First of all, if you haven't already, take the time to watch the two videos below-they are the forest and the big picture.
As for the trees, we are in a top and a top of some consequence. TOPS ARE ALWAYS VOLATILE. That means that we may know the ultimate direction, but the day to day, hour to hour action can change very quickly, especially now that institutional money has their short positions in place. I suspect they started putting them together last October, which is ironic because October ends more bear markets than any other month.
Now is the time to keep those stops wide, to build positions, not establish them all at once. I posted a lot of individual stock short picks tonight because being short has it's advantages like being able to use your profits before you close your trade, unlike being long. However, the short ETFs we have ben buying are not real shorts therefore they do not have that advantage, but they do have the advantage of establish broad market coverage without being overly sensitive to stock specific news. They also "can" return more than you expect in a trending market. In a sideways market they are bloodsucking killers.
Whatever shorts you choose, I do recommend you look at the list of ETFs (ultra/3x short) that I listed in a post below. Those shorts are the foundation of all that I am doing for my clients that I advise. We are at approximately 50% capacity, with 25% of the portfolio reserved in cash. By the time the SPY breaks below $104.50, we want to be 100% short (with the exception of the 25% in cash for opportunities in swing trading-the rest is a trend trade).
I can not stress enough RISK MANAGEMENT!
HERE ARE SOME RESOURCES:
POSITION SIZING VIDEO
THE 2% RULE
POSITION SIZING 2
Know these like the back of your hand. You can also divide up the 2% by the number of positions you intend to trade (8 positions into 2%= 1/4% loss per trade). However, now is not the time to place tight stops, they need to be either REALLY tight and you can take another crack at the trade or they need to be wide, there's too much volatility and that is why I gave you so many limit trades.
3C right now is all over the place in the midterm, except some negative divergences on the 1-min chart suggesting early weakness which could build is some key levels are taken out, or if the powers that be spin the news in a bearish light.
We'll see, but now is not the time to be fooled by any strength in the market. There will be no new Bull market.
If you have questions, email me directly at BT46n2@gmail.com
**For all of our new members, the date on the trade spreadsheet (to the right at the top, current one says June, but May is useful too) is the date the idea was listed. If the notes do not say "Limit trade" then all trades are for execution on the open at market price. The stops are suggestions, you can modify them for your own style.
5 years ago
