My Guns Are Better Than Your Money

In an end of the world scenario, it makes little sense to own stocks, bonds or even cash. Shorting the market just gets you more cash—-which is burned like useless rubbish.

No, my friends, if you really, really believe all this is eventually going to turn into “the end of the world as we know it”, you need to take the necessary precautions to protect yourself, your hearth and your home.

And, don’t forget about the comet of death that is set to wreak havoc, death and destruction in 2012. All of a sudden, hiding out in a cave doesn’t sound like such a bad idea.

Don’t count on your money in that scenario. Oh, by the way, (*sound of racking shotgun*), I’ll take your keys to that car of yours. And that food in your pantry. Thanks.

Disclaimer: Not a recommendation or solicitation to buy this stock.

Trading and investing is all about risk. Insurance? I don’t need no stinking insurance.

Or do I?

Check out the breakouts:

Just completed the finishing touches on the day and finally caught my breath. What a glorious day of a reversal of fortune, and my head is still spinning.

Let me update you:

I rode the energy bull [[ERX]] today from $43.82 (14:10 ET). What the hey. I’ve got [[DXO]] . But prior to doing so, I blew out my [[SDS]] position at $109.10 (13:34 ET) in it’s entirety. Thank goodness. My sense is that this rally is what we need to lift the tide.

The size of the Fed’s balance sheet has mushroomed to over $1 T over the past few weeks. Monetary policy is shifting into 5th gear trying to stabilize asset values and fiscal policy appears poised now to support income growth.

Back on offense (for now). This is ridiculous.

Did you catch how Mr. Market unpolitely bitch-slapped the bulls today, told them to STFU and go back to the kitchen and make him a “samwich”? Lovely.

In the same vein, my ill-timed foray into Almost Family, Inc. [[AFAM]] netted me a $1,000 loss as my 45.90 stop was triggered today. Screw those Almost Family bastids. I’m going back to my cave.

I’ve been in meetings all day long, but did receive stupid text messages like, “the market is down big”, and “so-and-so called and was wondering if we should be buying here”, and my favorite, “fuuuuckk!”

Exactly.

With all the flurry of activity, I did manage to increase my short bias by another 20% of equity, buying more [[SDS]] , @ $98.39 (9:52 ET) early this morning. Currently, I’m 25% net short my equity holdings, and also 28% cash and 19% muni bonds.

Back to playing defense.

Bought 200 shares of Almost Family, Inc. [[AFAM]] , @$50.71 (15:57 ET), with a stop at $45.90. This stock has been screening well, as it was in the Top Ten stocks as of Friday’s PPT ranking. It is on a PnF buy signal and held up at the close. The other stock I’m watching is Emergent BioSolutions Inc. [[EBS]] , but I need it to pullback some more so the reward to risk is better than 2:1.

The price objective is $67.00 on AFAM. The reward-to-risk is better than 3:1.

The long rules are simple:

1.) The stock must be in an uptrend and trading above bullish support.

2.) Wait for a PnF buy signal to initiate a trade. Look for the stock to pullback off it’s recent highs before placing the trade.

3.) Risk no more than 1% on each trade = $1,000 max. The potential reward (@ the price objective) should be at least $2 for every $1 at risk, at a minimum.

4.) Use a percent-of-risk position sizing methodology. In the case of AFAM, my initial stop loss is at $45.90 (a break below $46 support is a double bottom breakdown). So, risking $1,000 or about $4.80/sh, gives me a position size of 200 shares (rounded).

5.) Exit strategy: sell 1/2 of the shares when the position is up by the amount that I’ve been willing to risk ($1,000). Then move the stop up to breakeven on the other remaining shares. Use a 15% trailing stop or breakeven, whichever is greater, and hopefully, let the dog run.

Disclaimer: Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. This information is prepared for educational purposes only and is not a solicitation, or an offer to buy or sell any security or use any particular system. Use proper due diligence and judgement when buying or selling stocks.