When the Market Takes it on the Chin
(This post was sent via email on 4/25/2024)
When I was growing up my father watched wrestling. I’m not proud to admit it, but I was a fan too.
Rick Flair, Jimmy the Super Fly Snooka (no idea on spelling), and my favorite, Wahoo McDaniel.
But at some point I figured out it was totally fake…though I understand the entertainment aspect…and I completely stopped being a fan.
Over the past few years I’ve become a fan of another “fighting” sport though, that is anything but fake (if you know it actually is please don’t spoil it for me), and that is UFC fighting.
They have characters every bit as colorful as the old wrestling stable, with Connor McGregor, Patty the Baddy, and Tai Tuivasa who is famous for his “shoey”. Or drinking beer out of fan’s shoes when he wins.
If you can stand a little blood, it is so much fun to watch. Highly recommend it.
Almost 100% of the time I’m watching these fights with my son these days.
And, when one of the fighters takes a hard punch that results in some quick wobbly legs, we ALWAYS turn to each other, and pretty much in unison say, “THAT hurt him.”
(IF you are a UFC fan, no, we don’t throw our arms to the side and come out of our seats like Joe Rogan…but we do a scaled down version, and a small “OHHHH” That hurt him.)
Now, when this happens, sometimes the fighter who is hurt is able to stall for a bit, catch his breathe, recover his wits, and actually win the fight.
But, the majority of the time, when you hear a “THAT hurt him” out of the two of us, it isn’t long until the HURT fighter is donesky.
You see, it’s very difficult to fully recover from a “THAT hurt him” even if you’re able to stumble around a few more minutes and fight off the inevitable knock out.
By this point you should be thinking, OK, but you’re a stock market guy…soooo…
And you’re right, there is a point related to saving or making money in the market.
Here’s the thing. Much like these UFC fighters, when the stock market gets a “OHHH, THAT hurt him” event, it’s often just a matter of time before the knock out blow. (The time in between, where the market attempts to fight back, but you can tell it’s very likely not going to work out, is called a “retracement”.)
That’s what the market has been doing after two “OHHH THAT hurt him” blows this month. Specifically I’m talking about a first blow on April 4th, and a second on April 15th.
(If you’ve been reading my emails I made a call from the stands on that April 15th punch a few days before it happened. I could see the mighty sucker punch coming in from the back as the late, great Toby Keith said…look it up I’m on a roll.)
So, where are we now as a market?
Well, we’ve been punched in the face twice, and our legs are super wobbly. USUALLY, what happens at this point is we fall over on our face after a final flourish from our opponent.
And, anyone who follows UFC fighting…or happens to look at technical indicators and patterns in the stock market…should be extremely cautious that we’re about to go down for the count.
Whether that means buying puts for protection, exiting long positions, or putting on shorts, that’s up to the individual “sports bettor”.
As I’ve been looking very closely for that “I’m trying to fight back, but I’m not sure I can do it” moment, puts became very fashionable in my estimation around 3pm this afternoon as we challenged Friday’s lows in the QQQs.
You do you, but keep in mind it is extremely difficult to recover…at least short term…from an “OHHHH THAT hurt him” blow, whether you’re a UFC fighter, or the stock market.
Don’t let that canvas hit you too hard in the face as you fall. (Translation, caution is STILL the word of the day, even after this multi-day attempt at a recovery. The recent uptrend has been clearly broken, and the BEST longs can likely hope for is a sideways market.)