Why I Should Stick To What I Know And Do Best...

i.e. if there is even such a thing -- that premise is also debatable, though, on good days, I'd like to think that I do know a thing or two about equities and derivatives. A few days ago, I wrote that I might regret shorting the dollar against the euro @ $1.175. I do now -- probably a chronic case of bad timing on my part, which happens when I get involved in something which I think I understand well (because it looks simple), but I actually don't. Am I changing my view? No. Why not? Because my stop loss is at $1.1490. Trading FX is remarkably simple and, at the same time, remarkably complicated. This is why some of the biggest losses (and profits) have been made in this asset class -- by people who think they are better than the market, or rather, that they are the market.

I must admit that, from just looking at the dollar/euro chart, my trade looks worse by the minute (which makes me practically puke in disgust!), but there is nothing for me to do until my stop loss is hit -- I am just going to take a walk with my dog Rufus (who is remarkably calm about the situation, probably because he has just done his business for the morning), drink some cold water, and wait, and then wait some more. FX stop losses should be tight (unless of course you are good 'ole Warren Buffett...), because position sizes tend to be so big, as everyone and their brother (but evidently not me!) seems to know where the dollar is going. Why is the dollar going higher, I ask? Because some macro model says so (?), because U.S. rates are going higher (?), because Paris is/was burning (?), because Warren Buffett is no longer so bearish on it (?), because I am short it and it wants to spite me (?). I have no idea, but I do know that, despite what the Wall Street Journal would have you believe, the U.S. dollar structural-decline issues have not yet been resolved, hence I am willing to stick it out for a while, and probably have my a$$ handed to me in the process -- so be it!

As far as the rest of the market is concerned, I have nothing to add to yesterday's comments, except that it's Veteran's Day here in the U.S., and shorting a boring/lackadaisical tape is a sure recipe for disaster -- defined, in my dictionary, as having one's head taken out by a stampeding herd of bulls (who are "bullish" because they are too confused to ask themselves why exactly they are "bullish"). Yearly highs (1245 in the SPX), here we come!