Even when I cashed out of my longs in the first half hour I still was optimistic that the markets might turn around intraday. I didn’t get an official sell signal according to my system and I let my instincts guide me this time to exit stage right and go to the sidelines.

Here’s how I thought the reaction from investors would go down from the jobs number. “Ouch, that’s a really bad number, it can’t get much worse. Let’s buy.” Here’s how it really went down. Investors watched the opening minutes tepidly and when there was no reaction, sell, sell, sell was the overwhelming battle cry. One little trick I’ve learned when trying to time the markets is let your positions decide for you when to add, bail, or do nothing.

Yesterday I was buying into the 2 day sell off because I was slightly bullish, and my positions were making money, and thought I may be rewarded for taking a risk and holding stocks overnight before a big economic report. I had gains in some so I thought if the markets sold off I’d be OK. When the markets opened initially everything popped a little and I sold FCX for a 7% gain, holding the others. Soon after all my green on my screener turned to red and that told me all I needed to know. Not only did I not want to expose myself for looking for new longs, I immediately went into defensive mode and sold everything. I didn’t want to allow one day to wreck this trading week so I bailed figuring if the markets turned around in the pm I could always go long again.

In today’s case it proved to be a good decision to exit without an official sell signal on the markets, but it’s important to have a reason for doing so. I let my positions tell me to exit instead of getting scared and cashing out.

Ironically with about 20 minutes to go I was still holding out that we may rally into the close and was lining up potential longs to buy into the close. What was supposed to be a simple pullback is starting to look like something else. Anybody else getting that sinking feeling?

The market is running out of chances to start 09′ off on the right foot. Right now my system has a hold on the markets and a big up day could redeem this uptrend on Monday, but a flat to down day will certainly have me in full scale short mode.