The Short Side May Be Setting Up Again

The bulls have had a lot of fun recently and they deserved to have the baton passed back to them after the mighty SPX selloff down to 1810.  I’ve never been a perma bull or a perma bear, I’m an equal opportunity capitalist that tries to take advantage of things when they get overdone to the upside and the downside.

As I did state at the beginning of the year in more than one of my blog posts or rants, was that I thought the personality of the market changed last year for a multitude of reasons.  I opined that this year, unlike others, I would be much more inclined to short rallies than be too aggressive buying dips.

I don’t think crude oil will hold this rally. I’m not saying it revisits 26, but why shouldn’t it? Nothing has changed.  I definitely think that the move in metals, mining and other commodities will lose their bids soon.  Folks love owning these names for a trade, but not a long term hold yet. Fast money took these groups up and fast money isn’t sticky money. Fast money leaves as fast as it arrives.

I’m not bearish today because the market was a little red. I would have laid in shorts if I was that passionate about a move lower. I may regret it, but I still want to watch this for a couple of days.  I’m bearish for the same reasons I was since the end of November.

It is true that commodity bull markets usually get started with gluts and supply, and bear market start with scarce supply (see oil at $140), but I still think we can trend lower for a while longer.  The pendulum always swings at extremes.

When I see charts like the ones below, it makes me want to take advantage of the irrational exuberance on the short side.  These moves never last. Stay tuned for some other potential ideas.





HYG is probably a short again.


IBB-just keeps failing and flailing.


XLF –I still think banks are toast.


Russell 2000– Not so sure about this….down almost 3% today???


I look at things through a different prism than most, but I think even the most bullish people have to wonder about things at this level.  On the macro front I still think Europe is doomed, China still lies (did you see their export #’s this morning?), and Japan is contracting. Also, I think the power and impact that the Central Bankers think they have is waning big time. We’ve seen that QE movie and it’s grown tiresome.  Financial juggling at its best.

I removed HIMX and VNTV from the P&L as they never triggered.

Stay tuned, I’ll see you in the morning.

P.S. 50 years ago today, Bob Dylan released Subterranean Homesick Blues

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