Well I will take it after a miserable Sunday. San Fran +150 a winner in MLB 3-2. I just got back in and will not have time today to work up MLB for tonight.
After the carnage of yesterday with the dow plunging 300 points the market is taking a breather today up .6% an hour before the open. The market right now is officially oversold. Its time to start looking at how to make some money on a rebound. But unfortunately its not risk free as the market has not yet tested the lows and there has been no capitulation. Just a steady move down. So any trade I make is going to be a counter trend trade. Exits will be much quicker then if the market was in an uptrend.
Right now I have two mean reversion trades in equities. If the market trades back to the open I am planing on putting on some more exposure to the long side. Not much though. I am going to carefully add to mean reversion trades right now. This is not a market to jump head first into.
Also I will be looking at some breakout trades if they trigger. There is plenty of room to the upside right now if the market gets any kind of reversal. But again in an uptrend I take every trade that triggers with about a $600.00 stop loss. Right now I am going to be selective and put on 1 or 2 trades if they trigger. There are not very many good setups out there right now.
Finally we are still a few weeks away from entering a portfolio position for the best 5 months of the year. I have already started a list of candidates of 10 to 20 stocks. Typically I put 10,000 in each position. No reason to do anything different this time around. But first I want to see at least one of these things happen…1. A capitulation move to the downside (500 to 1000) pts in a day taking out the prior lows 2. A return to the 200 day moving average 3. The NASDAQ taking the lead again on a weekly basis.
Right now the most likely thing to happen first is 2 or 3. We are so far away from the 200 day MA that waiting for the cross over is going to leave a lot of potential profit on the table. No reason to be that conservative this time of the year. #3 will most likely happen first….but #2 would be the best scenario. They say to buy when there is blood in the streets…if the market takes out the prior lows with capitulation selling of 1000 pts in a day…blood in the streets would be an understatement!
Thats my plan….lets see how it turns out….things NEVER go exactly according to plans. That is what makes this interesting.
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