Raise Cash

Posted on Aug 19 2015 - 11:45am by Sharpe Trade

I know I keep saying it

I know it gets repetitive

But I seriously do not like this stock market.  Not one iota.  And China certainly isn’t helping matters

Some folks are new.  They may think that being down 25 points (at the time of this writing) is a big deal, and now is the time to ‘buy the dip’.

No.

Being down 1.25% on the day (or thereabouts) isn’t much when we’ve been stuck in a channel all year long.  And I’m not talking about intra-day day-trades, in which case, it may be time to buy a dip.  So when I say “I don’t like this market‘, let’s put that into a bit of context. 

As I have said, I would not be surprised by a 10% correction at some point within the next 55 days.  That means the September e-mini futures would be trading near 1911 or so, and the Spoos at 1920.

What can someone do?

First of all, don’t panic.  We get a 10% correction (correction, not a crash.  A crash would be a decline of 20% in a few days time) statistically once per year.  And from my screens and looking at quality credit spreads I’m not seeing too much to worry about.  By the way … why is everyone touting the lower-quality credit to equity spreads?  I’m seeing that everywhere.  We all knew that would be the first domino to knock over.  Old news.  Anyways, I digress.  I’m not seeing much to worry about in the way of a prolonged stock market decline.  However I do believe it is time to be cautious about being on the long side.

Even with short-term trading?  At times it’s ok to just pull the ‘boat into the dock’ so to speak.  My short-term trading account is still recovering from draw-down, so it is built into a very defensive mode overall.  But there are times (especially around Fed minutes and releases) that it is ok to simply ‘remain in cash’.  Cash can ‘be a position’ in and of itself.

My Fixed Income accounts will remain as they are, but I am not really interested in buying any assets at the time of this writing.

Stay calm. 

Relax.

Raise cash … 

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