Random Thoughts
"Same As It Ever Was"
I woke this morning and began writing about the importance of patience. I wrote that the secret to trading was doing nothing when there’s nothing to do. I also wrote that doing nothing is much harder than it looks, especially for the successful and motivated. Extraneous (to trading) influences such as wanting/needing money, trade goads, boredom, FOMO, your home life, and many others will always be tempting and taunting you. I even wrote about how I tend to beat the dead horse a lot for two reasons: you need to hear it, and heck, I need to hear it too. I felt pretty good, thinking that I had it in the bag until I pulled up my last newsletter. In my best David Byrne voice, “same as it ever was, same as it ever was.”
Well, given the market conditions, I think it bears repeating.
“Doing nothing is harder than it looks.” Ken Lambert
Bide Your Time
“Remember this: When you are doing nothing, those speculators who feel
they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes. Jesse Livermore
The secret to trading, if there is one, is waiting until conditions are conducive to your methodology and pouncing. Unfortunately, you often go back to waiting all too soon. Tom Petty got it right:
“The waiting is the hardest part.”
“He who waits, wins.” Big Dave
How Bad Is It?
So, before I beat the dead horse on being patient, let’s look at why we need to be mostly waiting.
One criticism of technical analysis is that it’s “all in hindsight.” A few years back, a friend was a little concerned about a stock that he bought. He told me that he bought some stock, then began buying more and more and more over the next few months as the stock price dropped. I drew a big blue down arrow on the chart. He then said, “Well, that’s in hindsight.” Okay, I’ll give you your first buy (even though the trend was obviously down then), but you said that you bought it at lower and lower prices. So, from when you started buying more, up until now, it’s been in a downtrend. This all fell on deaf ears as he kept buying more and more of the stock until the company eventually went bankrupt. So, yeah, maybe the downtrend wasn’t so obvious on the first buy (it was!), but it was on subsequent purchases. It always amazes me that the simplest “indicator” of all: the “net net” price change, can be quite telling. “Connect the dots” with a big blue arrow, and you got a pretty good trend indicator.
So, what’s the “net net” indicator saying in the $SPX? Well, we haven’t made any forward progress since June. Looking at a slightly more technical indicator, we haven’t had more than 10-bars of upside Landry Light since August. And, even then (08/13/26), the market failed to make significant new highs and began to sell off (i.e., day 10 was the exact high). Always look at the chart for confirmation, regardless of what your indicator is saying.
