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goldminingXpert (29.55)

Don't short this market just yet.

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April 03, 2009 – Comments (15) | RELATED TICKERS: BE , A , R

We're getting close to the optimal short point, but we aren't quite there. The late surge in financials was both powerful and surprising. We must now wait until a new topping process begins--next week--I thought we had a top yesterday, but apparently not quite. Once we put in a top (hopefully at 870, that'd be ideal) we will either get A) a significant correction and then one last bull gasp higher or B) a new bear trend taking us back towards the lows. If we roll over from under 850, a correction is more probable while if we reach 870 or higher (the 200 DMA is still way up there) we should conclude this bear market rally and return to our regularly scheduled sickening declines. I think we will get an optimal shorting opportunity in the next two weeks to position for a 10%+ decline, however, the close today gives me pause. Let's see what Monday looks like before getting too aggressively on the bear boat.

15 Comments – Post Your Own

#1) On April 03, 2009 at 6:20 PM, ayekappy (< 20) wrote:

It's quite simple really, this market was designed to f me up the b.  Horrible news?  RALLY TIME!  In a few weeks?  Mediocre news... BEAR TIME, but after my puts expire.

 

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#2) On April 03, 2009 at 6:30 PM, goldminingXpert (29.55) wrote:

Yeah, I'll be buying May puts fwiw.

Ayekappy:

I'm going to repost my blog from a week and a half ago. Once you've been trading awhile, you start to learn the pattern of the market--last week was too early too short because too many people were shorting it. When too many people anticipate something, it doesn't happen. Now that the "new bull market" BS has kicked off again, we can start thinking about shorting.

Here's my This Rally Post from about 10 days ago:

"will go on longer than you expect. It will go on until a large number of people believe that the bottom is in and a new bull market is underway. While the economy isn't finished declining, the bulls-in-waiting will come from the bulwark proclaiming that the stock market is a forward indicator. At this point, calmly join me in selling your stocks as quickly as possible and buying puts on any stock with a ticker symbol. But for now, either hold your stocks or patiently wait in cash until the new bull market blather spreads throughout the masses. Too many people were trying to short the S&P at 800 last week. Wait until the bears are beaten back and then pile back in on the short side. This is not a new bull market, it is merely a bigger bear market rally than most--enough to hopefully scare you senseless if you thought shorting stocks in a bear market was easy. That is all."

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#3) On April 03, 2009 at 6:49 PM, murugan2 (37.08) wrote:

Thanks for the insight guys.  Whatever "bear capitulation" target is identified in the press will be taken out.  Whether that is 865, 875 or even 900.  I'm still holding my shorts, some dating back to march 17.  FAZ that looked so promising at 37 was added to today at 15.65.  Someday I may recoup, but since I dont know when, I'm going to hold out until the retracement.  I have a few puts which will probably expire worthless, but mostly ETFs that I'll hold my nose and hang onto until this crazy ride slows down.  I do think that the last 10 minutes today was a lot of short covering, so hopefully the bulls are almost at the point where they think they won.  This has been one ugly bear trap, and I have seriously considered cashing in my chips and sticking everything thats left under the mattress.  I can imagine a composite chart made up of predictions of the last 3 weeks showing points at which people predicted the pullback that never came.  When you start to see every chart with a higher target, then we might have of chance of getting our money back on our shorts.

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#4) On April 03, 2009 at 7:59 PM, crystlz (64.60) wrote:

I have liked your call of the bottom "around 660" and your call to not start shorting at 803. 878 takes us back to the double top at the beginning of February. I'm sitting on cash waiting for this rally to continue for a while longer. I think I'd rather buy groceries than to chase at this point.

peace 

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#5) On April 03, 2009 at 8:30 PM, nuf2bdangrus (< 20) wrote:

I started shorting today in earnest and closing longs.  I was early, and got burned by GS, AMZN   If Monday is an up day, I'll close and take my licks...and wait till 900.

 

Problem for bears...the market never goes down when you think, it does it at the point of maximum pain for shorts.

 

 

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#6) On April 03, 2009 at 8:46 PM, binve (< 20) wrote:

GMX,

This post seems to align with a conversation I just had with Tasy on GVs blog. Here is what I see:

1. S&P rallys >25% from the beginning of March (short period of time) and is now in the thick of a heavy resistance zone.

2. Daily indicators are overbought

3. There has been no signifcant pullback since the rally began

4. Hourly MACD shows tons of bearish divergene. I see short term weakness in the rally the last few days, not strength.

5. Very good break of 50 day MA. But this is the first real break. When the 50 day MA is long time resistance it is statisically likely not to provide support until after a couple of repeated failures. Recently look at oil. It had to break through several times to be done with it. 2002 bear was very similiar for the markets.

6. Much too much euphoria. Housing, banks, mark to market, G20, blah, blah, blah. When just a month ago the world was ending? Come on. That was waaaayyyyy too easy if you ask me.

7. MACD on the daily chart is showng very bullish divergence. Vey constructive. But we should have a retest before the market takes off on its really big run

8. Gut reaction. This just felt way to easy. There needs to be another test. The strong willed and calm investors will jump in when everybody else is panicking during Wave 2. It just seems to me that needs to happen.

So that is why I am still short term bearish, we have had no pullback, no retest of either the technicals OR the will of the investment public.

I could be 100% wrong. I totally admit that as a possibility and I will publicly admit there if this turns out to the middle of the greatest rally of this year. 

After a good pullback, I will get out of my shorts, and go 100% long. I think a MASSIVE rally is in the works. I just don't think it is here yet, and I think this is a very bad entry point. Report this comment
#7) On April 03, 2009 at 9:12 PM, goldminingXpert (29.55) wrote:

I think a MASSIVE rally is in the works.

Don't blink cause, um, you missed it. Lol. If 180 points up doesn't do it for you, what's it going to take? 25% in a month is pretty massive if you ask me. I called 943 as THE TOP for 2009 back in January and I stick by it now.

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#8) On April 03, 2009 at 9:16 PM, binve (< 20) wrote:

LOL! Touche :). But I honestly think you haven't seen anything yet :)

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#9) On April 03, 2009 at 9:30 PM, jszoke01 (24.49) wrote:

GMX - Are you buying puts on SPY, or specific equities?

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#10) On April 03, 2009 at 9:35 PM, goldminingXpert (29.55) wrote:

QQQQ's most likely or I might just buy a slug of FAZ. I'm really tempted to go for the QQQQ's after today's RIMM madness.

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#11) On April 04, 2009 at 11:29 AM, RVAspeculator (29.57) wrote:

I finally bought some FAZ a few minutes before the close on Friday.  

I agree with your call though and I only bought 1/4th of my planned position size so I can scale into the position as/if we rise.   Worst case is I don't have enough shorts on when the market falls.  (like if it were to fall on Monday)

Really what I was doing most of Friday was dumping a bunch of my long positions….  I even sold the 401K back to cash on Friday.  Only have a few longs left and I sold calls against those guys.

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#12) On April 04, 2009 at 12:07 PM, OldEnglish (28.23) wrote:

"...wait in cash until the new bull market blather spreads throughout the masses."

Too true. It's almost a law of nature. I'm just waiting for Kudlow to start talking about a "New Paradigm" where job losses, dividend cuts, and lower earnings signify a rally. I began the short move way too early.

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#13) On April 05, 2009 at 3:45 AM, FleaBagger (28.14) wrote:

FAZ seems really risky to me with all the money that Geithner (read: Obama) is shoveling into the financials, and the way they're doing it, allowing all the toxic assets to be hung around the taxpayers' necks via newly created hedge funds and enormous loans from the Fed.

Is the money all focused on a few players, so that enough of the Russ1000Fin will tank to boost FAZ? Comment?

Unless someone knows better than me about the Geithner Plan, FAS is a better bet.

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#14) On April 06, 2009 at 11:39 PM, usmilitiadude (32.14) wrote:

Six out of the last seven trading days seem a little light on volume. What is a good number of days to average volume? For that matter, what is a good resource for some basic TA?

Barry, Ben, Tim, and Warren might have to shave their legs and grab the pom-poms to get this market to go higher. Look out broadcast babes.

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#15) On April 16, 2009 at 3:55 PM, outoffocus (23.49) wrote:

Well I have to say you were quite correct in telling us not to short the market yet. Congratulations.  Unfortunately I had already red thumbed a few stocks before this post came out. Looks liek we may actually reach 870.

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