Duck And Cover Drill Time

For those of you so inclined, click here for my video market wrap up of today’s action.  Now is most certainly not a time to panic, but you do want to mentally prepare yourself, indeed do a duck and cover drill, for a scenario where we gap lower in the coming days. Consider what adjustments you would immediately make.  It may not materialize, but when we have a short term breakdown, it is a wise precaution to take.

Recapturing he $SPX 1196 (20 day moving average) and 1200 (psychological) levels are crucial for any sort of short term reversal back up for the bulls.  If we continue to chop around this zone, we will likely be setting up a bear flag prior to another move lower.  As I noted earlier today, it is CRUCIAL that you remain open-minded and nimble here.  If you get caught heavily leaning the wrong way–at this point in time especially–your trading account will pay a dear price.

I still am of the opinion that a larger than usual cash position is correct.  I also believe some short hedges are sound here. Finally, my top long ideas are $SWHC and $YSI. Corning ($GLW) may still break out of its cup and handle pattern, but I sold off a bunch today because I did not like its fallow reaction to solid earnings.  Remember, the best trades usually work right away. Although I am basically even on the trade thus far, my style is to play for the breakout either immediately prior to it happening, or in the early stages of it.  If it takes too much time to develop, if at all, I will cut it and wait for a better opportunity somewhere else.

Losers average losers and winners add winners, to paraphrase Paul Tudor Jones.