For those who are interested in my present market stance:
I believe we now have a sufficient count to mark the end of our corrective upwave. We've seen three high volume distribution days now, after a clearly speculative phase that would qualify as a blowoff. Sentiment correlates with a top. Insider and corporate selling are at levels associated with tops. Mutual fund inflows and cash levels are at levels associated with tops. Seasonality favors a downleg here as well. Funnymentally, I think the present quarter will mark the high water mark for economic optimism, as the combo of tax cuts and refinancings should have just peaked. Liquidity should begin to recede again, and optimism with it. Look no further than treasuries for evidence of this.
I have not yet released my hedges to expose the portfolio to the short side, however. I'm anxiously waiting to see the nature of the next rally attempt, likely underway today. If it is corrective and weak, I will probably begin releasing hedges into it. I am keeping a keen eye on the glamour trash like the Asian Exotica names - they are the canaries in the coal mine. If most of them give up their 50DSMA in convincing fashion, then I will fade the next bounce.
Most of all, I have no interest in being early. The overall trend for a very long time will be down, and loss avoidance is the name of the game. I'm waiting for a year-long uptrend to turn, and then trying to rejoin a multi-year secular bear. As long as I am patient and wait for the overlying downtrend to reassert, I will have maximum capital available to ride it with.
There is plenty of time for shorting. Let's see if the trend has really turned.
BC |
