Nice Pullback

The market headed much lower as expected yesterday. It was a good time to buy into the solid blue chips I mentioned yesterday. You should continue to be cautious as you pick up some of the beaten down names. Continue to buy very small positions and add to them on days like yesterday.

The encouraging sign for the bulls is that today looks like it will move a little higher at the open. After a bloodbath like yesterday, one would expect to see another lower day. The encouraging sign is that the market is starting to move more toward an area of more perceived certainty. That is why you are seeing the market head for a little bounce today. If we were in a really uncertain time like we were 6 weeks ago, the market would have headed for a lower open again today. Overall, the market is continuing to bounce along the bottom but some of the action is encouraging.

I still think we have to go lower again in the medium term, but it is starting to look like a market trying to find its legs.

A quick note on the gold GLD trade I set you up with a while back. The action over the last couple of days is exactly why you sell half of the position when you get a quick double like you did. Your entire original investment is safe and when it pulls back like it has recently, you don't have to worry about losing everything.

Overall, continue to stay in the trades that present low risk opportunities. Cash is not a bad thing in a market like this. Doing nothing is always a good option if you have nothing compelling out there. Until next time, stay low risk.