Uncle Bernanke will blink… I think.

Whether the Fed cuts rates or not to stem the current panic in the markets won’t change the way I trade, just the symbols I trade. This week I added all of ProShares ETFs to my watch screen. ProShares offers short and UltraShort (leveraged short) ETFs you can use to get short this market. ProShares has index, sector and style short funds as well as un-leveraged short and index funds. The leveraged funds are very volatile, so be careful trading them.
This week many of the ‘China play’ stocks on my watch screen started flashing buy signals again. It was hard to pull the trigger and ignore the market turmoil, but I did. Maybe the market is going to whipsaw or even continue to dive for awhile, I don’t know, but not taking signals is just as dangerous to a portfolio as ignoring them, which I’ve been known to do.
Actually, three stocks that I did ignore sell signals on fell hard, and have now bounced to where they’re giving buy signals again. Interactive Brokers (Ticker: IBKR), Bowater (Ticker: BOW), and NVE Inc. (Ticker: NVEC) all fall into this camp. All clearly gave sell signals which I ignored. I’d have been a better trader to sell them and buy them back now. I rationalized not selling them by convincing myself that the positions were so small that it wouldn’t affect my performance. I was wrong, it did, and I took a hit for it. Okay, enough confession!
Often, taking the signals correctly will lead to a loss also. That is just part of game. The big gains are made by the few big trends you correctly take and stick with until the run is over. Selling too soon, before the trend ends, can affect the long term performance of your portfolio in a negative way too. The old saying “you can’t go wrong taking a profit” is wrong. If your system is robust and has an edge, over time, you’ll make money by strictly following the rules. If you constantly sell your winners, all you’ll have left is your losers.