I remain short/sell on the overall market. This is based upon clear sell signals generated on 3/8/2013 from my primary oscillators (Bollinger band and RSI). Additionally, MACD continues to be fading further especially since 4/2/2013, thus supporting my sentiment even further.
Friday's action prompted me to buy a small position in IJH (I favor mid-caps) as SPY trended toward the 50 day moving average. As mentioned previously, I'm planning for a correction, at least down to the Bollinger band low at 150.60 (NYSEARCA:SPY). Therefore, I used my proceeds from last week when I was stopped out and re-entered at the low level of the day. Therefore, I'm already in the black as the market rebounded late in the trading day. And, I sold a 109 4/20/2013 put (NYSEARCA:IJH) for a fairly good premium.
Re-entering the market may appear to be contrary to my overall sentiment. However, I can assure that it is not. Since I was alerted of a sell on 3/8/2013, I have either sold or stopped out of most of my positions, thus reducing my overall equity position below 5%. Strategically, I feel comfortable with maintaining a range of 5% to 8% under most market conditions, especially when volatility is muted (like today). Ideally, it would be nice to be at zero when re-entering the market at the Bollinger band low and RSI below 30. However, it's extremely tough to accomplish, so I base my range on my personal risk tolerance level, and to take advantage of potential reversals (upward). When the market signaled a sell, SPY reaching a Bollinger band high and RSI reaching 70, I was at a 20% equities level, a bit short of my goal of 25% - 28%. I may increase my risk tolerance levels as I perfect my current trading strategy.
Therefore, my current short term goal is to get back to 5% and capitalize on the upcoming earnings season beginning Monday, 3/8/2012, with AA reporting after the close.