Happy Capitulation Day!

I slowly unwound most of my positions over the course of the week. It is clear that momentum is overwhelming on the kill the dollar/buy anything else trade. I was fortunate to at least have a lot of TLT 91 puts to ease a little of the pain(there was still a LOT of pain).

I felt dirty shorting silver and gold and pretty much decided to never do that again. They are my favorite investment(in its physical form) and even though I was shorting paper it still didn't feel right.

I was dead wrong on the bounce in the dollar. I shouldn't have gone against the momentum there. I thought a lot this week about not going against the herd in a momentum trade in the future. The herd has spoken and they decided the dollar is bad.

So I sold every option position I had, except my UUP May 22's. I did start to add USO puts, in both May and June. Strikes range between 38-43. The world cannot function for long with oil this high. It will slowly strangle most advanced economies and there is a chance the central banks conceive a scheme to bring it back down. They don't mind their currency weakening, they don't necessarily mind high PM prices. However, they know keeping oil this high for too long will doom every margin on the board and employers cannot raise wages, yet. I bet they are busy inventing a "crisis" to cause oil longs to head for the exits.

Then again, what do I know. I just gave back about 50% of my trading portfolio in just shy of a month(a new record!). Fourth(or fifth?) time in 3 years I've given back half my porfolio. Like each time before, I will look to get more defensive. I will take things a little slower over the next few weeks and possibly set up a hedge play. Each low has been higher than the low before it.

I feel fortunate to still be up for the year. Granted, it is a very, very small gain now. Basically a rounding error. Is it better to double your portfolio and immediately give back the gain or lose half your portfolio and immediately double that back to even? Either way, you are right back where you started. However, making it and then losing it has a little more sting to it.

Happy trading. I plan on being more of a spectator for a little while. I have a vacation coming up next week. Probably good timing.