7/22T10:18 Market Comments

Terrible EPS from many quarters, Semis & Banks etc., has led to a hard sell off at the open. However, as I stated yesterday, the market needs to rally for a couple of days at least before heading a lot lower. This theory is being helped by the continued precipitous decline in Oil, down another $4 as I write this.

I have been so right on the names I was short but so wrong on the execution it has become comical. The volatility is whipping me around like a dog with a rag. I need to stay with my positions through thick and thin as long as they remain in the down trend and do not violate resistance. We must find a way to ignore the noise all around us and just focus on the technical facts. One possible way to deal with the swings is to react quickly in the morning to negative forces to our positions and look to reestablish later in the day.

The beauty of the market is that is will give you a chance to get it right over and over again. Remain vigilant and continue to move and check in the corners, we will eventually get free.

Rules of the Road: Oil & the equity markets

When oil runs up 2.5% or more quickly in the morning there is no reason to remain long equities. Book the gains you may have and look to reestablish later in the day after the inevitable sell off.

Conversely, if oil sell off 2.5% or more in the 1st hour of trading holding shorts is pointless. The market will rally during the day and give us another chance to put the shorts on.