Wednesday, March 17, 2010

Market Talk

From our newsletter tonight:

Some decent break-out action today. Even though it was a good day we could have traded better. Simply put: we over-traded today: a consequence of trading nervously. But we had good reason given that the SPY is up 14 days in a row (previous record was 12). End of day action was sloppy and we expect market to be difficult going forward, at least short term. This is our plan for tomorrow: we're short SPY 117. If we add longs then we will keep it as a hedge. If we don't add any longs then we'll probably give it 50 cents before taking the loss, depending on market action (and breadth -- if spike up to today's highs with mixed breadth then we'd probably add and not bail).

We still have a few non-extended long set-ups we like for tomorrow. If the market melts up most likely we'll be involved with those and just leave the SPY short on as a hedge.

For very active traders like ourselves the GS AAPL and metal reversals today were enough of a warning sign for us to retreat back into a more conservative mode. For longer-term swing traders there still is no confirmation to head for the exits (but raising some cash at these levels makes a lot of sense).