If you’re in this game for the long-term, you know that the sell button is every trader’s best friend. Bull market or bear market – doesn’t matter. You need to sell to mitigate losses and reap rewards. Unfortunately, the media was saying otherwise this spring, and if you listened to them, you have lost out.

When the markets started moving back up after hitting bottom in late March, skeptics sounded the alarm. “Do not get suckered into a bear market rally. You’ll pay the price!” Sitting on the sidelines was excellent advice in early March. Then the Fed stepped in with their stimulus plan, and the game changed once again. (Thank you to Marty Zweig for teaching us not to fight the Fed.)

Did you miss out on stock market gains?

If you listened to the skeptics, you missed out on some astonishing gains in the stock market. The Nasdaq has hit a new all-time high; the SPX 500 is within spitting distance of one. The Russell 2K and Dow Industrials are trailing (and need a swift kick in the rear). Recent high volume trends tell us the crowd is chasing the markets higher – probably because they’re suffering from FOMO (fear of missing out).

It’s too late to chase the markets; the big money is already involved. At some point, a selloff will occur, and it’ll feel painful. But for the Nasdaq, a 10% drop only means a loss of 1,000 points. It will still up strong for the year. A move down like that won’t sooth the recent buyers of Amazon, Tesla, Microsoft and Apple stocks. Hopefully, they are aware that sizable corrections happen rather frequently during a bear market.

The sell button is your best friend

With Q2 earnings season set to start in earnest this week, I suspect reports will be an excuse for traders to hit the sell button. I certainly wouldn’t want to be short into earnings season, and I would feel much better with less risk on the table. I suspect we are in the midst of a nice earnings run for the best stocks, while others are left behind (financial, industrial and defense names).

After 3 1/2 months of solid gains, don’t be complacent. Use earnings season as an opportunity to raise some cash, and keep index puts as protection. The resurgence of the coronavirus in southern states is making investors worried. Plus, the election is going to bring some uncertainty as well. Don’t lose sight of where your sell button is located. It can be your best friend in a market storm.