Time to buy SKF...?
Dexion10 posted last week about his newly added short positions:
I basically agree with his thoughts about how the market is overbought at this moment. Regardless of your overall market outlook. Whether you feel this is just a suckers rally or the beginning of an actuall bull market is irrelevant. What is important to realize is the fact that the amrket has risen too far too fast. Remember way back in our last bull market, the market did not rise up this quickly without taking a breather (a downward correction).
So I agree with Dex in principle that we are ready for a downturn.
My only concern is that now we have pretty much smashed through the resistance level (~910 SP 500) as we are currently sitting at ~ 930 on the S&P 500. That is, we did not just brush up against this resistance level and are prepped for a crash, we completely blew past it and thus may not "respect" it. The next technical resistance level is not until around 1000 on the S&P 500.
What about SKF?
I've been a big fan of this 2x short financial for the past 6 months or so and I have done really will by sticking with a rather simplistic approach. I buy it everytime it gets close to 100.00 (anything less than 105.00 essentially). This seems to be the lower limit on it, yes this is totoally an oversimplification. I hold onto it for a week or so, and sell it for a quick 20% or so gain. I've done this about 4 times. Easy money right?
It is currently at 102, so I'm seriously thinking about pulling the trigger again on monday and playing it once again. I think the market is ready for a pullback because of what I stated above. However, even if the market rises a bit longer, the odds of financial stocks rising straight up in a then apparent "V" shaped market is zero at best. In my opinion, financials will at the very least, retest some lows, more likely fall off the face of the earth.
Thus, buy some SKF and make some quick bling bling $$.
Reasons why my logic is completely flawed this time?
Happy New Year my fellow Fools...