A one day decline of 2.5% isn't really capitulatory especially when the rally the next day is just as big. The internals were not great for such a big day either. On the NYSE there were 52% advancing and 47% declining according to Yahoo Finance. I also think that the huge run up in the financials after getting pasted on Friday, along with these other things leaves me questioning the market's short term health. But of course nothing may come from this concern.
I noted last week I was weighing the sale of one particular stock or adding to my double short position. About half way through the day I sold the stock, Starbucks (NASDAQ:SBUX), but did not add to the double short.
SBUX is a discretionary stock, a sector I am and have been underweight for a while. Discretionary is usually not a great place to be heavy toward the end of the cycle and this has been the right call this year, as measured by the Discretionary Sector SPDR (NYSEARCA:XLY) but Starbucks has struggled so I sold it.
Given the market action Monday, I don't mind having a touch more cash raised.
From the bottom up, SBUX has had trouble off and on with various estimates and while I believe people will always wait in line for a fancy coffee, the stock has been a let down for quite a while.
If the stock goes up from here it will look like a bad sale and if the stock goes down it will look like a good sale. As I write this now there is no way to know, but a touch more defense by lightening up in the wrong sector feels right for now.