Sunday 16 May 2010
It was necessary for the market to show downside follow-through if a new
selling wave were to get underway. [See S & P – Market Showing Weakness,
last paragraph]. We had an objective of 1125 as a potential support, and that
area did hold. Half the short positions from 1158 were covered at 1129. This
was done simply as a money management tool, and lowering stops down to
1156 makes this a totally risk-free trade.
It did appear that there was short-covering at Friday’s lows, and that gave
credence to the anticipated initial target of 1125. When one sees that kind of
market activity, accepting partial profits makes sense, for it gives more flexibility
in decision-making. With less risk exposure, it is easier to sit through a normal
type of counter rally and view it as a potential for adding to the short side, as
opposed to staying fully positioned, “watching paper profits diminish,” and
being distracted by normal market activity. Trading still very much has a
psychological element to it, even with fixed rules.
Not every day is a significant event, and what we look for now is development
of present tense market activity to watch HOW it develops, for pertinent clues
will be provided to give further direction.
Still short.
