To cover or not to cover

this the question for tomorrow's gap down.

 

It depends.

If I were still holding onto the GS puts I had last week, I would cover first thing in the morning.

However, I also have short positions in downtrending stocks that will probably continue falling even if a rally occurs. I will hold these.


It depends on your overall view of the market, esp. in the long term.

 

wait for a retracement then add to the short....thats what Livermore would do....cut your losers and add too your winners....good luck!

 

My plan so far was to cover and then wait for bounce and reestablish shorts again.

Good advice though.

 

In my opinion it depends on your time frame.

When I take a long term view (12/24 months) of the DJI, HSI, and other markets as a discretionary trader, this is nothing more than a signal to get out and watch from the sidelines.

There is nothing here that tells me short the market or begin buying again.

If I take an extremely long term view (5+yrs) this is nothing more than a possible red bar after a series of green bars. Nothing more.

Look, the DJI made a HL in 2003, we broke the 2000 resistance level sometime in Oct 2006 with minimal resistance and it's now time to take some profit. Where it goes from here I don't know. But this isn't the doom and gloom/Christ returns level.....yet. To me that would be breaking the 7-8K level.

This is just my opinion and I'm sure some with much more experience than I would have a completely different view. As a discretionary trader that looks at price patterns and longer term s/r level, I'd be covering my position but not shorting.

 

Good points. I tend to look less on charts when I invest in longer time frames. I look more at valuations, grows, dividends etc. I agree with you if you look at 1+ years this sell off is still nothing.

 

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Agree with MTok also;
depends on your time frame.

Like on ES derivative, covered because on that time frame;
short term short profit was melting , so helped fuel the mini-rally by short covering.

NasdaQQQ is still mostly down premarket, but above 200dma;
and again nicely below 50 day moving average.