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Margin Requirements Send The Bulls Running Away

May 05, 2011 11:07 PM ETSLV, SPY
Michael Kudrna profile picture
Michael Kudrna's Blog
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For four straight days, the markets have taken significant technical damage.  Many longs have become frustrated and battered, especially if you have been highly levered to commodities throughout this damage.  Silver continues to lead the markets lower after its freakish move north.  With margin requirements continuing to be increased let along a dollar that is showing a little strength, the markets seemingly had no choice but to plunge.  During this, I am trying to sit on my hands as much as possible and do very little buying, if any.  Cash is king now.   This is not the end of the world, this is simply creating better buying opportunities for the longs.  I just do not want to buy until I see true healing and the bulls are making a real push rather than trying to predict a bottom and finding out the hard-way why predicting bottoms is painful most of the time.  This is exactly why we have stop losses and cut our losses quickly to prevent significant damage.  Many times this is easier said than done, but it's a skill a trader must master.   We are in capital preservation mode for now.


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