Weakening Wednesday – Markets Turn Down Ahead of the Fed

Wheeeee, isn't this fun? 

It sure is when you are prepared.  We added a bunch of hedges on Friday to our Short-Term Portfolio and the two short Russell Futures (/RTY) contracts we picked up in yesterday morning's PSW Report are already up $5,000 and that's plenty for us to make a non-greedy exit at the 2,300 line as that's bound to be a little bouncy in the very least.  Congratulations to all who played along at home!  

Remember, I can only tell you what is likely to happen and how to profit from it – the rest is up to you.

When you make $2,500 per contract you need to protect your gains.  As we neared 2,300 yesterday, it was a 50-point fall so the weak bounce would be 10 points higher (20% of the fall), according to our fabulous 5% Rule™ and a strong bounce would be 10 more points to 2,320 so that became our stop and we didn't spend more than 5 minutes above that line so the stops didn't trigger but now that we're hitting goal at 2,300 – there's no reason to be greedy and we look for a "fresh horse" to bet on – an index that hasn't fallen like the others – yet.

   

As you can see, the Dow has fallen less than the other indexes in this sequence so now we pick lines and, in this case we have, of course, 2,300 on /RTY, 13,000 is a great line on the Nasdaq (/NQ) and we'll use 3,940 on /ES and, if two out of 3 of those fail, we can short the Dow (/YM) as our lagging indicator and that would then be confirmed by our 3rd cross lower and then, if ANY of our indexes poke back over their lines – we get out quick as our premise is only IF all the indexes keep falling we take the fresh horse out for…
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