You Didn't Sell the High: FOUR Market Timing Options for Late Sellers


1. Market Timing Choice One: SELL NOW: Of course it's better to sell closer to the top, but you do not know if the market will go back up to retest the high from here, so selling now may make sense. If this feels right to you and you need to preserve capital, this is what you can do.

    A. Sell right at the market.

    B. You then will have to decide where to get back in. The mistake novice traders make is getting out and then not getting back in after they have seen that they were wrong.

    C. WARNING: Do not sell if you will not be emotionally able to re-buy.

    D. You then re-buy higher or lower and decide in advance what you will do. Deciding where you will re-buy in advance will prevent you from freezing in the headlights.

    Of course, review the market when you re-buy, BUT do not change your decision unless you are clear as to why you should not act. Otherwise, you may freeze.


    A. You simply find the next support level down whether that is the first low below the recent high or a trend line or a bottom formation.

    B. You must re-buy if you are wrong. If you are not willing to do this, don't bother selling.

    C. Immediately after selling, determine where you will re-buy, higher OR lower. Otherwise as mentioned above, you may freeze.


    A. You sell if the market closes below a certain level from the HIGH since you bought the ETF or stock.

    If you do not know what trailing stops are, please read my Buying Checklist page (on blue navigation bar on the Homepage.)

    B. You must decide where you will get back in EITHER higher OR lower AT THE TIME YOU SELL(see above).

4. Market Timing Choice Four: HOLD AND DO NOTHING

    A. Yes, doing nothing is timing the market too. You are waiting to buy rather than sell. You simply add more of your cash into the market should the market take a pasting in the current move lower.

      1. If you are a value investor, this may make sense as long as you have a very clear understanding of the companies you own.

      2. If you are "underinvested," because you sold a lot at the April high when I issued my first SELL, you may be able to afford to "ride the market down."

      3. But remember, the market is NOT an amusement ride! Why not set a reasonable stop rather than give back the tremendous profits you have from the March 2009 low?

We are not short selling stocks or ETFs here. We are doing what I call "Passive Shorting™": Passive Shorting: Selling Near a Top. We GET OUT in order to GET BACK in at lower levels. A short seller by definition is selling shares he/she does not own against a cash position that is maintained in his/her account. The short seller is exposed to upside risk, whereas the "passively short" investor sells only the shares he/she owns and is exposed only to the loss of upside opportunity until he/she re-enters the market.

There is one thing more I have to share with you today which is ONE CRITICAL CONCEPT which is HOW TO SCALE OUT.

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My Market Timing Blog