The fact that 2cs never really got into the 70's for more than a half hour on October 16, and not ever on end of day, means this is a weak market for a while....probably at least a month. But there was also exuberance on October 16 in the volume indicator I use.
I was already into gradual cutting and pruning as detailed here, and I continued that last week. Finally I bought some SDS (double short SPX) last Friday.
The point of this is that I don't sell and reverse at a specific minute in time when everything lines up with a light in the sky. It's a gradual process of increasing probabilities for a change in trend. At tops some things get sold ahead of the inflexion point and some afterwards. In that way I am never too far wrong if the market fails to reverse. There is far less anxiety when all you have done is take some profits from the previous move going ito the top window and are waiting for confirmation to go short or just stay flat.
A lot of what I have left are the various hedged funds I have discussed here at various times: LSC, HSGFX, FPACX, TFSMX, OAKBX, HSTRX, PAUIX, etc. plus very long term hedges in gold and believable (proven) "all season" funds like PTTRX and VFIJX and some SDS for proper "flavoring". Cash is nearly 20% after being under 5%, so I have ammo for small game when they appear out of the bushes. Since cash truly is trash from an income basis (thanks to the FED) I'll have no hesitation in spending it on good causes.
It's not exotic or heroic trading. It's very pedestrian and boring, but it works for this retired investor to maintain a very good existence and to defeat the evil forces of inflation and taxes. OK, I'll admit it. There is a wee bit of drama in it.....;)
