After the market moves in a big way in my direction, I do two things:
- Take profits on issues which seem to have hit a technical support zone (in the case of shorts, which is the case here);
- Tighten up stops to take into account recent price action.
When I did my long list of stocks to short on Tuesday, some were shocked at how wide the stops were. But now that we've taken a tumble, I can tighten things up radically, almost to the point where a profit is assured. For example, my original stop on MON was 121.04. Now, just two days later, it is 96.80. So obviously my risk is radically reduced.
As for what stocks to cover, it's tough, because as I've said before, don't underestimate how far things can fall! But there are times when you should simply not be greedy.
The chart above, for instance, shows a price very near its multi-year low and very close to a major fan line. I've covered it. One might even consider buying it! But I'm not going to do so.
