Do not, under any circumstances, throw away the conservative strategy for trading this market just because of a few big up days, Jeff Macke said. Stocks should still be sold into rallies and bought on dips. Trim your gains when you’re ahead, Macke said. No one ever lost money taking a little profit.
But that doesn’t mean you should sell anytime the tape is green. If you’re worried you’re going to miss the next big rally, you can always take a small percentage of the gains from a stock and use it to buy options in order to maintain some exposure. The point, according to Macke, is to have discipline and not to bottom fish. Sure, the market looked good on Monday. But if the last few months have taught anything, it’s that nothing is static. So hope for the best –- but prepare for the worst.
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Trader disclosure: On Mar. 24, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (YHOO), (INTC), (ATVI); Seymour Owns (AAPL), (F), (INTC), (MER), (MSFT), (SBUX), (TOL), (TSO), Seygem Asset Management owns (EEM), (CHT), (EWT), (TSM); Finerman Owns (GS), Finerman’s Firm Owns (PM-WI), (PLCE), (AAPL), (FLS), (MSFT), (SUN), (TSO), (VLO), (WMT), (YHOO), Is Short ( IYR), (IJR), (MDY), (SPY), (IWM), (GLD); Jon Najarian Owns (AAPL), (ACI), (AG), (AGU), (GOOG), (GS), (MON), (MOS), (POT), (USB), (IDCC), (EK), Is Short (BVF), (TGT)