Friday Notes - Locking Up Q2

3:45pm Well, the cost of this week's blinds and antes, along with my inability to effectively adapt to the current market pace, wiped out a good portion of last week's gain, and so -- just as we did in the memorable December 19, 2008 post -- it's time to lock in the first six months of '09 with a hard +$400K chip gain stop, to supplement the longer-term +$2 Million protective stop on the cumulative 2008-09 gains put in place a few weeks ago.

Why? Well, if it isn't startlingly obvious by now, I'm at the same point I was on that magical date in December in terms of not being able to keep the early month personal momentum going heading into the all important quarter close (June '09 looking a lot like Dec '08), including this week's first consecutive three-day draw in sixteen months (well, we knew it wouldn't go on forever ... not a huge hit by any stretch, but nonetheless a huge warning sign.)

The primary reasons include not being a good range trader, not liking my capital in the market for very long -- preferring to scratch if the market doesn't move in my favor quickly -- and hour-long two point moves & VIX in the 20s that are akin to trying to play chess-by-mail with checkers without an opponent on the other side of the board. The action has also temporarily numbed my tape reading feel much like my dentist Steve numbed half my face on Wednesday morning.

And it's not that I'm not making good trades ... they're certainly there ... they're just offset by lack of patience on both entries and holds in this time when you need a sun dial to time the egg boiling and there are really only one or two solid opportunities a day. Plus, too many of my days have been starting off rough and then spent trying to scalp like hell to earn the keep. Case in point today, some solid short trades in the afternoon which didn't quite offset the morning slop.

And so this game of push-push-push-rest reaches another resting point for me, and I'll simply repeat the following words from December's post:

"My only disappointment has been the last two weeks of sub-par performance. Yet I clearly realize that's like saying the Celtics beat the Lakers in six games last year instead of four. Fatigue finally took its toll in December via lack of focus and interest, as if to keep my humility in check for the future." Don Miller, December 19, 2008

Replace "Celtics", "Lakers", & "December" with "Lakers", "Magic", & "June", and the rest is 100% deja vu.

In terms of recent comparisons, it's somewhat interesting that I'm running at about 77% of last year's Jan-June pace when I was +$555K on the way to the +$1.6M. And I suppose considering the personal issues I've had to deal with this year, it's far from awful. Yet the main point to me is that it's clearly below my capabilities, and I'll have to make some hard choices if I'm to take another serious run at the +$1M.

If you know me, I simply despise slowing down, as it's one of the hardest things I have to do in this business. I hate it with a passion. Yet doing so is arguably one of the main reasons why most fail miserably at this (lack of self control). My approach has always been push hard until the P&L tells you to stop ... and not before. Last year, it took eleven and a half months for the market to finally scream "STOP & PROTECT" to me. This year, it's told me a bit sooner than I expected -- although like a trade stop, this is a quarter-end pause and not a cease and desist -- yet as we know, the market always wins and you can't argue with it.

Everything has its seasons ... seasons to sow and seasons to reap.

Over the coming seven trading days, I'm going to work on sowing some seeds for the December 31 harvest in the context of some rest and reflection (and some light trading within the confines of the protective stop).

Until then, this farmer is going to lay in the hay.

My wife says I've earned it.

I really hate it when she's right.