Today I did something that I NEVER like to do…I was forced to sell, at what I believe is likely a Market bottom. I won’t list the entirety of what I sold, it was approximately 30% of my portfolio. The stocks I sold were generally the frailest.
I say “forced” to sell, because my gut instinct is to hold; however, today’s price action triggered a predetermined long term “tripwire” that I use as a “line in the sand” that can’t be crossed. Rule based logic outweighs emotion.
The tripwire is also being reinforced by deteriorating conditions overseas- sabotage to the natural gas pipeline under the Baltic Sea; UK pension fund panic; and growing concern about Emerging Market currency crisis due to the extreme strength of the US Dollar. I continue to believe the overall status of the US economy is resilient, but these externalities might prove to be a stock market “Lehman Brothers” type event that would breach support at the 4 year moving average.
I still anticipate a bounce off this double bottom low; however, if my next tripwire is triggered, I’ll take more chips off the table.
This is not yet a time to panic. A 2023 mild recession is already priced into the Market. Corporate profits are being adjusted down, but they’re still strong. Any “good news” type headlines will likely drive at least a short term rally. Conditions are forming for an excellent opportunity to swing trade between what will likely be a long term range bound market.
As always, trade with caution.
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