"COVER, CASH, COVER, CASH!!!" – Me at 12:17
You know we were expecting a drop and my members know I don’t often call a general alert like that but things started looking really ugly mid-day as we broke our technicals. As is often the case on PSW, we end up talking politics while the market burns as we’re a pretty well covered group so we just bide our time looking for nice entry opportunities while everyone else freaks out.
Sadly, there was very little we wanted to buy but we also refrained from shorting as we were guided by our Big Chart levels and hoping we could get a bounce here. The Dow finished exactly at our Comfort Zone line of 13,300, the S&P held our Must Hold line of 1,470 with 5 points to spare and the Nasdaq stayed right on our Next Goal line at 2,750. This is our robo-trader mode where we try not to think to much and let our levels guide us. We made a couple of upside plays later in the day, but not with much enthusiasm, as the market finished at day lows.
I’d love to point out the bright spots but there weren’t any. It was an ugly awful day but just as we don’t buy too much into a rally that is led by commodities and financials, we don’t really buy into a sell-off that’s led by them either. Bernanke speaks tomorrow and Bill Poole indicated there may be another cut in December and we’re not going to stand in front of that train.
We have lots of ready cash to deploy and will be happy to join in some upside momentum tomorrow BUT, only if we see some real recovery, not just a technical bounce!
