CPI Gives Bulls and Bears Another Reason to Clash

2008/4/16 15:15:02

Today, the market spent the entire session wrestling with CPI data, with oscillations centered around yesterday's mentioned short-term key level of 3311 points. The final data gave both bulls and bears ammunition for their respective narratives—bears obviously had their talking points, while bulls could seize upon the month-over-month decline in CPI to make their case.

In reality, what gets chosen ultimately doesn't matter one bit. Tonight, all the major newspapers and experts will analyze this data to death, but none of it is useful for actual trading.

We don't play expert—we play winner. Facing this kind of oscillation around a key level where direction hasn't been decided, the dumbest method is of course to wait for a third-type sell point to appear at the key level before exiting, but that's truly too boring. As already discussed many times before, the operation in this situation is quite simple: sell at oscillation highs using consolidation divergence, buy back on dips that don't break the level, and absolutely don't waste these short-term swing opportunities. Note, this necessarily involves half-position operations—if it truly breaks down, you simply don't buy back, then dump the remaining half too. This is the most efficient approach.

Of course, there's also the most decisive approach: exit at oscillation highs first, then wait for the price to truly re-establish itself at the key level with a third-type buy point before re-entering. This is the safest and most effective method—no need to waste mental energy predicting whether the level will hold.

Our operations must be viewed through the lens of trading, not argument. We come to the market to make money, not to demonstrate how clever we are.

Tomorrow, it's all about the third-type buy/sell point question at 3311. If you've already been operating correctly, there's no operational issue whatsoever.

We don't wrestle with anyone. We wait for the bulls and bears to finish wrestling, then follow the victor.

Signing off, goodbye.