Mission accomplished?

I was travelling last week and got this brief message:


"@深山老林 上次你说大盘要掉, 为什么还拼命往上涨?" (in English: why the market is going up like craze when you said it is going to decline?)


And my brief response on the road:

"I could be wrong of course but I still think the risk to the downside is greater now than a week ago. It could just be a bull trap that can easily wipe out weeks gain overnight. We have seen many times in the past few months but again I could be wrong"


If you still remember what I was talking about in the past few months, you should know that I have been talking about an uptrend and recovery for the market since early April. Here is what I said back then: "But now I actually think the market may have reached its bottom for this two months long correction and moving forward, it may start its uptrend as the major direction for the rest of the year........However, it is important that there is no such thing as a straight line up. The volatility will still be high and we may still see scary panic selloffs during the course. Panic selling at lows or chasing highs are both losing games in this market. Be disciplined and be patient! "  So there are two points I was talking about back then: the market should be moving up as a major direction but may also involve panic selling from time to time.  


I don't want to be surge coding about my bad timing for the most recent call for a potential strong selloff.  While it is no surprise at all for me to see the new highs as I have been talking about it for many times in the past few months, I indeed was expecting another strong selloff before the new highs. So I was wrong of course about my timing. This is part of the pitfalls for TA as it is not a rocket science to allow for calculating for an exact timing. Rather it is an art with a lot of moving parts involved. Although the market seems to have accomplished its mission for new highs, I'm still thinking we are going to see some strong selloff that may potentially wipe out all the gains in the past few weeks. Actually each inch higher is potentially just adding more severity for the magnitude of the downside risk. This is how I'm seeing the current market and I maintain my point of view. I'd still advise you not to chase the market as the market has the habit to punish most people the most, especially when there seems no risk at all. 


As I have told my friends, one can still make money by not chasing the general market. One easy area for me two weeks ago was the oil sector, which was brutally sold off but was poised for a bounce prior to the Labor Day. So I bet long with the leveraged ETF, UCO, before I went to travel. Luckily it was a good timing call and the crude oil was up for about 10% within the past week or so and my UCO went up even more of course. Since oil will typically be sold off post the Labor Day per its historical pattern, I took my short term profit while ending my travel. 


Enjoy your Labor Day holiday friends! It will be interesting to see how the market will behavior in September. Personally I feel more bearish than bullish as of now, betting for more volatility in the coming weeks, but importantly I could be wrong for sure!