Considering short positions

[abagillion]

David,

I agree with your argument for a drop in stock prices.  However, the large cap stocks are leading this rally.  There may have been institutional distribution in December, but that seems to have reversed this week.  A chart of the weekly SPX shows a clear uptrending channel.  This week's rally has brought it to the top of the channel, and there may be some profit taking next week.  The breakout failures in late December came on weak volume.  This week's rally had strong volume behind it. 

There will be a time to aggressively short this market, but I think you may be trying to pick a top here.

[David Randolph]

David,

I agree with your argument for a drop in stock prices.  However, the large cap stocks are leading this rally.  There may have been institutional distribution in December, but that seems to have reversed this week.  A chart of the weekly SPX shows a clear uptrending channel.  This week's rally has brought it to the top of the channel, and there may be some profit taking next week.  The breakout failures in late December came on weak volume.  This week's rally had strong volume behind it. 

There will be a time to aggressively short this market, but I think you may be trying to pick a top here.

I agree with you czahara1, please read «GIGM saved the 3 SOF Portfolio».

Thanks for your post and welcome to 3 Stocks on Fire 

[Maestro]

Looking at the 192 closed trades in the "2 SOF" category I see that there were 7 short buys; all but one resulted in a loss. The average loss of the short trades was 3.9%.

Nevertheless, I am for an increased proportion of short trades and share the hope that this will help improve overall performance of the portfolio.

Good luck to us all.

Maestro