DISCLAIMER

PLEASE READ THE DISCLAIMER AT THE BOTTOM OF THIS PAGE WHICH APPLIES TO ALL CONTENT IN THIS BLOG AS WELL AS ANY OTHER MATERIAL FROM WE ARE FUTURES TRADERS LLC. READING ANY CONTENT BELOW CONSTITUTES AN AGREEMENT BY ALL READERS THAT THEY HAVE READ AND AGREE TO ALL THAT IS SET FORTH IN THE DISCLAIMER AT THE BOTTOM OF THIS PAGE.


Friday, August 14, 2009

Time to get short



I rarely do this, post a trade right when I do it, but will take a shot at it today. I just put a position on with the SH etf to short this market on today's opening. I think with all the things I mentioned recently, along with the seasonal, and this tremendous divergence in this oscillator, it is time to look for the decline to begin.



I have no idea if it starts exactly today, but the only thing missing from making this a perfect setup is a heavier commercial short position. However, what has been happening recently is the commercials doing scale down selling and scale up buying. As a result, they are not giving us the advance notice they used to.



The negative in this trade of course is the PPT along with several funds that have every interest in keeping this up for as long as possible. The PPT for political reasons, and the funds just to keep their bonuses alive. However, at some point natural market forces are going to push this down. The public is just way too bullish right now as well as the advisors which is even more meaningful.



Valuations are very high also along with some trend measures reaching historical levels. You did read that right, on some levels this could be argued to be the greatest rally in history. One trend indicator I use has only reached this level one time ever, so by that measure this could be argued to be the biggest or tied for it, rally of all time. Keep in mind we have moved 50% or so in just a few months.



When all of these things get put together, it tells me this is the time to not only be out, but to be short. There are those last hour buy programs that have shown up every day like clockwork, and there is no reason to believe that will not continue. It might be the PPT, and most of the time it is, but it is also institutions as well. No matter, this trade is a hold not a short term play.

The challenge with this is going to be once the correction begins, how to guage if it is a pullback or a big picture trend reversal. I will tackle that when it happens. If we continue to creep up I am going to scale in more to this trade.

2 comments:

robert said...

So far, so good with this stock market call.

Great blog, Chris.

I read every post - I don't comment more because you're da' man re: the stock and bond market and I'm not.

Robert Campbell

Anonymous said...

I've wanted some exposure on SH this entire week but needed a 'nudge' so thanks for the insightful post. I bit the bullet today :)