If there is one thing that I should have learned from past mistakes, is to position yourself so that your trades do not conflict with what you want to hold for the next several days. For example, let's say one is short from Monday at the open at 1329. If the prices comes down to 1300 on Tuesday, and I want to cover at 1295, I should be getting ready to cover on any signs of a reversal. I.e., heavier volume, volume spin (price going nowhere but volume staying high), or refusal to go down much on bad news (Spain 10 yr yields shooting higher).
Especially because I thought the market would eventually go back up. Yesterday, I was getting more constructive on the long side after the Spain bailout and because of next week's FOMC meeting. So I was not a comfortable short. I was a just a renter.
If I am short and we are close to my price target, it is better to
cover then to try to squeeze out a few extra points from a predetermined
price target. Same goes for the long side. But I have noticed that the long side gives you much more time to get out profitably than the short side. In other words, the market spends more time forming tops than forming bottoms.
Bearish for the day, expecting weak action.
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