Tuesday, May 8, 2012

And Now All Together: Sell

I am not a big fan of crowded trades. When all traders do the same thing, the opposite result is almost certain (at least on short-term basis). We may not quite be at that point yet, but are probably near it (a few days). Traders are now all over the media pushing their short ideas. They were all long before and looking for 1440 on SPX, and now all of them want to be short. Pick a good spot to cover and stick with it, I say. The sudden excessive bearishness will do its trick. I personally like 1330 - 33 on SPX futures as the last short scale-out target and a good spot to go long on a scale-in initiation. Let's see if we can get there by Thu afternoon or early Fri and have a nice short-covering squeeze into w/e, just to mess shorts up and get their stops. It still would not change the overall bearish picture, but would reset the charts and sentiment for a bit, and set up another short entry. The next selling opportunity may be even better, but has to be somewhat higher than here, and with less traders being short.

I apologize for lack of deeper coverage...
Hoping to have more for you in terms of charts and macro thoughts soon...

Stay safe!

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