If I had a dollar for every time I was asked, “Are you a bull or bear?” I’d be a very rich man indeed – and I’m sure you would, too! I am often labeled a “perma bull” because many of my plays are on the bullish side of the market. Recently, though, I have been called a “perma bear” for the very opposite reason.
Honestly, I don’t know why I have to be labeled one way or the other. At the end of the day, it doesn’t matter whether I’m a bull or bear, because it’s all about being on the right side of a market trend, finding good trading opportunities, and banking profits. As a result, I make trades that are bullish or bearish all the time. The only label I care about – want to stick with – is “trader.”
Sure, any of us can be biased and skew our trades to follow the direction of the market, but sometimes those are just played by the gut – and that is no better than flipping a coin. While we may get lucky and hit a winning streak for a period of time, luck is not going to carry us for very long. What will carry us is watching the internals of the market action. Market action tells a certain story that we can identify and play appropriately. Is the action bullish or bearish? Doesn’t matter.
Just recently I was asked what would turn me from bearish to bullish, so I mentioned a few SPX 500 levels that would certainly turn the long-term charts in a bullish direction. I was not making a prediction; rather, it was an observation that will help me become more comfortable with the current and future action of the market based on my swing trading style. While we have been playing the downside effectively over the past couple of months, I’m not so naive to believe the trend cannot change on a dime.
I completely understand why this is such a hot question right now. This market is difficult to trade, as it has very little-to-no memory from day-to-day. If there is resounding evidence a change is occurring, every one of us traders has to position ourselves differently. As John Maynard Keynes said more than 80 years ago,
“When the facts change, I change my mind. What do you do, sir?”
Here’s how I answer the question, “Are you a bull or bear?” I am a trader interested in producing results that consistently put my portfolio far ahead of the rest of the pack, and so far this year, the Explosive Options portfolio is up more than 40%.