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I will be adding WCG to the swing portfolio today. There will be no sells that are triggered. I had mentioned RMD a possible swing trade the other day and that would be a sell today. I wanted to mention a strategy to keep your exposure levels in line with the market action. In my form of swing trading buying weakness and selling strength is the hallmark of my system. But as we all know the stocks we trade tend to generally follow the market as a whole. So if market weakness requires a higher level of exposure and strength less, how can we design a system to keep us in line with the market rhythm? The RSI indicator is helpful when determining the "where are we now?". Looking at the raw RSI number on a 9 or 14 day basis - we can use the inverse of this number as a target level of the swing portfolio exposed to the market. If the RSI is around 20, then I would like to be around 80% stocks and 20% cash. And if the RSI value is 80 I would like 20% stocks and 80% cash. The swing trading system itself will generally force you to sell these strengths in the market butit does not always match entirely. A good example of this would be today. If you look at the RSI reading today, you will see that we are at about a reading of 60. This would imply about 40% exposure of stocks. Yet today I will be adding a forth position to a 5 position portfolio. What should be done? The key is to sell a bit intraday of each of your holdings to lower exposure. Now I am not saying trimming it to 40% all at once is optimum, but know in the back of your head that you should have less exposure. This is what I have actually done in my real portfolio over the past couple days as the RSI implied exposure was higher than my actual portfolio exposure. Those higher levels would have been solved by the system itself if a sell had been triggered today, but alas it never works perfect. Another version you may like is to cut the numbers in half when the indices undercut the 50 or 200 day moving average. In this scenario a reading of 50 RSI would imply a 50% stock level normally, but you could cut this in half to 25% if the market has undercut a key moving average or trendline. Play with this yourself and see if it may help you in your trading. Have a Great Day! Dave Johnson dayvejohnson@gmail.com

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