Sell stocks at the top?

Since I have been "famous" for being bearish talking in the past couple of months, I will get this kind of question from time to time: Given your conviction that the market is topping and will have a severe correction, should I sell all my stocks when the market is strongly bouncing back from the recent selloff?

Sounds an easy question to answer, if I'm so convinced about the correction, right? Not at all!

You see, any view regarding the market must be interpreted in some context, especially in terms of the timeframe. You likely notice that I have never said that the market will simply go down for the year regardless. As a matter of fact, I'm still quite bullish about the market for the later part of the year, especially if the expected severe correction does occur first. At the grand scheme of things, I think we are still in the middle of the ongoing Melt-Up phase, probably at the very last stage which will trigger a manic type of final bull run. I think we probably will see this final mania towards the end of the year. But before that and right now, we are facing the risk of a severe correction. That's the context of my bearish talking now! With this understanding, without knowing each individual situation for their trading/investing timeframe and goals, I obviously cannot give generic advice what to do with their stocks, even if I'm very convinced that a sizable correction is coming in the near term. 

I think I have said before but I can repeat here again regarding what I'm doing with my own money:

• For long term investment, I'm largely holding many dividend stocks for reinvestment that I will hold nearly forever unless their fundamentals change to the worse. I hardly touch such stocks, even during a prolonged bear market. Overtime, lower share prices are benefiting me more as I can accumulate their shares much faster via DRIP. This is nearly an effortless wealth building strategy that I'd highly recommend as long as such stocks are bought at a good valuation. 
• For trading purposes, I'm doing a lot of swing trades depending on the short term chart of a stock. By definition, swing can be in both directions. Even though I'm quite bearish for the market for now, for example, I'm constantly doing long or short trading for SPY, even multiple times within a week. Actually I have done both long and short trading for SPY this week alone with its fluctuations up and down on a daily basis. 

The challenge for short term trading is the exact timing as the market is so fluid and volatile. While the TA tends to be correct for the underlying trend, it may not be correct immediately. For example, even though the chart suggests SPY has bottomed and should move higher in the near term, it may not do so immediately but may continue to decline a bit first before bouncing up hard. Same thing for the downtrend TA. So if one is using a simple option strategy, a slightly poor timing may badly hurt the result. Lately I have developed a trading system, which will allow me to profit if my timing is perfect but I may actually gain more if my timing is not perfect and the stock is moving against the trend a bit, as long as the countertrend move is still within my expected support/resistance line. This is a more sophisticated option strategy supported by a strong TA. It is serving me very well in this crazy volatile market. 😏

 

PS:
I have registered as 深山老林 at SafeChat (SC) (You need to download the SafeChat app first) and have set up a new SC chat group. I'm gradually shifting our major social media interactions to SC instead of WC. If you'd like to join my group, sign up a free SC account easily and search for me and connect me as friends.  For friends sharing  similar conservatism views, let's come together to form a better chatting group that won't be constantly disturbed and harassed by the insane radical censorship!