Market train wreck.... still fine with us

Oil Oil Oil!...FED decision....falling dollar....underwhelming Tech forecasts....GS hitting their amigos' when they're down.....all helped lead to a 3% train wreck across the major indices..    No doubt about it, you could smell the doom and gloom before the opening bell!   For many people, the only thing they could do is pray that their holdings don't get hit.   Wishful thinking!    Basically, when mkt is set to open negatively on a very bad tone, you have to be prepared for a potentially nasty day and go defensive.      By going defensive, we don't mean by shorting or buying gold or T-bills.    When we go defensive, we trim any excess position or number positions to a comfortable size.     This is all still assuming that we are holding the best of the best plays before the opening bell.    As the day progresses and the day winds down, it will always become apparent which one of the holdings you trimmed earlier are bucking the market trend and you may add it back later on.     You may ask "what heck is the point of this exercise if you going to end up with a similar position toward the end of day?"     For us, this is just our way of dealing risk.  You never know when and if panic finally sets in and takes everything down.   Everyone has his/her own way of dealing the "monster down day" and this is how we deal with it.

To say this market is in trouble is just blatant ignorance.    Market has been in trouble for a long while and if it wasn't for the fact we have been sticking to the commodity plays, we wouldn't have enjoyed it either.      A series of disappointing reports and downgrades and breakout of crude just pushed this market right over the edge.    Yes, forget about that March low and you are now staring at a new low.     Even as a bystander, we can feel the pain across the board.  The casual newspaper reader must be thinking the world is falling apart, the headlines are scary.

With DJIM plays, story is different but it's eerily familiar.    Deja vu?    Most of the Shale plays actually finished in the green, a few steel plays showed resilience given the market condition.    Coal plays also closed near the high and we are encouraged that this group is showing good strength.    Perhaps, a turn is in place for the Coal group after the recent minor pullback.   The volume was low in these groups, no real sign of selling.   The game plan is exactly the same for DJIM and will continue to buy our favourite commodity plays on dips and ignore pretty much everything else.   

The question remains now is that "how much more bleeding will this market take before a bounce occurs?"    We can potentially bounce tomorrow but again, we are not interested in any beta stocks at this point.     We are also coming to the month end and there's potentially the "window dressing" action that can take place.    Just keep in mind, any "window dressing" will not come to the beaten down sector.  It realistically should come to where we've been.  

• The market, majority of sectors have no positive catalysts, the Shales (exploration & production), the Steels, the Coals....DO!.  It's simple you do want to be where bearishness is contagious or do you want to be where bullishness is contagious?