The end to a fairly volatile week came to a close Friday with a very strange grinding down day that could not really be classified in any measurable.
It is days like these that many times are a pre-cursor to a shift in the short term trend.
Because of this market action on Friday, I took my profits on the put options we had purchased for a little better than a 20% return in 2 days. I have yet to get any type of signal to buy call options so I remain flat in that account.
So far, the decline we have seen is quite normal and nothing that would give the impression that the market is on the threshold of another sharp push lower. However, we need to get the complete picture of this correction in full and as of now we are about 1/3 through it.
It would not surprise me to see 2-3 days of higher prices followed by the ultimate low for the correction really not very far from the current levels.
I remain with a very defensive 50% allocation to equities, but should this correction turn out to show signs of another push higher after completion, I will be bumping my stock allocation up to 75% for quite possibly a counter trend rally that in essence could test the highs of the S&P 500 at the Mid to Upper 1500's.
Time is going to be the teller of the markets next move, but I am preparing to capitalize on what I feel is a high probability of a strong rally off these deeply oversold conditions we have just experienced.