Tuesday, March 1, 2016

Going Higher Till Bears Give Up

Many are still very persistent in their shorting and negativity.  I don't know why, the price action lately has been quite bullish.  But there must have been some serious trauma from last August and of course that monster dump in the first 3 weeks of January, followed by an echo dump a few weeks ago.  Yes, the economy is getting weaker but we aren't trading GDP futures here.  We are trading equities, and they are ruled by supply and demand.  When you have investors underinvested, corporations stubbornly using their cash to buyback stock, and short sellers shorting looking for another crash, the odds are that we will keep going higher.

I do believe the trend is down, but I have too much company with that view and we need time to consolidate the big down move in January.  During the consolidation and bear market rally, I have been playing quick trades, buying dips to sell the rips.  I bought yesterday afternoon and sold today.  I don't have enough conviction to hold for bigger gains, even though I believe it will keep going higher.

The potential bull catalysts in the form of the ECB and the Fed this month is enough to get a lot of shorts covering in the coming weeks.  That will probably be a better time to look for a longer term short position.  It is looking like we could get to 1980-1990 zone which I would consider shorting longer term, but I need to see what the market tone is like at that point.  If I still see Fast Money traders beared up at those levels, I will wait.  If they are optimistic, I will probably begin a short campaign.  This bear market rally feels like it has some serious legs and could last 8 weeks from Feb 11th, the long end of rally length expectations, instead of the 4 weeks which I initially thought was more likely.

Now flat and waiting for the next play.  Probably will just grind higher from here, in all likelihood.

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