Speaking of a narrowing of the market, about 4 weeks ago many of our positions began breaking below key moving averages ... we mechanically began culling them and moving into cash. Then within a week the large caps broke down (just for a week mind you) and the S&P 500 broke the 50 day moving average - right before Halloween. We also had 6 intraday reversals in a 2 week period. 3, 5, 7 years ago this would of led to a larger move down. Instead we did a 180 degree turn at the beginning of November and went straight up in now taken for granted, rocket ship style. Head shaking to say the least.
So let's see if we repeat this again. However, next week is a holiday week and usually the denizen of the daytraders - some of the biggest moves in nonsense stocks typically happen Thanksgiving week as the market is very thin. But I am beginning to see some charts again break down as they did about a month ago, so once more we're going to mechanically cut back. I see quite a few names close to puncturing a moving average...
First off will be Perfect World (PWRD) which on an intraday basis has sliced through its 50 day moving average - we're going to cut back the position in a large way going from a 1.4% exposure to 0.2% as the stock breaks $43.
Long Perfect World in fund; no personal position