First, we were taken to the house of pain in our index longs - other then retaining some BGU ETF (3x Large Cap) that waterfall had us fleeing from what we were buying in the low to mid S&P 1130s yesterday. The drop was so quick, it was hard to avoid...
Two individual equity stop losses have also triggered (so far)
We had a stop loss in American Superconductor (AMSC) at $37.90, which was chosen since that price would signify a break below the 50 day moving average - that triggered today. The stop was for 75% of the position.
We had a stop loss in Telestone Technologies (TSTC) at $18.92, which was chosen since that price would signify a break below recent lows - that triggered today. The stop was for 65% of the position. While this is one of my favorite fundamental stories, I only accept so much carnage on any one position and won't fight the market for too long just to prove a point.
If you have been following the market for the past few years, it's been the most correlated time I've ever seen - almost all asset classes move together (exclusions being US dollar and Treasuries which have been inverse trades for much of the past few years) - and charts become useless in such an environment. Especially when volatility picks up... so technical analysis has its merits in calmer markets but individual charts are subject to the greater whims of the market. This causes you to be "shook out" at times when the market sinks and then reverses - and takes almost everything with it; both up and down. With that said, job #1 is to protect capital and if we get taken out of positions prematurely from time to time - that is just part of the mechanics.
I'll be reviewing other equity charts this afternoon to see if some stocks have to be culled as well. As we said yesterday, the "large cap tech / momo stocks" were potentially giving us a warning signal ... if Google (GOOG)reports a good number (which it will) and the market could care less - Friday could be very interesting.
As for the S&P 500 if you recall day 1 of 2010 was a massive move up, and it followed a big selloff in the last 30 minutes of 2009. Therefore if you were not "all in" during that selloff you missed a lot of the surge on day 1 of 2010 as it happened very quickly. What I am trying to say is with today's selling 2010 has now lost all it's gains, and it is actually worse than it looks because a lot of the gains came in day 1 - for which many people were not positioned well.
We're about a point away from being back into the box! [Dec 22, 2009: Poised at the Top of the "Box" on Day 30]
EDIT: in the time it took to insert the charts, we've broken S&P 1120 and now are back inside the box (S&P 1085 to 1120) Goldman continues to throw a massive temper tantrum towards America. They don't like it when anyone steps into their sandbox. With that I sold the last of the BGU and taken the portfolio down to only 35% long exposure. Next support is S&P 1115 - late December lows. A break below that would be a new "lower low"... not good for bulls. A cursory bounce should be in the offering soon, even if just intraday - what happens after that bounce will be the interesting move.
Author's Disclosure: Long all names mentioned aside from Google. (edit) BGU in fund; no personal position