On September 3, 2020, I decided to raise cash and drastically reduce my positions. I ended the day with only two positions. Today, September 4, I am now at 100% in cash. This is the first time I have been all in cash in months. I made the decision to move to cash for a variety of reasons.
First, leading stocks have gotten extremely extended and have started to breakdown. These include Tesla, Apple, Nvida, and Zoom. I wrote a blog post about the action of these leaders yesterday.
Second, the indexes have become extremely extended and look like they need time to base and digest the gains from this year. The Nasdaq 100 needs time to reset, and the S & P 500 looks to be forming an engulfing bar on the weekly chart on large volume.
Third, I've had some great gains since April trading stocks such as Tesla, Square, Zoom, AMD, Plug Power, JD, CHWY, and others and want to protect my gains.
Finally, cash brings flexibility. If the market improves, I can always get back in. There's no rule I have to be in cash forever. If set ups appear and the market improves, I can quickly reenter the market. However, my number one priority is to always protect my account. There's no need to always be in the market.
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