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From yesterday: …causing me to get filled on a day that closed below my target. We’ll see how this hashes out tomorrow.

Yes, hash is quite an appropriate word.

Also from yesterday: The less-likely alternative would be for the bottom to fall out.

Did I say less-likely? I meant to say MOST LIKELY!

I’ve read somewhere that the market is actually a big leading indicator for most everything else (despite what CNBC would have us believe), and many of the reports and “news” we hear are really post-facto, with the best example being the LTCM debacle back in ‘98. None of us knew what to think when things fell apart in August (August? Are you kiddin’ me?). Then along about October or November, the fact emerged that the entire world economy had almost collapsed overnight. Kinda like, “Oh, by the way, we averted nuclear war by only a few minutes one day last year, but it’s OK now, so… no worries!”

So, stocks are being sold:

While bonds are being bought very heavily by someone, somewhere (note this is the yield… it goes down as the price of the Treasury Note goes up, i.e. under heavy buying):

Is this a little pullback in our long-term uptrend? I don’t think so, but I’ll trade my system regardless (which means I must now ignore the next “buy” signal I get and take the one after that… weird, but generally works better on days like today and 2/27).

I think stocks are being sold, bonds are being bought and yields are dropping precipitously in anticipation of something we “average” people don’t see yet; some economic news which eliminates any possibility of the Fed raising interest rates (not that there is such a possibility right now anyway), and in fact points to the possibility of lowered rates. That would only happen as a way to increase liquidity in the face of some severe, “unexpected” developments.

My two cents still says those developments have everything to do with real estate. Sub-prime, my ass. Easily three-quarters of the “prime” borrowers I know have financed, re-financed, “cashed out equity”, and “traded up” repeatedly until they currently teeter a few percent from owing more on the house they’re staying in (that ain’t ownership) than it’s worth. As more of them get sucked under by the whirlpool of decreasing home values, that whirlpool will expand, deepen and strengthen.

A friend called me up today (hey Read!) and we were talking about the nice uptick in volatility we were getting. Not exactly the words we used. But I told him how, back in the spring, I had considered stopping trading altogether, ignore the short-term action, and begin relentlessly buying a few shares of QID (the ETF which moves 2% up for every 1% that QQQQ moves down) once a week until I was 100% double-short. I had that much confidence in my… lack of confidence in the economic numbers we’re being fed. Fed. I’m all full of puns tonight. Must be the fatigue.

I didn’t do that. I like to trade too much. And by too much, I mean in magnitude and in sheer quantity. I’m convinced that a solid trading plan which profits in uptrends and downtrends is probably the best fit for me.

But, as I document here with great regularity, I could be wrong.

Now, back to the night job (mondo backtesting project… did you know there have been many many instances where “Buy & Hold” over a 10-year period actually produced a negative return? More later…)