No Change

I am 100% short despite the slight breakthrough above the 11,782 level. I'll have to see a stronger move above to exit this position as there are too many indicators flashing bright red warning signals.

--Fred

The Top or Just a Stop?

The time is here to tell whether or not the DJIA will hold at 11,782 or take off for higher levels.

I added to my short position - SDS - today and will add more if the market falls from here and will sell half if the stock market looks like it's going to close higher tomorrow. I'll also be looking to take a position in VXX if the fall looks to be at all violent.

The extreme bullish sentiment and possibility that we may close above 11,782 and then turn south will keep me from taking a long position.

The market knows....

--Fred

December 27 2010 Stock Market Update

I realized that I had failed to post that I had closed out my short position from mid-December with a small loss. Did that about a week ago but with the extreme sentiment readings once again elevated I have again taken a short position.

This is the perfect bear market setup: bulls are now investing their egoes in a climbing stock market and will likely buy into any dips for some time. We will know the market is ready to bounce a bit when they become angry and start blaming shorts for bringing the market down, which means they have finally exited their positions.

I consider a possibilty of the bull run extending from here but it will take a clear breakout above 11,782 for me to get behind that. Remember, I called the upside out of the March 2009 lows at 11,000 as early as April of that year. If that call was more than just luck the secular bear market should kick back in to the downside and begin to frustrate the bulls just as the past 20 months has frustrated the bears.

This is what secular bear markets do.

--Fred

Inflection Point Opportunity

AT this point we are approaching a point of what I consider extreme resistance but with little support and I have taken a short position via SDS.

The resistance comes from the August 2008 high of 11,782 on the DJIA. All gaps have been closed at this point and market sentiment is at extreme levels so the opportunity here is great. A close above the 11,782 level would almost certainly cause me to cover this position.

--Fred

Out of The Market

I have exited all my positions just prior to the close today. The reports that the U.S. Government is going to bailout Europe did it.

The constant meddling and bubble blowing by our government, against the wishes of the people they are supposed to serve makes it clear that it is impossible to trade this market. Yes, anyone with a brain knows where it will end up but I wish to have something left when we hit bottom.

--Fred

Bought SDS

I took about a 35% stake in SDS just before the close today. While I had expected an up market today and possibly Monday this market simply appears too weak to rally. I expect to be in at a 100% level soon as I expect the next 2 weeks to see the stock market drop well under the 11,000 level.

--Fred

Patience No More

I will be all in on the short side here within the next few days...just looking for the best entry point(s).

--Fred

The Week Ahead

I expect to take a position in SDS if and when the S&P hits 1,218, with a two percent stop.

--Fred

http://www.acclaiminvesting.com

Neutral on Market Short Term - Exited SDS Position

The Investor's Intelligence newsletter today painted a very bearish picture as bullish sentiment has risen to heights not seen since early May, two weeks after the market top. The balance to that is a very bullish short term picture painted by the Quantifiable Edges newsletter and the seasonal affect heading into the Thanksgiving holiday.

This morning I exited my short position with a small gain with the intention of reevaluating prior to Thanksgiving or the following Monday. I believe the stock market is likely to struggle off these levels and stage a rally for the next week, but regardless, I plan on letting the stock market clarify it's position before I take another position.

--Fred

Added To Short Position

I've added to my short position at the 11,000 level on the DJIA. The stock market toyed with that level much of the day but showed little ability to bounce and the trend remains down until it doesn't. Therefore I have increased my SDS position to 100% with no stop but I will likely sell all on a strong open tomorrow morning. A weak gap up will not impress me; I will need to see a strong, across the board rally to exit this position.

--Fred

Quantifiable Edges?

I've been getting a free subscription to the Quantifiable Edges newsletter for at least a week now and I really like it. Right now they are suggesting a very strong upside potential and I have to say that, along with some other seasonal evidence I've been exposed to, I do believe there is a chance we see a continuation of the rally up until Thanksgiving, and possibly a strong rally as volume lightens.

While my trade from earlier today turned positive quickly I will be looking at the stock market closely tomorrow and may exit this position and wait for a better entry just before or after thanksgiving.

I would also like to add that another leg up her would be the icing on the cake and would create an almost perfect short setup.

Short Position Taken

Investor's Intellegence reported today that Buying Climaxes took a big jump upwards and so that adds the last straw to the camel's back. Sentiment is very high according to AAII also and it appears that all the smart money that front ran the Fed's Quantitative Easing Program is now selling (everything) and the typical investor is panic buying, afraid of missing the rally to new highs. This is a classic stock market top, ripe for the picking.

Investor's Intellegence has also reported strong insider selling for some time now and let's face it, this rally is long in the tooth, even if you are long-term bullish, which I am not.

I took a 50% short postion in the stock market via SDS. I won't use a tight stop but instead will allow the market some leeway as the next 6 days up until Thanksgiving may provide a bit of seasonal support.

Stopped Out - Flat Trade

I was stopped out of the SDS trade initiated earlier today, resulting in a flat trade, with no loss and no gain to speak of. My sale was a bit higher than the buy but just barely made up the commission.

I'm prefer that as I do not want to be in the market over a weekend unless we are really building to a panic and the price action today suggest we are not quite there.

I will also point out that historically, buying about two weeks prior to Thanksgiving offers a positive bias, so let's see how next week goes.

--Fred

Stock Market Trading: Short Via SDS

I've decided to start fresh on this blog now that I've moved from my hosted site to blogger.com.

Today I took a 50% short position in SDS at $26.40 with a stop loss order at $26.20.

Reasons: Extreme bullish sentiment according to Investors Intelligence and AAII; entering the weekend with a potential panic developing over the European debt issue and currencies wars; over extended stock market; longer term bearish expectations in the macro economy based on Consumer Metrics Institute data.

Adjusted stop loss to $26.45 at 11:26 PST.

--Fred