectly for me trading-wise, since I sold at the top and sat on the sidelines until last week.

And yeah, PMs were a real bitch in January, but they have not made new highs like everyone expected, and presented good shorting opportunities in Feb and June, which I noted at the time, and are again good shorts at these lower highs this month. And yes, gold will likely disappoint for a long time. $600 is still not out of the question.

I don’t claim to be a trading wizard (I’m much better at making intermediate-to-longer term calls than the mechanics of charting), and I’ll admit to my mistakes — I totally f-ed up what should have been an epic silver short from June to July, shorting at 15.65 but covering at 13.90 and leaving big gains on the table, when a simply trailing stop would have been far better. I also went long silver with only a small position at 12.45 (2 ticks from the low) but wimped out again at 13.20 (again, a trailing stop would have given me another buck). Taken from when I turned bearish, to bullish to bearish again, silver should have been well over $5 in gains, and as good a set-up as it was, I should have taken larger positions — but making good calls is different from making good trades.

Copper has been equally frustrating, stopping me out flat after falling from 2.30 to 2.10, and again denying me an entry a few days ago when I tried to short it at about 2.62. Ditto oil last week, with multiple stop-outs there. Not to mention hogs — my bottom-picking attempt in June didn’t work out, though I’m even more interested now.

I noted here that I was long the 10 year note last week at 95.12 — well, I booked nice gains on some calls from 1 20/64 to 2 2/64, selling at the top at the end of the week. I bought them again this week at 1 20/64 but was stopped out Friday at 1.

Actually, it’s funny — the trades JB mentions were among the few highlights of the last few months. They were all solid calls. I wish I had stuck to them and been more patient about shorting crap like restaurants and retailers that just kept going up, and waited until at least late May to start buying back my long-term SPY puts (though I bought very few until June, and have only in the past couple of weeks built it into a large position).

I guess my lesson should be to stick to trading the high-probability macro waves — it is easier to gauge mood and trend on large asset classes than in particular stocks. And when you see readings like single digit bulls or bears and charts with clear levels for stops, have the guts to take a large position so that your calls make you good money for all your work.

Actually, that brings up a sort of rule for myself: if you are not confident enough in a trade to blog about it, don’t take it. I didn’t post about about all the losing stock trades I entered last spring (I only mentioned them in passing comments) — that should have been a hint that I didn’t have much to back them up.

I do not know if the 200k figure is necessarily true right now, but it is nit-picking. I object with that figure because immigration is probably down, and you are using a figure when there is relatively high immigration.

Nasdaq is nicely lagging, and the dollar is looking good. China could have topped already. The chatter on the boards is of scared bears and confident momentum chasers.

Next week could be brutal, maybe a drop to 950 before a rally to test 1000 again soon thereafter. Or maybe we slowly roll over and don’t break 950 til almost labor day.

If this really is wave 3 down, it should be another 5 wave move, like wave 1. During the first wave, and even the second, most won’t believe the top is really in. Wave 1 could start from here, since the momentum guys would be buying in on the decline and there would be few shorts. It would be seen as a “healthy correction.”

yes, the dollar rallies hard (one “safe” asset class). but the yen tanks more than other currencies -> one other safe asset class is torpedoed. so, the yen index (XJY) must be crashing now.

10-year treasury is absolutely raped, but the 30-yr not as bad (usually 30-yr is the worst raped if there’s massive rally in risk).

BKX is apparently near to violating Daneric’s EW count.

the signals got all messed up today. “Safe” assets, except for the dollar, are getting murdered, i.e. treasuries & yen. Stocks rally hard, but oil & commodity stocks are in general weak, given the big up in the S&P. Which sector is zooming, anyway?

I suspect this is a case of a too crowded dollar-short trade getting wiped out, while stocks & risk assets in general actually still have much to run.

I am not expecting a crash right away, simply a topping process. Look at a 2 year index chart, or a chart of the 2000-2002 bear market, and see how rallies roll over slowly, often with a series of smaller sell-offs and rallies on the way. It takes a while before panic arrives.