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
Showing posts with label shorting stocks. Show all posts
Showing posts with label shorting stocks. Show all posts
Wednesday, January 12, 2011
Monday, December 27, 2010
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
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
Thursday, December 23, 2010
Patience...
Once again I remind myself that patience is a virtue. The financial community is talking themselves into a higher market but only the market will tell us if that will happen.
I predict that the market will fail to break through the important 11,782 level, to any great extent, and will then proceed to eat away at bullish sentiment over the course of 2011 with completely unexpected action that will keep people hopeful and in the market, waiting for the next big up move. The rally out of the March 2009 lows was just a big setup that will be the cause of much more wealth destroyed than created. That's what secular bear markets do.
Should the stock market break through I will certainly revise my outlook. For now it continues to eat away at the confidence of bears and only those who fully understand history, what a secular bear market is, and how massive this one is, will be able to profit.
--Fred
I predict that the market will fail to break through the important 11,782 level, to any great extent, and will then proceed to eat away at bullish sentiment over the course of 2011 with completely unexpected action that will keep people hopeful and in the market, waiting for the next big up move. The rally out of the March 2009 lows was just a big setup that will be the cause of much more wealth destroyed than created. That's what secular bear markets do.
Should the stock market break through I will certainly revise my outlook. For now it continues to eat away at the confidence of bears and only those who fully understand history, what a secular bear market is, and how massive this one is, will be able to profit.
--Fred
Wednesday, December 1, 2010
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
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
Thursday, November 25, 2010
Seasonal Bias?
Normally I am a big believer in seasonal bias but I also believe that we are in a long term secular bear market and that should take precedence over all else. This means that we should be extremely careful in guarding our capital as a secular bear market will strike when we least expect it and in ways that we least expect.
A major theme for me is that we have only seen one other true secular bear market in U.S. Stock market history and that started with the crash of 1929 and bottomed in July of 1932. This time will be different, of course, but will use the same tactics.
One difference is that it will be longer in duration. The run up to 1929 with 8 years; the run up to 2007 was at least 25 years and possibly 33 years, if you consider the secular bull market as having started in 1974. This suggests a minimal bear market of 7-8 years with a possible 10-11 year correction. But I believe we can also take a longer term view of the secular bull market as having started in 1932 and that we may see an extended slow growth period that lasts until 2030. This fits in well with our demographic issues.
But back to the seasonal issue: If you look at the decline from 1929 to 1932 you see that there really are no clear seasonal biases. An argument to that is that because the decline was so steep over such a short period of time that the stock market simply did what it had to do to get where it had to go while this time around the decline is much more leisurely. The counter to that is that the stock market must use everything at its disposal to destroy wealth and that it seems that we are starting to see unusual seasonal moves. The low in July makes sense but prior to that and since then we have seen the market move in seasonally unexpected ways.
They only answer up front is to protect your capital. When you take a shot at a short or a long, make sure you have a clear exit strategy.
--Fred
A major theme for me is that we have only seen one other true secular bear market in U.S. Stock market history and that started with the crash of 1929 and bottomed in July of 1932. This time will be different, of course, but will use the same tactics.
One difference is that it will be longer in duration. The run up to 1929 with 8 years; the run up to 2007 was at least 25 years and possibly 33 years, if you consider the secular bull market as having started in 1974. This suggests a minimal bear market of 7-8 years with a possible 10-11 year correction. But I believe we can also take a longer term view of the secular bull market as having started in 1932 and that we may see an extended slow growth period that lasts until 2030. This fits in well with our demographic issues.
But back to the seasonal issue: If you look at the decline from 1929 to 1932 you see that there really are no clear seasonal biases. An argument to that is that because the decline was so steep over such a short period of time that the stock market simply did what it had to do to get where it had to go while this time around the decline is much more leisurely. The counter to that is that the stock market must use everything at its disposal to destroy wealth and that it seems that we are starting to see unusual seasonal moves. The low in July makes sense but prior to that and since then we have seen the market move in seasonally unexpected ways.
They only answer up front is to protect your capital. When you take a shot at a short or a long, make sure you have a clear exit strategy.
--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
--Fred
Wednesday, November 24, 2010
Waiting...
It is looking like Friday or even Monday will provide the strike I've been waiting for as the stock market seems to have set up this little counter trend rally perfectly.
I expect sentiment to rise once again with the holiday cheer and stock market bounce and we will then have a perfect two week window in which to pull off the real counter trend retreat back below 11,000 on the Dow.
Whatever position I take I will likely keep a fairly tight stop on it; more on that when the trade is actually made.
--Fred
I expect sentiment to rise once again with the holiday cheer and stock market bounce and we will then have a perfect two week window in which to pull off the real counter trend retreat back below 11,000 on the Dow.
Whatever position I take I will likely keep a fairly tight stop on it; more on that when the trade is actually made.
--Fred
Sunday, November 21, 2010
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
--Fred
http://www.acclaiminvesting.com
Friday, November 19, 2010
Staying Focused & Solvent
At this time I am out of the stock market and simply waiting...
I believe that to become a good stock trader one must hone their skills just as an athlete or salesman would. One of the most important traits on the road to success is being focused and when dealing with the stock market it is easy to become distracted by those who truly believe in a particular stance and those who simply have been trained to keep you bullish on whatever they are selling.
A year and a half ago I stated several times publicly that I believed the stock market would likely "close the gap" up to the July 2008 lows around 11,000 on the Dow. At the same time I continued to trade with a bearish bias; why did I do so? There are a number of reasons but the main one is that I knew that our troubles are long-term and when someone would state a bullish stance I felt the need to correct them...BIG MISTAKE because this got my ego involved and got me distracted from the trade.
Another reason is that I listened to too many smart people who make a living out of voicing their opinions. I don't mean Jim Cramer, I mean Richard Rusell and Gene Inger, both people I respect but I have found out that neither are good for me as a trader because they are selling a service and that service really has little to do with stock trading.
To make a long story short I now make every effort to look at the stock market with total objectivity and I always keep in mind that, "the market can remain irrational longer than I can remain solvent."
--Fred
I believe that to become a good stock trader one must hone their skills just as an athlete or salesman would. One of the most important traits on the road to success is being focused and when dealing with the stock market it is easy to become distracted by those who truly believe in a particular stance and those who simply have been trained to keep you bullish on whatever they are selling.
A year and a half ago I stated several times publicly that I believed the stock market would likely "close the gap" up to the July 2008 lows around 11,000 on the Dow. At the same time I continued to trade with a bearish bias; why did I do so? There are a number of reasons but the main one is that I knew that our troubles are long-term and when someone would state a bullish stance I felt the need to correct them...BIG MISTAKE because this got my ego involved and got me distracted from the trade.
Another reason is that I listened to too many smart people who make a living out of voicing their opinions. I don't mean Jim Cramer, I mean Richard Rusell and Gene Inger, both people I respect but I have found out that neither are good for me as a trader because they are selling a service and that service really has little to do with stock trading.
To make a long story short I now make every effort to look at the stock market with total objectivity and I always keep in mind that, "the market can remain irrational longer than I can remain solvent."
--Fred
Tuesday, November 16, 2010
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
--Fred
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