Our puppy darts for the safety of a makeshift “den,” whenever he feels threatened.

Fight or flight, an instinct all animals have, comes in handy at times.

But, we are not living in the world of threats from Wooly Mammoths.

Our pup, on the other hand, is driven more by instinct than thought.

Many traders behave the same way.

Both pups and amateur traders that react on instinct rather than strategy benefit from training.

That’s not to say instinct is a bad thing.

Instinct drives me to look at many different trades, particularly when I can invoke my “consumer instinct.”

But strategy, based on years of training, is what ultimately drives my entries, stops and targets.

How do we know the difference between a natural and healthy selloff versus a top?

Actually, we don’t. Why?

Because it is difficult to know what a top is until that top is confirmed.

Therefore, as per last Friday’s action, with my favorite indicator-Transportation (IYT) as my guide, we neither ran nor hid.

Rather, we factor in sell stops generous enough to keep us in during normal selloffs.

And we make them tight enough to get us out if something worse occurs.

Generally, we do not enter any new swing positions on Friday.

And, if the ones we are in-whether partail or full positions endure, we readjust stops on Monday.

Plus, we consider adding on the outperformers.

Furthermore, we consider new positions on instruments that improved in phase or retraced to the phase breakout.

An example:

GoPro (GPRO).

After buying one as a gift for family during the holidays, we began paying attention to the chart.

We bought the stock when it cleared the 50 Daily Moving Average in May (6 months after our purchase).

We set our stop wide upon intial entry.

Based on our risk, we have yet to reach a first target. When (if) we do, we will peel off some of the position.

Before it gets to target, we will go to a no loss stop to take the risk out of the trade.

On Friday, when the market was down nearly $300, GPRO fell in kind.

What kept us from running out of the position is the original generous stop.

And our experience to follow our plan.

And Transportation (IYT). As long as people and goods are moving, no need for flight or fight.

Successful traders combine the protective instincts of a dog with the intelligence of a repeatable, strategic system.

S&P 500 (SPY) Here is an example of a breakdown under support on the Daily, but no damage done on the weekly charts. 277.50 now the place to clear to resume the rally. With 274.25 support to hold

Russell 2000 (IWM) Has put in several highs just under 168, the target. At this point, with an inside day, it does not look like a top.

Dow (DIA) If there is an index that has the most to lose, it’s this one. The judge will be if holds 246.75 area. Plus, over 251.50 will save it.

Nasdaq (QQQ) 176 pivotal area held up. 175.50 better support zone now and if gets back over 178, could see some more upside