Friday, January 30, 2009

iii of 3 - And it Scares Me

A funny thing happened on the way to the bad-bank this week.

Wednesday's blast-up was faded furiously yesterday and now further flayed today. Elliot Wavers are pounding tables right now about having seen yesterday's i and ii and now today's iii of 3.

You got that right!

I would characterize it a little differently - you know how when you don't leave the house for a while a burgeoning smell isn't effectively noticed (rather it sneaks up on you), whereas if you return home after being out it is undeniable upon re-entering that something stinks?

Something died.

By default I'm net-short here, having removed myself from the longs acting weakest, while seeing no reason to cover my hedge (I did however cover YHOO at yesterday's close since it held > than the 50-day MA and I did add OTEX long yesterday, as that was breaking out on earnings, but this position is small and the benchmark leash is tight. I sold much more yesterday overall than I bought; more of the same today).

Next week could potentially get ugly. I'm going to attack this rather aggressively if we keep weakening, especially given the overwhelming attitude that we will hold the lows in the market. I thought we would break lows later in the year (September-ish), but if it is to happen sooner...I want to be a part of history.

I'll be pleased to get net-long or long-only again if the charts hold up and the market firms. At the moment however I'm not inclined to hold-on long in this tape and hope. I'll keep shooting first.

Current Shorts (according to size): SDS-long (SP500 Ultrashort), AAPL, VMI, MBT
Current longs (according to size): AVAV, ABX, CEPH, MYGN, ASEI (thin), OTEX, HOC (new), CECO, ATHN and DLTR

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