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goldminingXpert (29.47)

TMAP D37V26: Don't Short This Yet

Recs

19

June 08, 2009 – Comments (15)

Shorting the hole is a good way to get burned. If we close under 930 on the S&P, feel free to short the close. If you got short early Friday as I did (comment #3), don't cover here as you've got a position that is nicely in the money (15 S&P points worth for me) and my stop is safely set at a profit. However, I don't like shorting (or adding to a short) here as it is unlikely that we go straight down. As happened last week, we had an apparenty breakdown to 920 but we didn't CLOSE down there and bulls used the rejection as fuel for the last push north. Now the disasters that will be the long-bond auctions this week, we know the odds are very high that the market will be trading lower than it is now, but don't rule out a final push to 945-50 as the bulls take one last stab at the high.

15 Comments – Post Your Own

#1) On June 08, 2009 at 11:50 AM, atarigod (< 20) wrote:

Do you think the time is ripe to short at the close if we are going to close under 930??

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#2) On June 08, 2009 at 11:51 AM, atarigod (< 20) wrote:

Also, in your view, what do you think the weakest sector out there that has overshot to the upside?

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#3) On June 08, 2009 at 12:08 PM, goldminingXpert (29.47) wrote:

I will add to my short position at the close if we are under 930.

I think XLI (industrials) and XLF (financials) are the most attractive of the sector ETFs in terms of places to short.

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#4) On June 08, 2009 at 12:23 PM, russiangambit (29.29) wrote:

I think it is a combination of concern about over-supply of treasuries and stronger dollar today. Dollar strength is negative for the stock market in the short-term since it pushes commodities down and also makes the market more expensive for foreigners.

Now, why the dollar is getting tronger, other than it just being technical bounce, I have no idea.

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#5) On June 08, 2009 at 2:43 PM, goldminingXpert (29.47) wrote:

Don't look now, but the bond market is crashing again today. Earth to Ben... where were you? You're just a little late.

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#6) On June 08, 2009 at 2:49 PM, atarigod (< 20) wrote:

GMX, what do you think about SIJ vs shorting the XLI?

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#7) On June 08, 2009 at 2:57 PM, goldminingXpert (29.47) wrote:

Not a whole lot of volume, but looks like a good play. Unless we get a sharp rally higher into the close, I'll be shorting more between now and 4ET. The wheels have entirely fallen off the bond market--it goes down every day, even when the stock market falls (which should drive bonds up.) Mortgages have gone to 6% for 30year-fixed. The bull party is over. The bond auctions this week (3's tomorrow, 10s, then 30s) will be three sticks of dynamite for an already frayed market.

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#8) On June 08, 2009 at 3:18 PM, atarigod (< 20) wrote:

This impossible market seems to be making a comeback yet again!

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#9) On June 08, 2009 at 3:35 PM, goldminingXpert (29.47) wrote:

And that is why you wait for the end of the day to short. Weird weird action. Anyway, I got stopped out of my Friday shorts at a 5 point gain and now I shall wait and see what we get tomorrow.

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#10) On June 08, 2009 at 3:39 PM, StopLaughing (< 20) wrote:

Note:  Interest rates are moving up slightly from decade lows. The fed slashed short term interest rate last year to more or less 0. The longer term tips were signalling 5 years of deflation.

Now we are returning to  a more regular mind set (pre Lehman) and we are also returning to a level of interest rates (and market prices) that existed before the liquidity crisis. Take a look at a 10 year chart on t-bonds.

Corporate bonds are going lower not higher in rates as the spread between them  and t-bonds return to normal.

If there is any crowding out this week it will be the t-bonds crowding out the gov guaranteed mortgages.

Except for the run in oil due to $ weakness and anticipated future shortages there is little inflationary pressure at this time. There could be plenty in the longer run but so far most of the movement is due to gyrations in the $ and maybe expectations of future inflation pressure.

On where to short, I would be very careful about shorting in here unless you are a very nimble day trader.

If enough of the green shoots blossom or do not turn out to be yellow weeds or brown stalks the market will decouple from it's inverse relationship with the $ and go on up even if the $ is even or goes up slightly.

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#11) On June 08, 2009 at 3:56 PM, goldminingXpert (29.47) wrote:

Putting a tiny short back on... this looks like a nice rollover and the 10-year bond is falling even farther.

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#12) On June 08, 2009 at 3:57 PM, goldminingXpert (29.47) wrote:

StopLaughing--you are entirely wrong about interest rates. This is the fastest up move in the 10year bond in the last 10 years and mortgage rates are soaring.

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#13) On June 08, 2009 at 6:28 PM, LongTermBull (94.04) wrote:

Anyway, I got stopped out of my Friday shorts at a 5 point gain and now I shall wait and see what we get tomorrow.

Putting a tiny short back on... this looks like a nice rollover and the 10-year bond is falling even farther.

If you feel the market is going down and shorting is the right thing to do, why do you put a stop and then re-short?  Wouldn't you make more money just leaving them alone if you were going to continue to short?

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#14) On June 08, 2009 at 6:44 PM, goldminingXpert (29.47) wrote:

Cause I haven't taken eaten a lot of the rally...I got stopped at 930 just before the explosion to 950... got to keep your capital available for the big one... one of these days I'll get short and find the S&P drops 200 points in a few weeks in a move reminescent of Dec. 07 where I shorted and kept a tight stop on for weeks and the market never came back and stopped me out. Take lots of small losses and let your winners run.

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#15) On June 08, 2009 at 7:13 PM, LongTermBull (94.04) wrote:

I still don't get it.  You said you got in at 945 but your stops kicked in today at a 5 point gain which would be 940.  You then re-shorted.  You pay commissions plus fees for the stop and the purchases, if you just let it ride wouldn't you make more?

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