Put away your charts for a minute. Unglue your eyes from your quote screen. Close up your spreadsheet because today I'm going to broach a topic that is, quite frankly, weird. And that topic is: your body and what it can tell you!
I know, already I sound half-, if not completely, cocked. But bear with me for a moment because I have a theory.
First, let me give you some background. A few years ago, I was reading about
, and the author wrote about how Soros felt his back's health was a good indicator of how well or poorly he was trading. In other words, if he had a back pain, invariably he was in a trade he shouldn't be, or a trade was going badly and he wasn't being proactive. In short, bad back equals bad trading.
Now when I read that, I honestly thought it was a bunch of hokum. Yeah, right, like your body knows how well you're trading. Next we'd be using mood rings, Ouija boards and the Magic 8-Ball to tell us what to trade.
So I thought no further about it, basically writing it off as the idiosyncrasies of a crazy billionaire.
A few months went by, and all of a sudden my stomach started killing me. And I mean to the point where I could barely stand up. Yes, yes, I thought of going to the doctor. The only problem: I had just been in for my 40th birthday tune-up, had gotten the complete once-over (including that thing they do with the glove -- guys, you know
what I'm talking about, and it ain't fun!) and checked out 100% OK.
The strange thing was that this pain would gradually build up throughout the day, so that by the time I went to bed each night, I had to lie on my side in the fetal position to get any relief. In fact, sometimes it got so bad that I had to leave the bedroom and go sleep on an ultrasoft couch to get any relief at all.
After a few nights of this, I remembered the George Soros story and got out my trading sheets. Ironically, only a few weeks earlier, I had started experimenting with a new method, and had -- stupidly, by the way -- been using real money.
Well, one of my positions was absolutely killing me. And I mean killing me. I was short
(I can still remember the name!) and it just would not go down. I don't even recall what cockamamie method I was trying, but it must have been the dumb-a-- method because TGX was grinding me to bits, and like a dumb-a--, I wouldn't let go! (Of course,
it's down about 80% from its high, so as usual, right ... but early.)
Anyway, I went over every trade, trying to figure out which one was bothering me, until I finally came across TGX. Light-bulb time: TGX was my Soros trade! The trade that would have given him a bad back had given me a bad stomach.
Now, I swear this next part is true, I lay there and promised myself I would cover TGX the next morning. And exactly three minutes after I made that vow, the stomach pain went away.
The next morning at 9:30, I covered TGX, absorbed a whopping loss, but felt, well, purged! Theragenics was out of my life, never to trouble me again.
Now, was there a link? Was it cause-and-effect? Are these the ramblings of a nutty technician?
Well, here's what I think. I think that when you've traded for a while, you know deep down when you're screwing up. And even if you don't want to admit it consciously, the body knows. G. Soros has his back; G. Smith has his stomach.
So now I listen to my body. And it never fails me. Something aches, and invariably I'm screwing up my trading. In fact, just a few weeks ago, it was my back that was killing me instead of my stomach. Turned out it was just a strained muscle. But you never know...
10K! Shoot, it doesn't even look like Dow 9.9K anymore. Not that I care, except that my Special, Super-Duper Dow 10K! column just sits there in the editor's in-basket collecting dust. And to think I spent every bit of 15 minutes putting it together!
I'll give you this glimpse from the column, though: This A/D line does not support a high market. I said it on the
chat, and I'll say it now. The A/D line is
. You can buy on dips, you can look for pockets of strength, but my story this year is the same as my story for three-fourths of last year: Short is where it's at.
In fact, look at this A/D Line.
! And to back up my point regarding the short side, my win rate there is close to 80%. I'm telling you, it rarely fails: My win rate gets that high, and it's the market, not the GBS magic.
Look, I'm not a bear, but I'm not a bull either. It's just been a lot easier being short, so that's the side I play. No need to make trading any harder than it already is.
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication he had no positions in the stocks mentioned, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. This column, Charted Territory, appears every Wednesday. Smith also writes Technician's Take, which appears every Monday, and TSC Technical Forum, which runs Saturdays and Sundays. He appreciates your feedback at