Ramblings of a Dad and Tape Reader

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  • on December 23rd, 2011

Every year, I tell myself the final week of the year will be reserved for deep study and methodology cleanup. Then as the days run together and Christmas comes and goes, I realize I’ve (again) left myself with a long list of “To Do” items before Dec 31. My final week turns into an unpleasant mix of paperwork and peeking at the market, and before I know it I’ve taken no real break from trading and it’s Game On for the next year.

This year is different. I’ve had a miserable trading year, worst in the 15 years that I’ve tracked results. Win rate looks normal, average loss size looks normal, but there was one element missing…big winners. It’s hard for me to believe this year came and went without a few big hits but I was patient when impatience was the call and impatient when patience was right. The innings came and went and I was unable to land an extra base hit.

To get to that elusive year end review required knocking out my To Do list before Christmas, which I have mostly accomplished with the exception of shopping for my wife…that comes now. I do have a few random thoughts before signing off so I’ll indulge my need to share with the following:

1) Every element is in place for a massive move in $SPY and $IWM and $TLT and $GLD the rest. Whether you measure it in low ATR, low ADX, low volume, whatever…these months of noise are dribbling into an eerie quietness that precedes a major move

2) I honestly have no idea which way that move will go. I’m encouraged by real, actual breakouts in $XLP and $XLV and $XLU as it shows a willingness to buy high, but would feel more confident if it happened in $XLY and $XLY and $XLK instead.

3) Lagging breadth concerns me. As shown below, we are smack dab at the apex of a tightening trend in breadth with just over 1/2 of my universe above their respective 50 day averages. The universe matters a little, as you move down the scale from $OEX to $SPX to $COMPX you’ll see lower participation. Large cap leadership on its own is not a bad thing; what concerns me is that the levels are so far below where they were 2 weeks ago despite equal index prices. I’m not going to short a narrowing rally, but it makes it hard for me to embrace without improvement.

Those are some thoughts, they probably raise more questions than answers but it does pay to know which questions matter. For now, I’m looking forward to tackling my responsibilities on the homefront this weekend. Our annual Happy Hour/bowling comedy arrives tonight followed by assembly of a dollhouse and batting machine to start, and I know a game of Madden football on the new Wii will take place by 9am Sunday so I need to learn the rules quickly. I’ve only had a few of these, but there’s nothing like watching Christmas through the eyes of kids with nothing but wonderment and belief.

To parents out there, if you ever wonder if little actions matter, READ THIS. Yes, a tear or two slipped out as I realized the gravity of each decision I make. Don’t worry, I snuck ‘em back in before anyone could see but a simple RT of this epic post wouldn’t cut it. I won’t make a resolution to focus more on my family and less on the market; I do my best but know that this game owns a big piece of me. But I’m sure as hell going to enjoy this weekend from start to finish, and I hope you do as well. Catch you next week!

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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