Think about how much an account needs to gain after a loss. It's easier to protect your capital than to make it back.

Loss% Gain%
1%  1.01%
3%  3.09%
5%  5.26%
7%  7.53%
8%  8.70%


10%  11.12%
15%  17.65%
...
25% 33%
33% 50%
50% 100%
75% 300%
..

I’m still all cash although I traded some things last week and caught a few rallies, before they fizzled. Nothing though to write home about. Capital preservation is job #one right now.

                                                   30 min. view

30 min. view of SP-500

Tomorrow we'll put today's reversal to the test, we'll ether extend the reversal and get a price follow-through or we'll go back to a range.

Daily view SP-500.

                             

Weekly view of SP-500.

Price of gold 1971-1982

30 min. view of SP-500

                Patterns laying the foundation for a move, But Follow Through Is Key.
                                    Observe price action first and foremost, it is telling the tale.

Back in 2008 short sale bans produced a big oversold bounce.

The bounce gave an opportunity to trade long, short-term, and unload trapped long positions.

No follow through today.

There will be some good trades ahead of us. For now, stay focused on cash preservation and at the same time stay opportunistic.

An extremely powerful short-squeeze sent markets scrambling higher into the close.

Further upside follow through tomorrow and/or for the rest of the week has the potential. Stay focused and see how the market reacts to today's super squeeze. Focus on the price action first and foremost and expect more volatility until the market stabilizes itself.

The markets may be setting up for a trade with a significant bullish edge.

In spite numerous factors suggesting near term reversal, for now, until the price action shows positive improvements focus is on capital preservation.

Last Mohicans standing.

Remember, leaders must be shot down in order to have any meaningful rally that has potential to hold.

An old Wall Street saying has it that they don’t “ring a bell” at market bottoms.

Thinking that panic selling signals a low ?
Consider the Crash of 1987, which is the granddaddy of selling panics in U.S. stock market history. On that day, Oct. 19, the Dow dropped 22.6%. And even though the Dow bounced back impressively over the two trading sessions following that Crash — gaining 5.9% on Oct. 20 and another 10.1% on Oct. 21 — the stock market’s post-Crash low wasn’t registered until Dec. 4, more than six weeks later.
Chances are that the final low of the decline we’re experiencing will not be recognized as such until well after the fact.

Keep it simple !

Let’s keep it simple – protect yourself, never let small losses have even the remote potential to grow into large losses, remove hope and your emotion from the process, and finally stay opportunistic. Do these things and you’ll be there to profit more than you can imagine once the storm passes. We’ve been here before and we know what to do.

VIX check.

There has been virtually no safe harbor in today's market action.

For those of you who have been buying silver and gold over the last few weeks may consider taking some profit here. That is not to say they wont keep going higher over the longer term, but in the short term, they may continue to sell off as liquidity is raised to meet margin calls.
In late 2008 when the market had its slow motion crash from September through November, nothing was safe, with most stocks and commodities losing typically between 50-85% of their value peak-to-trough. Gold was perhaps the most robust out of all vehicles, but still sold off over 25% peak-to-trough.

The market seems particularly vulnerable here, so it may be prudent to keep your long exposure to precious metals on the lighter side until the dust settles and the general market stabilizes. You can then always buy back what you sold.

Is the history repeating ?

Sector check from July 22.

Congress and the market's performance.

Weekly view of SP-500.

       Let's look at the big picture. The market remains stuck in a wide and loose sideways trading range. There is a head and shoulder possible formation that we need to observe and there is possible support there from which the new rally could start. We have to wait for the market to tip its hand for us to act. Although trading is an active verb, sometimes the best action is no action.