By: Scott Redler
UPDATED CHART
On January 21st we warned that the uptrend could be breached and we could have a composure change. That lead to a 9% correction. On May 4th I sent out the same note saying take profits get flexible as that uptrend was in jeopardy, that lead to a 15% correction. When uptrends break you never know what it will lead to, but if your flexible you can save yourself a ton of pain and put yourself in a proper mental state to get back involved with the right set-up.
This uptrend will be tested today and could be the MOST IMPORTANT DAY OF THE SUMMER.
1104-1107 is very important to see if it can hold
For the past few sessions the market has done all it could to test the mettle of those holding longs, me being one of them. I’ve stayed with this rally since early July, adding to macro longs, buying cash flow break outs and rotating through the right sector at the right time.
Yesterday, got me to go to full cash or at least completely hedged, whether it was fatigue, frustration, or a gut feeling due to the “Misery Meter”. I made a decision to go back to “cash flow” trading, both long and short Vs. Buy and holding which I do when I feel a strong trend is in tact.
Today with the futures testing the uptrend once again, it could be one of the most important days of the Summer. I will test longs with the luxury of coming in flat, but if we close below the area I’ve spoken about for the past week-1104-1107-we could be in for another down move in this market.
Same drill, see if any stocks or groups can go green, if not this could be the typical trend day we see after the Fed, and it will be painful for longs who don’t have stops. Same pain if you were short and didn’t cover when the market took back 1040 a month or so ago.
Crazy times, so prudence is key. I will update on the Virtual Trading Floor.
P.S. I will be on vacation from August 20th through Labor Day, so perhaps I acted a bit quick so I can take a “real break”.
