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I’m Going 100% Cash This Weekend

ByRyan Mallory
Published 02/12/2016, 03:20 PM
Updated 07/09/2023, 06:31 AM

Here's Why, And It's Pretty Obvious

1. Three-day holiday weekend. Heck, it is hard enough holding positions overnight, much less a weekend. But throw in President's Day and you have a lot of additional risk that you're taking on by holding positions over the weekend.

2. We were oversold and bouncing on Friday, but that bounce can easily turn into a selloff because what gets oversold can stay oversold much longer than you'd think.

3. China will be open on Sunday night for the first time in more than a week. That's a lot of information, events and price action for it to process and who knows how that market will open. Also, China's government will probably do something to manipulate the yuan to its favor prior to the market open.

4. Remember: China will have two trading sessions before we open on Tuesday.

5. Europe will have two trading sessions before we finish our first session on Tuesday.

6. Oil is all over the place. It rallied as much as 12% at one point Friday and with a holiday weekend giving us three days off, there could be another similar open in either direction in this most volatile of commodities, which no doubt will play a large role in the direction stocks ultimately take.

Call me a chicken, but I value my capital -- A LOT -- and I don't see where I have any identifiable edge going into Tuesday's open that suggests I go short or long over the weekend. And when there is no clear edge in the market, you refrain from trading, which is exactly what I'm doing.

Original Post

Latest comments

Ryan, first of all - super fun name of the article, really hilarious! Second, I just can't disagree with you in you statement, I mean that is kind of obvious that we have been oversold and bouncing on last Friday, but at the same moment that bounce can easily turn into a selloff because what gets oversold can stay oversold much longer than you'd think. That's so true ! .
Chicken
The CO2 (China and Oil) issues and long weekend are true, real and well known. I'm a contrarian and remain 75% fully invested in oil and financial ETFs. Sure, they may tank more. I'll use remaining cash dollar moving average to buy more and reduce my cost base waiting for eventual recovery. I'm betting too much liquidity on the side line with central banks printing more of it. Where all those cash will go when negative interest rate are the popular things to come ?
I agree with you but would add a few things that suggest it could be a temporary bounce.. . 1. Even though Friday ended on the highs of the day, the bounce felt heavy with a general undertone pessimism and negativity.. . 2. Other than an OPEC member suggesting to collude on prices, nothing has changed internationally that would suggest things or attitudes have improved.. . 3. 1800 on the S&P 500 is such a strong inflection point with multiple converging points of support that a bounce was almost a certainty. If it punches through that support level, all *****will break loose.. . 4. The oil <-> US equities correlation is still strong, not healthy.
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