ManyPeaks.com

As you know, terrorists of some sort attacked the London subway & mass transit system in an apparently coordinated attack there during the morning rush hour. Being the first large-scale attack since the Madrid train bombing in early 2004, it naturally has people spooked.

While many of us were snoozing, some sleepless souls were awake to “bomb” the September DJIA futures contract (symbol YM U5). In the thin overnight trading, the Dow dove from around 10,290 to a panic low near 10,060 — 230 points ! — from 4am to 6:30am. The chart shows that as of 9:20 this morning — after the big money crowd had a chance to digest and act on the news — we’ve recovered about 1/2 of that loss.

I have several long positions on, but nothing in big size.. I also have one short, in DHR. The Dow already looked dangerous for the long side even before this terror development.. so while I will not panic sell, I will be looking for bounces to unload my long positions into. I expect a bounce from this big gap down opening, but how high is anyone’s guess.

The best thing for me to do today is to clear out my Swing Trading positions, and watch for a while.. using the mental clarity and truly objective viewpoint afforded by temporarily having no skin in the game.