Result of Trading on short positions
2022.12.18 09:56
Result of Trading on short positions
Budrigannews.com – On Friday marked the third day of decline since the Fed meeting on Wednesday, when it fell an additional one percent. However, despite how dire that may sound, the index only lost 2% this week. This is not exactly free-fall material, though it is not great.
Although Powell tried his best to sour the market, it is unlikely that many people were changed by his remarks. Those that were negative Wednesday morning are similarly as negative today and those that were bullish are comparably bullish.
Obviously, Powell’s press conference did not comfort the bulls, but that lack of comfort has not yet resulted in a panic on the streets.
The economy is chugging along, inflation is decreasing, the labor market is still tight, and the Federal Reserve has promised to fight inflation until the end. essentially everything we learned last week. Additionally, if this is what we were thinking the previous week, there is no reason for stock prices to significantly change from their previous level. This week’s selloff is nothing more than a routine bit of down after a nice bit of up if support is found near 3,800.
I have a nice pile of profits sitting in my lap. I’m far more worried about losing those profits at this point than I am about trying my luck for a few more dollars. Friday afternoon, I took a small profit and will sell even more on Monday if prices rise.
I might be selling these partial positions too soon because my reflexive selling continues into the following week. However, this is acceptable because it is never a mistake to profitably. I’m not even going to try because I know I can’t pick the bottom. It is truly a no-lose situation for me because if the selling continues, I will profit from the partial positions I am still holding.
In terms of what comes next, if prices rise Monday morning, I will close the remaining short positions and even go long if those initial gains last for a few hours. A great low-risk entry would be to start small and stop below the early lows.
However, my ideal setup calls for a sharp selloff on Monday morning that drops more than 3% before bouncing back strongly in a capitulation bottom. We won’t be so fortunate, but that’s what I’m hoping for.
