The stock indexes sold off today in one of the more bouncy sell off patterns. When the market is moving lower, do you short it right away or do you wait for a bounce? Some of our strategies short momentum and some short bounces. There are cycles when there are multiple medium sized bounces like we had today. Stategies that short quickly along with strategies that short small bounces can get stopped out on an extremely "bouncy" day. The temptation is to adjust the strategy to wait for a larger bounce.
I have found that once I make that sort of adjustment, the market then sells off without a bounce. If a strategy changes from its current set of rules to more closely match what was recently observed, the market can cycle back to the original set of rules, generating losses or missed trades in the new set of rules while the previous set of strategies captured the move. There are many cycles in the market and consistency is key.
In recent years, on down days, there seems to be a "force" that tries to close the market at its early morning low. While the Nasdaq was down -355, the 4:15 pm EST close was only 9.75 points below its 10:49 am EST low. I anticipate over time, this pattern will get stretched when the bulls lose the excessive control they have to continuously prop the market up. There is a side of the market since 2020 that has remained excessively aggressive in the "dip buying no matter what" mindset.
The One Million MNS 87 was down -1.07% today while the 250K Portfolio was down -$2,140 in live trading. The first three days of trading this year were profitable and have provided a buffer for today to keep some gains on the year in the first four days of trading. There were some nice short trade signals but five 100+ point bounces in the E-mini Nasdaq during the day that made the short side more challenging. The V-Reversal finally reversed from short to long and was stopped out on the last sell off before the market made a final V-Reversal up without us.
The hypothetical trading system signals for the Stock Index Portfolio 24 was -$9,420 per E-mini and -922.75 per Micro. This new portfolio was at equity peaks on Friday. It was a harsh day with the wild market swings as all strategies were down on the day.
The hypothetical trading system signals for the Top 50 Select was -$1,375.00
The hypothetical trading system signals for the 50K Portfolio was -$2,027.50
So far in 2025, going long at night and shorting the day session continues to be similar to 2024 with nice gains in the night session for longs and an overall down market during the day session. The 30 Year Bond yields continue to rise as prices continue to drop. We saw a big move lower on Bond prices today on the JOLTS report. The VIX closed up in the 17 handle today.
The VSD Breakout 2025 is a strategy that I want to add to the One Million MNS 87 when we can sync up and the risk to worse case drawdown is reduced. This strategy did really well in December and was up yesterday on a long trade and took a short trade in the after hours yesterday, keeping the trade for the entire session and was up +$7,845.00 (hypothetical) on the day per contract. It sat through all the bounces and through a 9 hour mean reversion from 11:25 pm last night through the open of the day session today.
This is the type of hindsight trade that looks easy, but all the bounces can make it challenging to sit through. I look forward to synching up with this strategy for live trading on days like today where the early short captures the move.
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