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Too Many Distribution Days

The markets suffered a major distribution day Friday on Chinese and Ireland fears. This doesn't necessarily mean a top is in, but we have had too many distribution days over the past week or two to ignore the weakness here. Market's are overbought and a correction would not be out of the ordinary.

We saw leadership under severe selling pressure on Friday and decided to just get out of the way when AAPL sliced through intraday support. We timed our exits well for when Apple support gave way we saw a heavy round of sell pressure hit most stocks in the markets and we protected the bulk of our recent profits in doing so.

Selling on Friday gave us two major advantages. It allowed us to sleep well over the weekend as we now don't have to fear a gap down today that erases our recent profits, and it allows us to look at the markets objectively again so that we can position ourselves for the next major market move, whichever direction that may be.

It wouldn't be surprising to see the Nasdaq and other major indices return to their 50-day average before they find footing. If things firm up from here without a 50-day test there is no reason we can't buy back in as evidence of continued buying pressure presents itself.

In the meantime, the silver and gold markets have both put in major topping signals. A major top isn't necessarily in in these markets, but when metals markets correct they can do so in swift fashion, so today we will nibble at the short side in a gold and a silver stock so we have some exposure to what we believe may be the beginning of a sharp pullback in the metals markets as the world works out disagreements over inflationary measures.

Disclosure: no positions