The Pause That Refreshes and What To Do Now

{+++} The pause that refreshes. Sometimes you need to refresh your laptop to get it humming properly again. That’s exactly what the market needs to do from time to time. Prices get inflated, sometimes a bit irrationally, so it needs to take a breath.

Everything is a cycle and stocks get oversold and overbought. We got overbought so it needed to breath. Japan is down the most since the 2011 Tsunami as they have followed out market lower. I will be a buyer of more DXJ and YCS as soon as the dust settles, maybe even today, so I will let you know. Right now the Nikkei is almost at a technically perfect 50% Fib retracement.

I have stocks like everyone else, although as you know, we have been trimming a lot and raising stops almost on a daily basis. Here is my best advice right now, at least for today.

1- Let it shake out.

2- Don’t catch knives

3- Keep some powder dry as you will need it for the turn.

4- As you know, I try not to take stops at the open, as it can be a very emotional time and things can get overdone to the downside and the upside.

5- Be patient and stay alert. We will get a recovery bounce, it may or not be today though. My downside target is the 20 day moving average which I mentioned in last nights post. That level is 1627. If that doesn’t hold then we could see 1590-1600.

I will keep you posted on the chat room this morning and if I see some moves that make sense I will let you know by email.

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