Market low is due Friday at the close, so volatility will more than likely increase from here on. Also from this point on tech will underperform blue chips. I don't expect new high in Nasdaq.
The use of stop-loss is a process for me that includes:
1) Setting a line in the sand just behind the general's horse (in this case the breakout point on the upside 1171 + 1 point). If the soldiers retreat (tech, small cap, the speculative horde) then the general stays in place until the entire army is forced to move.
2) If stopped, staying out at least 1 day (preferably 2) to allow my bias to shift more toward neutral and to re-assess my premises for the campaign.
3) If re-assessment results in the same conclusion, then renewed vigor to press the position when opportunity presents itself.
The use of stops, for me, is for my psychology as well as my pocketbook. Being in the heat of a position that is not trending in my favor wears me down over time. I need a break away from the battlefield. Having returned, I have stepped into a small initial short at SPX 1150 and am looking forward to XMI 1168 falling and SPX 1140.80 falling. If they do not then so much the better for me as I have dry powder and a fresh set of eyes.
Steve, you stated you feel we will hit a low on 3/19 and much lower low on 3/29. Do you plan to add to your short position on 3/19 if things are going as you expect and what do you see after the 29th? I am following you and trying to market time a little better then i do currently. I think i have a much larger risk tolarance then you do and do not need to jump in and out as much, i just need to understand the current trend and approximate length of it. A 7% swing in price will not scare me out if i think the market is going to continue its current trend.
ReplyDeleteWill provide a review of the I1 strategic position in the 1:30 post.
ReplyDelete