My experience about schizophrenia

First just be clear that I’m not schizophrenic at all and you can feel safe to listen to me about my ideas posted in my blogs.😘😎 But I grew up with a schizophrenic, who was the mother of my immediate neighbor classmate. Her schizophrenia was really severe and had never been in remission. So long before I went to medical college, I had been very knowledgeable already about what schizophrenia was and how it looked like. In a nutshell, it is an alternate between two extreme moods, euphoria and depression. And importantly, such actions and feelings are withdrawal from reality and are more associated with fantasy and delusion. Almost everyday, I could see her laughing all the way to wherever she was wandering to. Then without any reason after a while, she could quickly become depressed and crying all the way back. Of course the sequence could be different but you get the point. So why I’m suddenly talking about schizophrenia here?
 

Well, since I’m not interested to practice medicine, I thought I would not be seeing schizophrenia anymore, at least on a daily basis. But I was totally wrong. Actually I have thrown myself into a world in which I’m seeing it again almost every day! If you still haven’t figured out what I mean and you still haven’t noticed yet, don’t you think the market is just like a schizophrenic? Its mood is constantly changing from one extreme to the other, often far from reality to support it. The mood swing could be huge and frequency of such swings could be relatively long in days or weeks but lately it has become extremely short. The market can be very happy and euphoric for a few days, and out of blue, it will suddenly become extremely depressing. This could even alternate within a day and we have seen such kind of intraday extreme mood changes quite often in the past few weeks, right? Below is the graph that can let you see vividly how the market mood can change from one extreme to the other. This is called Nasdaq McClellan Oscillator (NAMO). Without getting into any technical details, the indicator ranges from -100 to 100, with +60 or above to indicate an overbought condition and below -60 as oversold condition for Nasdaq. Most of the time, it alternates between -60 to +60 obviously. But from time to time it can go to extreme to either side, signaling an extreme mood status for the market. As you can imagine, since it is capped at ±100, anything beyond ±90 should not be seen often. Two to three weeks ago, the market decided to be depressing that brought down everything to the levels not seen in a decade. When S&P came down to 2480ish, I thought it was a good time to get in due the extreme depressing mood of the schizophrenia I was seeing. Apparently I was wrong and too early to think it would change the mood soon. It went down all the way to about 2350 just within days with NAMO dipping to -90, which scared most of people to death as far as I could see. That’s when I wrote “The world will not end” and we would likely see a “rip your face off rally”. Almost immediately we started to see the change of the schizophrenic mood, from extremely depressing shifting to increasingly euphoric without anything materially changed!  And now just a couple of weeks later, we are seeing S&P shot up to almost 2600 (my baseline target for the bounce) and it seems everyone is happy with NAMO to the highest level we rarely see (94.64 yesterday to be exact). This is the time I would ask my friends to cash out any meaningful gains from short-term trading as this is the time to be wise with extra caution. I personally even started to place some short positions to anticipate a mini crash at least lasting for a few days.

Don’t get me wrong, I’m not saying the strong rally I was expecting two weeks has run its course. Likely not yet,  as typically a strong “dead cat” bounce will challenge its major resistance, which should be around 2615 for S&P and if a bit overstretched, it can even run up to 2700 before exhaustion. But given how fast the schizophrenia type of mood change has been in the past two weeks or so, some sort of mood swing should be expected. In this environment, dancing with schizophrenia must be extremely cautious as it can coax you into a trap in one extreme and then suddenly changes to the next extreme at a blink of eyes. My life-long experience with schizophrenia has taught me enough lesson on this and I’m doing all my best to try to counteract against the hoax by the schizophrenia. I hope you will do so also!!