As noted by Dave Fry, we may be early in calling for profit-taking but, as I said to our Members this morning – I'd rather miss the first 2.5% of the next 20% move up than blow 10% of the 20% move we've caught since Thanksgiving.
For one thing, look at those volume bars – we haven't confirmed anything yet and, in fact, if you bisect that rising channel – we're actually stuck in the lower half of it with an RSI and MACD that some might call "toppy."
A lot of traders don't understand that you can't get good prices taking gains off the table if you wait until the market reverses to start selling. That being said, in our review of our two $25,000 Portfolios and our Fas Money Portfolio and our APPL Money Portfolio – we haven't actually found anything we want to sell. We covered XLF at $19, we covered AAPL at $460, we tilted bearish in our aggressive portfolio but none of our bullish plays were taken down yet – the signs just aren't confirming it so far.
We are, on the other hand, in the process of redrawing the lines on our Big Chart (thanks StJ) and we're going with very aggressive targets if this rally is determined to convince us to keep playing.
The Dow Futures hit 14,999 this morning (/YM) and make a great short at that spot with a stop at 15,005 for a loss of $30 per contract but it's a quick trip to 14,950 for a $250 per contract gain if the Dow Index, which is 60 points higher, re-tests the 15,000 line. Risking $30 to make up to $250 is a good way to play the Futures!
I wish I could say we deserve to be this high, but clearly we don't. CAT, for example, is up from $80 to $90 in the past two weeks, adding 85 points to the Dow despite the fact that the miners they service have fallen off a cliff and housing starts have slowed markedly. Don't get me wrong, we bought CAT at $80 – we love CAT long-term, but we certainly didn't think it would gain 12.5% in 12 sessions since. My simple comment to our Members as CAT was bottoming on 4/22 was:
There is no reason I
…
This article will become free after 48 hours (see below for free content). To read the rest of this article now, along with Phil's live intra-day comments, live trading ideas, Phil's market calls, additional member comments, and other members-only features - Subscribe to Phil's Stock World by clicking here.
