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Thank you very much for your analysis.
For passive investment accounts that can't be liquidated (401k, IRAs, etc), is the play to move into bonds and keep any additional capital in the sidelines?
A lot of variables would need to be considered. For example, anyone 100% invested in equities or equity heavy funds would be wise to draw exposure down to 50-75%, dependent on age, income, balance, etc.
There has not been a definitive top called, only a trend top spotted. When I see the top laid out with charts and explained ad nauseum with caution, it means I place a high probability of it occuring. That means I have locked in profits on trading shares, sold covered calls against my big gainers, would exit any flat or losing holdings (didn't have any in that category this cycle), hedge using VIX on macro move and selective Puts on stocks. (NOTE THAT SOME OF THESE, ESPECIALLY HEDGES, REQUIRES ACTION. EXAMPLE A-I POSTED MY EXIT OF VIX HEDGE. I ALSO CLOSED SELECT PUTS.)
In short, pun intended, I am very active when you see me posting those specific key technicals being at risk. So you had illustrated posts showing it was coming, cautions to pare holdings and take protective strategies and then, once I could see futures were to breach triggers down 72 DOW I tweeted that I hope people booked their profits.
Now, I completely understand that people looking to take 401k action are restricted to end of day settlement. That's always no fun when you see a 400 point drop, but coming off all time highs its not that big of a deal.
I have had a self directed 401k that allows me to make instant moves, even pre and post markets. That said, unless Friday turns out to be the reversal top trend reversal stocks will find volume support and recover.
Here are the 2 key takeaways however. Mark the highs on all sectors, markets, individual stocks, etc. when you have a large selloff day. There are too many dynamics to cover on money flow but we do know 4 billion shares = big players were in action. There is no way they can sell all of their desired profit taking sells Friday. But they sent you, me and everyone learning where they saw it was time to do so. That's much of what creates resistance on any move upward from those levels. Most educated traders who spot and buy a bottom bounce will be selling anytime we approach the mark set by the big boys as the top.
Now that also partially explains why markets and stocks that break these resistance tops tend to explode through them. Why? Cause a lot of money will short as we approach those levels and become part of the "fuel" for exploding it higher as they chase the ask to get out. People who sell also rebuy when they see it break higher. On and on it goes.
A program I have running as I type is a "short shares by available shares" on every stock. Common sense tells us how much "fuel" is in the tanks should big money squeeze us higher. Conversely, the more "flat-footed" that number the opportunity is open for big money to send us down without coat-tail riders. They truly want as much of it for themselves as possible. This is why terms like "shake", "head fake", "short squeeze" exist.
My entire focus and hope is that my postings allow you to capitalize on peaking behind the curtain.
Happy trading!
