Foul? That was no foul! Are you kidding me?

Being a pretty decent ball player growing up, I would often enter an opponents gym with a target on my back that always seem to lead to extra scrutiny from the referees. I could always tell immediately which refs had it out for me, and at times it was almost as if they wanted me out of the game in the first 10 minutes. When this first started happening I didn’t understand it, and chose a very immature response, until one day a coach sat me down and plainly said “Quint, no, it isn’t fair, but deal with it.” From that point on, I accepted the extra scrutiny as flattery and rather than let it destruct my playing I embraced it and it immediately had the opposite effect on my performance.

This morning we awake to learn of a desperate attempt by our government to prop up falling stock prices. Never in my lifetime did I ever believe I would see such a thing however it is here and now I can complain about it, or embrace it and move on. At the end of the day, my job for myself and clients are to make money regardless of the rules or environment and that is what I must do.

Whether it be luck or skill, just as we started to see life yesterday, my shorts were gone. We had seen that song and dance before so I was not too eager to run into any new longs however as the momentum built and it felt as if ‘this time was different’ I ventured into a few ETF’s and for the first time in months, added exposure.

Now I awake to see futures ramping, which will ultimately make prudent entry points near impossible all day. This is unfortunate, but it is what it is, and I must remember that if this is truly a game changer, the run we’re about to see will last much longer than 2 days.

Not that you asked, but if someone asked me how to play this, my response would be as follows.

1.) Cover those shorts and don’t be stubborn - The game has changed, at least temporarily and markets can remain irrational longer than you can remain solvent. It doesn’t mean you have to go long, but it doesn’t mean you have to lose money while complaining either.

2.) Dabble in Diversity - If you are interested in playing any bounce consider using ETF’s. This mitigates stock specific risk yet allows you to capture a broad based move. One that I jumped into quickly and will eye for adding is the Semiconductor ETF (SMH). This has been beaten to a pulp and yesterday clocked an impressive outside day moving below and above the previous days low and high, closing on the highs.

3.) Play Techncial Health - Believe it or not, there are a few technically healthy stocks out there that have managed to survive the recent carnage. Hub Group (HUBG) has been flirting with 52 week highs the last several days, while the general market has been cracking. Yesterday’s volume and solid close suggest this one may be breaking out very soon. I started some for the FlexFolio quickly yesterday and will look to add on a move over $41 trailing a stop at the 50 day moving average.

4.) Remain patient - New trends are not established overnight and if this is an actual trend change, it is going to take much time to develop. If you have done a good job at protecting capital during the slide you will do very well as the environment slowly improves. Set aside any anxiety you have about seeing your account at new highs tomorrow or the next day.

5.) Remain Realistic - Despite whatever bounce we may have, you MUST remember it is in the context of a broader decline and should be considered counter trend until it isn’t. The market has significant technical resistance overhead and everyone should be aware that at some point shorts will have covered and to take a market higher over time, it needs real buyers. I am NOT a real buyer here, I am a speculator attempting to play the price action.