We had the midday reversal yesterday and the selling continues. At 1:50 p.m. CST, we have the Dow down over 200 points. We’re only seeing strength basically in commodities. Gold, silver, oil, natural gas, and agribusiness are all strong today.
Make sure you have a sell strategy in place if you’re long right now. You need to physically go through every stock, mutual fund, or ETF that you own and establish a sell point. I don’t like using physical price stops. I use conditional stops. They could be technical places. Or, in most cases, I see what technical indicator has worked the best for each stock and use that indicator. If that particular indicator turns negative, I sell. If you don’t have time to do that, place a 3% stop or so underneath all your positions that aren’t long-term holdings or hedged. As I get stopped out, I will probably go net short.
The market can erase a couple of months worth of gains in just a few days. I’ve seen it happen. So, your strategy needs to be put into place now so you’re not staring into the headlights like a deer.
The fear is picking up a little today but still way too many people that are bullish. Be careful.
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