In this 345th edition of Turning Points a review of why we went to 100% cash today along with profiling a new position being opened tomorrow morning.
We were awarded a pretty good spot today to take some profits, which I decided was much too attractive an opportunity to pass up.
To be clear, the current call is nothing like the early February call to not only exit all of our longs but get short over the next 1-2 months.
Technically, other than the fact I was confident that the markets would retrace the gap up today, nothing really stood out. The SPX is up 0.03% for the week thus far. Another sideways affair, in other words.
I can see some market shenanigans taking place over the next several trading days. I can also see a scenario where the market does breakout, but then retraces the gains. In either case, in 2023 to date, protecting profits at every turn has been the correct decision. I don't see this time as being different.
The benefit that we have is the ability to get into a new group of risk/reward opportunities that will provide an improved risk profile while allowing us to participate in further upside, if the market chooses to continue its move up.
Resetting a portfolio (moving to a large or 100% cash position) for short to intermediate term traders is a highly underrated tactic.
First, it allows a trader to view the market without bias, enhancing one's ability to make optimal decisions at critical junctures.
Second, it forces one to seek new opportunities that often have better risk profiles than names that have run 30, 50 or 100 percent.
Third, it allows for agility in a portfolio, while creating the habit of being flexible in one's views. The biggest losses come after a good run, while getting attached to specific thesis or a group of positions.
Where we are currently in the market is in a 3-5 day period where conditions can get volatile in both directions. Rather than sitting around, hoping for the best, the decision was made today to reset and reallocate....small at first.
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