We are often asked, ‘are you bullish or are you bearish?’. I am often labeled a ‘perma bull’ because many of my plays are on the bullish side of the market. More recently I have been called a ‘perma bear’, for the very opposite reason. I really don’t care about labels, it’s all about being on the right side of a market trend. We make trades that are bullish or bearish all the time, but the label I want to stick is this one – trader.
We can have a bias that tends to skew the way our trades to the direction of the market, but sometimes those are just played by the ‘gut’. That is no better than a guess, flipping a coin. While we may get lucky and get on a streak for a period of time, luck is not going to carry us for very long. However, if the internals of the market action are telling a certain story that we can identify and play appropriately, then we know the course of action.
Back to labels for a minute. When asked recently what would turn me from bearish to bullish, I put out some SPX 500 levels of interest that would certainly turn the long term charts to bullish. I was not making a prediction, rather an observation that will help me be more comfortable and in tune with the current/future action of the market with my swing trading style. While we have been playing the downside effectively over the past couple of months, I’m not so naive to believe the trend cannot change on a dime.
This market is still difficult to trade as there is little memory from day to day. If there is resounding evidence a change is occurring, I have to position myself differently. As John Maynard Keynes said over 80 years ago, ‘When the facts change, I change my mind – What do you do, sir?‘
I don’t pay too much attention to those putting a label on me. Frankly, if we can produce results that consistently put us far ahead of the rest of the pack over time, that is the only label that matters.