Thursday, May 07, 2009

Churn while you Earn (scaling further short)


The glass is evolving half-empty at the moment with waters inside churning.

While yesterday it was the NDX flashing distributive action, today it is the NDX and pretty much everything else (sans Medicals). Volume is rising and heavy again today, the pace of which is extreme.

Combine this with today's ugly gap-up and reversal (again, the NDX ugliest in that regard), and you have a genuine toppy, churning tape which in my world suggests some kind of top.

Cute churning action.

I say some kind because I don't know (and I don't pretend to know) whether this is simply a mild pullback before resuming upward again, the beginning of an intermediate-term trend lower, or the latest, greatest decline-to-define-all-declines for futureless generations to come.

Leadership growth charts are looking poor at the moment (some breaking down, many others getting choppy), but nothing too dramatic at this point.

Elements so far then command a bit of respect, perhaps nothing more. I'll continue to let out more short as this develops (thus positioning myself as one dirty, short-bastard by the time blood is seriously flowing, or else keep overall-small; nibbling on dumpster-fare should the downside lack lethal dejection.

Sad story - I tried shorting a couple of Solars gapping 8 and 10% higher (they are 8 and 10% down now on the day; nice swing), but could not get shares borrowed. At-the-money option premiums were too high to go that route, so I've got nothing short in Solar.

I intentionally waited to short the Financials. But GS now, unless it recovers to 36.05 by the close, is set to mark a key-reversal (gapping to a higher-high and then closing at a lower-low); volume is rising there as well. I got GS off short, but it is MS that is perhaps more exciting, since that beast couldn't really rally lately and has lower relative strength. I'm working orders to short MS (>27.70 at moment), but may not manage to get it today; if not, I'll take the first reasonable set-up, regardless of price.

That's it. I don't want to jinx the pullback for you guys by blowing sexy conch calls about colliding wave counts, imploding stars and bloody-green clovers. I suspect tired bears will be reluctant-but-happy to exit quickly now that they see losses finally improving. That's the bitch about being so early - nothing left in the lust tank to take advantage of one's previous dreams, once they start to gel.

Did that make any sense? I'll just try to keep 1-small step behind the market action and let you guys make the smart calls - how's that? Stupid-lucky showing up late to all the finer parties.

Snort.

Total Position: 2.42-to-1 net short, 27% invested

Currently Long (according to size): WNR (4%), CYOU (new, 3.8% - benching on 10-day m.a., post-2pm basis

Currently Short (according to size):
AAPL (8%), GS (6.1%), STRA (4.9%)

Futures Accounts: Covered NDX June (unfortunately) at 1405.75 for small profit; looking to re-enter; blew-out on the slice lower today as breadth was then 2-1 positive, but internals have worsened sufficiently since.

Cute churning action.

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