Today was nasty...The market on the gap up reversed course. After yesterdays close a gap up is typical. The level and speed of the reversal was a bit surprising but in Down Trending markets almost all rallies are faded.
As I mentioned in the blog in the morning I will be trimming positions in the a.m. on gap up and that's what I did. In markets like this its good to constantly be taking profits when you see them. As you can always buy the stocks back. I trimmed SNV, PARD pretty much everything. When i bought them back I got them at a better price. Yeah they are down now but I booked gains on them 1st thing so whatever I'm down now is neglible and I got them back at a better price.
The key to the trading this past 2 weeks has been taking profits as you see them. NO longer are the 30-50% booms showing up and they WONT! they just wont. I saw numerous setups that a month ago would explode and now they peter out at 5-6% before reversing. Those profits have to be taken.
As we keep saying in the BF and in the blogs its best to stay at least 50% cash for most of the past 8-10 days i been closer to 75-80% cash. I've taken some lumps with UCO and some other positions but they are neglible as I have a large cash hoard to tide me over. 'm fine taking small hits to my port as your cash management will help you survive for the time of a reversal.
In terms of the general market. It seems like we are starting to get to the bottom of the range we keep talking about between 50dma and 200dma. On a gap down tomorrow we should be near a level where a bounce can happen as we are starting to get oversold and nearing some major support.
It is possible that we break down through the 200dma. the probabilities of a confirmed breakdown lessen when mkt is getting real oversold but its still possible. If that doesn't happen though. We can scalp $sds (double inverse etf for SPY) right through it.
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The gameplan: SELL ALL SPIKES sell all spikes. I been posting that everyday in the boom factory….just do it…there is nothing wrong with taking profits. My plan is to buy extreme weakness. We gap down to the 200dma I'm adding stocks.
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If your a partime trader or a swingtrader. Easiest way to that and get good exposure is to use $sso (double etf for SPY). Use $spy as your proxy so if it breaks below 200dma then you unload your $sso
