4:30 PM EST For those of you following me on Twitter, you know I changed my mind on the direction of the market at about mid day. I covered some losing shorts and hung on to the long winners. That is what a trader does. When the information in the market changes, they react to cover losses and allow winners to run.
That said, I am now as cautious about the downside as I was about the upside a couple days ago. On Sunday I said, "...you need to be careful initiating new short positions here..." this is what I meant. Every savvy trader knew this type of rally was coming. That is why getting short was a really bad idea this week.
The (DIA) trade from the past week or so is now positive. The average cost basis was a little over $70 per share. I am now making money on that trade.
The (FAS) trade from Monday is now working REALLY well. I am not advocating selling more right now. You should have already sold a portion and moved your stop up to break even. You should only move your stop a little higher (5%). This is a very volatile ETF. You need to allow it to breathe while keeping the position on for more up side.
Tomorrow will be a key indicator for the market onger term. We have had 3 days of a dramatic rally and we are going into a Friday. Will traders be ok with being long for the weekend? We'll see. Until next time, stay low risk..
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