Thursday, February 25, 2016

Get Shorty

They are coming after the shorts with a vengeance today.  Once again, the morning was a bear trap and set up another painful short squeeze.  Now that we are at SPX 1950, you will stubborn bears thinking this is a great level to get short.  The only problem is that the bottom was just 14 days ago, which means there is probably at least 2 more weeks of sideways to upward price action.  It doesn't help that in 2 weeks, you have whatever it takes Mario coming up with ideas to goose up the European markets and then followed by the Fed the following week.

Oddly enough, it has been easier to profit from the up moves than the down moves.  It seems like the down moves come more randomly, while the up moves seem to always come after you get a sharp drop and excess pessimism.  I am sure we will quickly get more bulls jumping on the bandwagon, thinking this is like October of last year.  Probably when we are at 1980-1990 level, which should be a nice sell short zone.  We might even overshoot to 2010-2020, depending on how long this grind higher goes.

Even with these projections for higher prices, I am reluctant to go long, because of the poor fundamental backdrop.  But I will be an opportunistic long for small size if we get any dips.   Probably best to just stay on the sidelines until a good setup comes up.

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