After a big run I'll buy the QID. When that goes green on the down trend I'll start to
roll it into my most beat-up holdings. Seems to work just dandy. It not only gives me a
cash supply when I need it the most, but it usually tells me when to start buying.

Maybe we can learn from this:

I shorted the bounce to the 50 day resistance. Yesterday, we are at 50 day resistance.
Do I continue to hold thinking that the 50 day could get taken out? or should I sell now
and then buy again if I see a downtrend.

I decided to cover my short and set a stop limit to buy one of those ultra short ETFs
below the lows. My reasoning is I can't hope that the stock market continues to go down.
We were re-testing the lows. I had no edge at that point. It's almost 50-50 that the
stock market goes up, or it goes down. So I cover and make a profit. Then, if the market
continues down further, I can reopen a position at a lower price (to short). Turns out I
was correct as the market went upwards and my order to buy more below the 50 day moving
average was never activated.

Hope is not part of the equation. I think you have to know when there is no edge to the
trade or if you have an edge.

Just some thoughts.

YIKES!! Sounds like putting your money on red and black at the same time.

As far as hedging goes, I've been boxing stocks in my trading portfolio for some time now
(being both long and short at the same time). I then overlay long or short positions
over these box positions to take advantage of both rallies and pullbacks in stocks. If
at any point I don't understand the current trading action in my stocks, I'll just sit in
my box position and allow the market dust to settle before taking another opportunity to
go net long or short.

In the pullback action we are now seeing in the overall market, if the stock I'm following
is oversold stochastically, I tend to wait for short term rallies to develop and add a net
long position just long enough to capture that rally - then back to a box position. If
the stock is overbought stochastically, I look for rallies in the stock to either put in
new added short postiions near the top of the rally or sell the long side of my stock and
try to ride the stock back down on the pullback - then back to a box position.

While many folks use options to hedge their positions, I find boxing stocks can be quicker
to execute and easier to tie to T/A stats for the stocks themselves rather than trying to
tie them indirectly to the stocks options.

Sell and go away.

I jumped into that stock @ $97. I couldn't stand to watch it go up everyday while I waited
for a meanful pullback.

Yeah, forget about the scare for now i'll be thinking about my 50% gain in NOV

Lotta green on my ticker this morning. :o)

So, what are we lookin' at here, about another 3-4% downside risk on the S&P? That's
nothin'. I see it as a good thing.

I have several portfolios/strategies. My 401k: well diversified and stay the course.

In one of my taxable accounts, I have a stay diversified, stay the course portfolio.

in my other trading/experimenting taxable brokerage account, I am staying long-short.
Meaning, I have long positions, and I also have some short positions by going long one of
those Proshares.com ETFs. So a part of my
portfolio, I'm hedging using these inverse ETFs, and when all is clear, I sell it, all
while my long positions remain long and minimizing churn. You don't even need a margin
account for this strategy.

I still haven't decided what to do with my short as we are now at an inflection point near
the 50 day support level on the S&P 500.

Some interesting predictions (and result of one of the early predictions):

Short term prediction of S&P 500 looks to be correct:

http://techfarm.blogspot.com/2007/06/prediction-correct-s-500-bounces-then.html

If 50 day doesn't hold, we might have an ABC Correction on the S&P 500:

href="http://techfarm.blogspot.com/2007/06/prediction-abc-correction-on-s-500-6707.html">
http://techfarm.blogspot.com/2007/06/prediction-abc-correction-on-s-500-6707.html

Last edited on: 06-13-2007 12:35 am