This is a week of Earnings and Expirations, so at the very least we should expect to see additional volatility in the market. We also have to take into account that the Major Indices, and some Sectors, are technically speaking in a somewhat “vulnerable” position after seeing some early distribution days to start the year.
Right now, all the major indexes are ALL under their 50 day moving averages. That isn’t good, and for the market to get going again, they must close above those levels for a couple of days.
We, (I mean the Upsidetrader Team), have been in lala land, Pandora if you will, as we have had exposure to the hottest group on the planet. Biotech. This wont last forever.
When your stocks are going up everyday, it makes it difficult to look over your shoulder and look at what the rest of the market is doing. I am guilty too. If I’m +$40 in KITE, I care nary a wit about what an OXY is doing. It’s human nature. Maybe you say a quick prayer for the poor bastard who is getting his pancreas ripped out trying to catch a bottom in energy every day. Maybe you don’t. I don’t care about him.
As you know, I’m one of the bulliest of bulls, but lets be just a little more careful here.
I took some more profits today and took some very small loses on a couple stocks that weren’t playing along. This doesn’t mean I wont buy them back in short order.
If you own biotech or have big exposure there, my recommendation is to tighten stops so you still make money should they decide to correct.
Bottom line, our stocks are great, but the market may be showing signs that it needs a rest. If this happens then know one thing, the market doesn’t pick favorites, everything will get sold. Energy and materials are horrible, semiconductors may be starting to crack (see SNDK) and the financials don’t have a shot when rates are plummeting. Technology is just OK and doesn’t impress.
I felt the need to pontificate here because many of you are newer traders and although you may have seen a correction, maybe you weren’t fully invested like you may be now. Profits can disappear in a day, profits that took you weeks to build. I just want you to be aware that’s all. Keeping money is more important than making it.
When the indices get back over their 50 day moving averages then you have the green light to go full throttle with full position size.
I have nothing new tonight by way of stocks and I didn’t particularly like that reversal today. I did add MU as a short position today. I took a little KITE off for +65.0%, CLVS for about +9.0% and a small loss for CLDX and partial DRNA +31.0%
See you bright and early. Please note any adjusted stops this evening.
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