The market gapped down over 2% at the open, and then spent the rest of the session in a narrow range. Apparently, the two-week consolidation period has resolved to the downside. While it's too early to say whether the peak of the recovery rally (so far 1018) has been put in, it's certainly close. Whatever comes next will be tough to play. In my opinion, the best ways to play the bear market from here on out are to focus on short-term trading (intraday to 3 days) or fairly long-term trading (weeks to months). My recommendation to non-traders is to go 100% into cash. For conservative traders, put 10-25% of capital into an inverse ETF (preferably 2x or less in leverage) and hold through, stopping out if the S&P breaks above 1100 and using the weekly chart to set sell-stops. I'll try to bias my system to wider stops on the short side and greater emphasis on taking partial profits.
Today we sold TMX for breakeven, SWC for a wide loss (it gapped down hard at the open), and we bought SKF.
| Current Holdings |
| Ticker |
Basis |
Closing
Price |
Perf. |
Sell-Stop |
Addl Exit Guideline |
Chart |
| SRS |
12.31 |
13.49 |
+9.6% |
12.31 |
Set sell-stop for partial position at 13.10 |
Chart |
| FXP |
10.04 |
11.04 |
+10.0% |
10.04 |
Set sell-stop for partial position at 10.88 |
Chart |
| SKF |
30.52 |
30.74 |
+0.7% |
28.11 |
N/A |
Chart |
After such an emphatic drop, few setups appear on either the long or short side. The idea for tomorrow is a speculative long.
New Trade Ideas
| Ticker |
Entry |
Exit A |
Exit C |
Chart |
| SRZ (Senior Sunrise Living) |
2.19 |
1.94 |
N/A |
Chart |
Please refer to "How To Trade The Ideas" (right-hand side) to read this table.
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