The subtitle for this update could be called ‘Default to Cash’ (D2C), which is exactly the sentiment that has been repeated for much of 2015 as the market jigsaws up and down, trying to slice everybody up.
Under the D2C edict, some items were sold for good and modest profits and some for very limited losses. Details, insofar as anyone cares, will show up in the trading notes next weekend. As stated, anything can and will be sold in service to preserving 2015’s gains.
While I am going to wait until definitive breakdowns occur along with rebound bounces before getting much shorter, it is not at all a difficult decision for me to raise cash… putting my money where my mouth has been; in a safety vault. Cash is about 96% across accounts, except trading (a small account), which is 80% short the SPY.
Today could be just another down spike for the headline indexes, but the market is losing leadership as the Biotechs continue to correct, Small Caps continue to weaken and the Semiconductors look suspect at best. The Banks have been rising because interest rates have been rising. But interest rates are getting stretched toward over bought (bonds over sold).
My tack – which may well be different from yours because I am completely comfortable with trading in and out of the market, which is not for everybody – is to raise cash to very high levels from, some would say, already very high levels.
From there the mission would be to evaluate whether the next phase is to remain in cash or short (as suits personal preferences) or to reinvest (and if so, where).
I do not think the market is cooked. But it has been ripe for a knock down, and until the dust settles and I can get a sensible read, I don’t want to commit.