Wednesday, March 16, 2011

My target price for adding risk

1175 on the S&P is only a 12.5% correction from the highs. Given we've had a 100% move from the bottom this seems more than reasonable and probably healthy as it will wash out some weak hands. I'm not predicting this will happen, but it is the target number that I'm tentatively planning on doubling down at. Tentative because I need to see how/why we got there. If it happens in the first five minutes tomorrow because all six reactors are spewing radiation, nope, probably not stepping in front of that. If it happens in a more orderly fashion and over the next few weeks, I'm probably interested. Again, i'm not saying this will happen and you will not see me saying I told you so, I'm saying I'm not willing to play further until/unless it does happen. I'm comfortable with my current positions even though the largest one is getting anal raped.


  1. Dow Theory would say that there is not a sell signal until the Dow Transports goes below 4,950.00 yet guess where we closed yesterday. Keep a watch on the transports. Be very careful.

  2. What are you going to double down on? Is this an area that you are willing to get long at? What position is getting "anal Raped"?

  3. Dom: I should rephrase, I will consider doubling down on taking on new risk in general, not necessarily my current positions. I am currently short the 30yr bond and down 8K. If the fundamentals of world growth are altered from new economic events and inflationary indicators subside, then I will have to adjust accordingly which might mean shorting bonds is no longer a good concept.

    Marty: I will be very careful.