This morning I hedged my long positions I purchased yesterday by shorting DIA and QQQ. I did this because the market has entered an area where the odds are about even that it could rebound or allow this sell-off to turn into something more serious. I warned that the velocity of this move had me troubled since we went from really oversold to overbought in a matter of weeks. That isn’t normal behaviour, especially when it isn’t driven by any real economic reason.

Whatever the case, I try to trade what the market is doing and I bought yesterday expecting a rebound right out of the gates.  When that didn’t happen I decided to hedge and allow the market to tell me which is the next right move.

Another troubling sign is that the remaining stocks on my long watchlist are dropping off by getting their individual sell alert. With no new stocks to replace them from last nights scan, my watchlist is getting paltry – another warning sign that the trend could be running on fumes.

Bottom line. Sold a few longs, trimmed some gains, and sold short the indexes this morning. Given that I came into today heavily long, I feel fortunate to be completely flat on the day at the moment of writing this.

Watching the chart below to see how we react at the middle keltner line. The bulls can still turn this around, but it has to be soon. Bespoke has a good article today showing how there is a big move that is likely coming soon due to the recent manic nature of the markets, but it’s difficult to say which way it’ll be.


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