Don’t Let Paper Gains Become Paper Weights

bear market, recession, market crash, market bottom, uncertainty, stocksBy Andrew Nyquist
Hey, I’m bullish this year.  Yeah, I said it.  The market is technically in good shape over the mid term and heck, the financials are leading the market higher!  BUT,  short term, not so much.  In fact, my portfolio is slightly tilted to the short side.  Why?  When markets start to rejoice and high fiving goes viral, the message is simple: it’s time to start thinking about banking some coin.

Remember that strategy buy low, sell high?  It’s not rocket science (or an exact science, for that matter), but it does become ever more difficult when we get emotionally attached to our investments.  Think of it this way, if someone told you that they would give you $180 for your $100, would you hold out for $190?  And further to that point, what if the TV and media were saying “it’ll be worth $195 or $200 for sure!”  To remove the emotional aspect of trading, active investors should remember to exit positions just as they entered them:  in pieces… 1/3 or 1/2 at a time.  That way, if it continues with the trend, you will still be involved, and if it moves against it, you’ll have freed up some cash to buy lower.  Easier said than done, especially when they are my thoughts on the matter.  And it’s even more difficult around trend changes, as the market turns into one big mind trip.  Remember, gaming short term moves in the market is for active, experienced professionals.

Below are updated technical charts with support and resistance for the S&P 500 and the Powershares Q’s (QQQ) – note the QQQ is the proxy etf for the Nasdaq 100 index.  Note as well that the potential inverse head and shoulders on the QQQ, if triggered, could ignite a big rally at some point this year.

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Position in SH and SDS at time of publication.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.