Here Is My Trading Strategy as Selling Pressure Intensifies

Market action is weak on Tuesday morning, with about 57% of stocks trading lower. The number of new 12-month highs has dropped to 140, and there are 60 12-month lows. The Magnificent Seven  (MAGS)  names are leading to the downside with a drop of 0.7% but the data center group is hot with big gains from CoreWeave  (CRWV) and Nebius Group  (NBIS) .

Nvidia  (NVDA)  has seen two price target increases to $250 and $210 from KeyBanc and Citi, respectively. That is boosting the chip sector and helping to offset weakness in the hyperscalers such as Meta  (META)  and Alphabet  (GOOGL) .

Consumer sentiment came in a little softer than expected, but Job Openings were in line, and it doesn’t have much impact.

With the government shutdown looming, there isn’t any great rush to buy, but overall, the price action is still quite solid. There is hope that if there is a shutdown, it will be resolved quickly, but that is going to be the key issue in the days ahead if it does happen.

My game plan right now is to review all my positions closely and to reduce some exposure. Overall, most are still technically healthy, but I’m reducing some of the larger positions and those that are most extended.

I do not believe that we are going to see a significant top at this point, but I think there will be better entry points in names I like, and I want to increase my flexibility. I always like to be in a position where I have room to add to my favorite names.

It is very powerful when you are in a position to root for more downside rather than fear it. If your positions are too big, then you won’t be able to take advantage of the opportunities that develop.

So far, this has been surprisingly mild corrective action, but it looks like the selling pressure is picking up.

At the time of publication, Rev Shark was long NVDA, CRWV and NBIS.