Here's how I play the pair. 

I adjust when I get moves on both sides with my % allocation. LABD moved into the mid $27s from $25s yesterday so I collected on some into strength I purchased when it was weak. 

then I wait for an established range and decide if to move in on some on the other side, which I did increase my LABU when it came into the pivot support. Really gonna depend which way the wind blows for the market of course, though my experience has been XBI tends to bottom before the market and top before the market. Now soon as I say that, the market will do something totally out of the norm. Gotta love algos, quants, other factors, and options. The one thing I control is monitoring PRICE. 

All that being said, I make sure I capture trade profits when they are available. No wondering if I'll get this or that price after. I typically do the sell some keep some deal unless its a powerful move. Using allocation dollar amounts has afforded me also the freedom to not feel like I need to call a top or bottom. Objective entry off a support and/or objective sell into resistance and I go from there. Capture a target, sell some. 

I'm currently net long in my spread after earlier adjustments. That could change in 5 minutes or 2 hours, market decides when and where. Protect, monitor, and adjust is my favorite song on Amazon music   

SPX Gotta admit, this market is making me rethink selling any of my long term assets. We are well allocated to ensure a worse case scenario with what we have overall. The bottom line is I want to come out of 2023 with more stocks than I did before because the next bull market expansion will ultimately have highs come again. And if not, I won't be here to worry about it.   

We continued to accumulate even when things dropped into the 3,600s this year. My prior consideration was to sell all that inventory back up at 4,220s if we get there. With 70-75% of earnings being good there is certainly an argument that the bottom is in. I still may sell that part of the inventory if we get there though. It would secure even more peace of mind for me. I think it particularly makes sense knowing the concerns that remain. The risk/reward would be reasonable to give inventory back to the market with making money in between. It could take significant time to make that spread again. 

I can't ignore the negatives which I've outlined over the last days and have been discussed so many times. We have 5 gaps below now and the market is overbought. The VIX is about to hit that demand zone Steve showed in the newsletter. A 64 RSI is very risky here for new longs to say the least. Very extended here. Next gap above is the 4,176.82. I'd be surprised if it made it in a straightline but who knows. Sentiment can carry things further than expected in both directions. Caution is elevated for me. Protect, monitor, and adjust. There is always another trade, the market just wants me to believe there isn't. I've been doing this long enough to know better. 

I hear ya, goes for perma bulls and perma bears. Eventually it comes true if you wait long enough and take that snap snot in time. The key is taking advantage of the opportunities on both sides, not staying married to a view for me. Morgan Stanley has been bearish for years. They missed a lot of the last bull market. They look like heroes this year so far. 

This is not what a recession looks like

Signs of economic growth are everywhere, says Jurrien Timmer

https://www.fidelity.com/learning-center/trading-investing/doesnt-look-like-recession

Some good things to think about going forward. I can see why respecting the price action is a lot easier. One can really get into the weeds trying to figure out the total picture economically. It is near impossible on a given day with all the moving parts. Protect, monitor, and adjust. 

Nice trade! 

Poor Cathie/ARKK, she buys it all before it tanks and sells things after they tank. Never seen anything like it.

She bought COIN in 200s,,sells in 50s.

Still going, huge blastoff today. Anytime areas like this are oversold like that into demand zones, they are buys. Tightening up my positions as rsis are getting extended. 

Good stuff. Might need that right shoulder before the bigger dump can happen. Will respect the price action either way. That gap 4,176.82 is the next major area, then good ol 4,220s at the fib. Not getting too far ahead of myself. I have concerns longer term still. 

We have a pocket here where travel and food are doing well and even raising guidance. Wingstop, Hilton, and Royal Carribean all good examples. This was the covid stuff that got destroyed because of the shutdowns.  Notice these companies are operating what seems like independently in the cycle here. Jetblue buys Spirit for $3.8 billion. 

We now have other sectors taking the discounts as consumers adjust their habits. It can work really well until the cycle ends and people are out of money. Talk about a mess.

Exactly. They are comparing deficit spending to covid level spending and calling it better. Less bad is the story right now across the board. But less bad compared to what? Time to get on a budget. Not gonna happen. I just can't figure a scenario where this returns to growth without a lot of pain. I wish I could because many will be hurt. It saddens me. 

How the Great Inflation of the 1970s Happened

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

Keeping this discussion alive amidst sentiment/feelings that the worst is over in the longer term.

Thanks for sharing your thoughts. So tough right now.. It is amazing what a period of days of upside can do. Of course many are biased too as there is a lot of long term money at stake. I have some out there too but am well prepared for a worse case scenario allocation wise. 

I gotta keep paying attention to the facts. Its one thing to control hyperinflation and it's a whole other thing to have earnings growth.. Growth ultimately drives stock prices. 

One thing that really bothers me is we haven't had a true capitulation. Big money ultimately is the buyer that bottoms markets. They haven't even joined the party. 

I continue to believe even a rally to 4200-4300 is distribution to retail. The FOMO is so high here for it being a bear market. Means a crash will likely come when everyone thinks the worst is over again.  

You'll notice in the chart that the Fed fund rate had to be over the inflation rate to control it. We're so behind the curve but everyone anticipates inflation will magically come back down to 2%. Would be a first. I have no doubt that inflation will come down hard soon but it will be sticky and not sustain at 2% like it needs to for long term growth. 

Not seeing how this gets fixed in 7 months at all. If I'm wrong that's fine, I'll sell into major rallies and secure even more peace of mind. I'm an operations guy at heart and you can't fix 3-4 things and grow consistently in an environment like this. I believe the many companies who are warning, laying off workers, and guiding down. 

Let's see what GDP, PCE, and more earnings reveal. Today felt good though I'm not getting complacent. It can and has turned on a dime all year. 

SPX QQQ There's a question nobody can answer for me right now ..even if the Fed were to Pivot how does that actually help inflation?

The only way I see inflation coming down is if we have a dramatic deflation which means all assets have to decrease in value. What am I missing?

One thing if the market bounces, though nothing is solved long term.

A  respected friend sent me back this answer as I wasn't aware of the history of trying this very strategy in the past by the Fed. Here is his answer to my above question: 

It doesn't. That's what's so bizarre about people looking for a pivot. It puts us in the 1970s stop and go. Check the Dow and SPY charts for that decade. It was a disaster. Fed's tried cutting rates every time inflation started to drop. It turned out to jump right back up every time. Over a decade of fighting inflation was the result.

I saw another article that he had a loss on the trade as he bought in July 2021 originally. 

Probably doesn't want anywhere near it with the lawsuits that are flying around with government reps and trading. 

Here it is, just under $342,000 loss: https://www.yahoo.com/news/nancy-pelosis-husband-just-dumped-151017638.html

Yep. Everything out here is just an instrument to me. 

Trading encouragement and tips. Gareth lost about $300k before becoming a consistent trader who makes a great living. His story and tips in this interview. I found it worthwhile: https://www.youtube.com/watch?v=uni_Ck5yf-A

I remember almost quitting too at one point with trading, so glad I didn't. Being a part of this community is so helpful for improving the learning curve. Great habits and strategies bear repeating. I need the reminders and the perspective of others as well who have succeeded for years. Then I form strategies that are my own. There were times I got sick of hearing and sometimes still do, adjust until EVIDENCE changes. 

I would complain and blame when I wasn't getting my desired result. These days, I'm neutral, I simply obey the price action during a given day or days. No more having to be married to a bullish or bearish view for me. Freeing and I make consistent money. 

SPX typical stuff you get with market "weathermen". One of these scenarios will be right lol

The next video will say it was predicted. Ya it can only go up or down eventually. 

Comedy is telling the truth. I turn these on now and again for a laugh. This one was 35 mins discussing the SPX. Love this stuff..

ARKK hilarious "management"

Some interesting reading for those interested in investment psychology, how it relates to decision making, etc.. Howard Marks new letter "I Beg To Differ": https://www.oaktreecapital.com/docs/default-source/memos/i-beg-to-differ.pdf

SPX Stagflation anyone? Nothing the Fed does can stop this from taking time to normalize. Unfortunately we may have a lot of pain ahead after whatever seasonal rally unfolds. If Walmart is struggling then the economy is in major trouble. If some type of system wide issue can be avoided that will be a win. Where are the signs a bottom is in? Unemployment announcements are just taking hold and companies are guiding down. 

*IMF Again Cuts Global Growth Forecast Amid Inflation, War*IMF Now Sees Global Growth Slowing to 3.2% in 2022 and 2.9% in 2023*IMF Has Repeatedly Cut 2022 Forecast, From 4.9% in October, 4.4% in January and 3.6% in April*IMF Warns Actual Outcomes Could Be Worse, Citing Several Downside Risks-Walter Bloomberg

SHOPIFY TO LAY OFF 10% OF WORKERS IN BROAD SHAKE-UP - WSJ.

*MCDONALD'S SAYS US LABOR INFLATION IS ABOUT 10% NOW*MCDONALD'S SEES US FOOD AND PAPER COSTS UP 12%-14% IN 2022-Walter Bloomberg 

Walmart and McDonald's just told the Fed that inflation needs to return to normal before business does. No way they can pivot. Into the wind here in a major way. 

Rancid market backdrop and action today. A ton of option premium out there for August 19th, they may be trying to hold it through there. After that turn out the lights, the party is over for some months. Maybe we see that October buying opportunity.