Friday, January 3, 2014

Bear Suit Ready

2014 is the year to start being more aggressive on the bear side.  I held off in 2013 because of the tremendous momentum, and we still have that going for this market.  But now, the overvalued levels and complacency are obvious.  The bullish sentiment is extremely high.

Tops are a process, while bottoms are usually short, quick events.  So I am sure that we'll be chopping back and forth around these price levels, but the sign that I am looking for is more extreme dips and rallies.  In other words, more day to day volatility than what I have seen so far.  I want to see the chop like 2000, 2007.  We haven't seen that chop yet, so I can't be too aggressive.  I expect to see some of that chop soon.

I am looking for opportunities now to get long bonds and short stocks when we have those 3 day rallies off a quick pullback.  That was something that I was unwilling to do in 2013.  Now stocks are sufficiently overvalued to where I am more comfortable going short and staying short.

For today, I am bearish and expect a close near the lows of the day.

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