Fuzzy Bear Trap? (quicknote on the new week)

Action is further negative so far today, following Friday's reversal lower, but there is nothing yet overly concerning in either market internals or the behavior in leadership stocks.

I wouldn't suggest we're good to reverse higher today and things could deteriorate further certainly, but I am not against adding-back to longs on the weakness. Volume is declining from Friday's pace (constructive) and neither market breadth, Up-to-Down volume ratios, numbers of new 52-wk lows, or really anything else I am seeing point to an imminent rout. Certainly, the ever-bear camp of SKF/FAZ/SRS, etc. is not getting a ton of relief just yet. Tomorrow is another day; further weakness would cause me to increase defense; one step at a time; we'll see.

Easy game ;)

As far as hedges, I shifted from SDS to TWM (as the Russell2k is weakest of the majors on the session).

Total Position: 2.18-to-1 net-long (plays 1.40-to-1 net-long considering levered TWM); 56% invested
(Note: inverse-ETF TWM represents being dbl-short the Russell2k index)

Currently Long (according to size): TQNT (re-increased today, 4.8%), ASIA (4.5%), SWN (4.5%), RAX (4.2%), WFT (4.2%), PEET (3.8%), ARST (3.4%), SNDA (reloaded, 3.1%), AU (reloaded, 3.1%), CYOU (reloaded, 3%)

Currently Short (according to size): TWM-long (new, 9.9%; Russell2k Dbl-short), ONXX (4%), MYGN (3.9%)

Futures Accounts: covered 20% short Jun NDX, ave. 1476.50; from 1495.75 ave Friday

Warning to SKF, FAZ and BGZ Players

To SKF, FAZ, BGZ (etc.) traders:

Okay, you are flying high, ripping ultrabone-financial quintuple shorts into your own personal stratosphere. Well done tough guy, but wipe that grin off your face and be at least poised for when to cover-up.

Fat city no doubt, but if you are long these here and now, then have a look at these charts going back to last November. I have discussed before how these over-bleed on the downside (vs. their relative indices), but now it is more timely. It goes something like this...

-They can continue to rise as high as the sky (this is no bottom call on financials, though it is a possible inflection point).
-But it is when they re-trace, after the huge incline that they bleed badly relative to the underlying index; meaning that the financials will be gaining far less than the SKF and FAZ will be declining.
-These are faulty products and it is after a big move that the faults appear. Math geeks can tell you why, I'm just telling you that is the unfortunate downside to these trading instruments.
-Wouldn't we all like to have this problem right now. Just don't get caught when they turn down, you scumbag shortseller ;)

[Edit: Dreamdaily sent in a nice and dummed-down video explaining the geek(less) math. Anyhow, whether SKF topped today at 250 or it is going to 300 or 450, etc., it is the counter-slide were anyone holding is going to get burned. I'm not going to hold any of these overnight for the time being, but I am not at all against using them for daytrades if the tape is ripe (rotten).]