- Sold BDD (hard stop hit right on Monday morning)
- Shorted PCBC (right away used margin from BDD to short this one)
- Sold RHT (stock broke 50dma. Break even trade)
- Shorted GME
- Sold CAKE (stock broke 50dma)
- Shorted FULT
My system caused my account to become much more exposed to the short side of the market this week. Monday's weakness was the last straw for some longs, which were just barely hanging on.
Some of the longs that I am still holding, like OCN (see below), seem quite hearty, and have so far not been shaken by this recent weakness.
Now that my account is net short, I find myself looking at charts at a bearish angle. Interestingly, it is not a case of me looking at the charts with a bearish angle and thus deciding to become net short.
One psychological dilemma that most traders face (even if they are not aware of it) is that if they are heavily long, they will see all of the bullish aspects of the chart, while if they are heavily short, they will notice only the bearish aspects of the same chart. This is known as the confirmation bias.
Here are 2 charts that are a manifestation of my confirmation bias:
The chart above shows the Nasdaq stalling out under major gap resistance. The second chart shows the Australian Dollar divided by the Japanese Yen (the carry trade, basically):
To be clear, these charts are only for entertainment purposes, and they do not, in any way, have an influence on my trading. I only follow the rules of my system, and this helps keep many psychological issues, such as the confirmation bias, at bay.
Anyway, here is one stock that I am holding that I may add to if the market rises next week: