In my opinion, based on my experience, I have found most investors are reluctant to short the market, with more than 95% of all trades long. As well, many traders I speak with say they do not short at all. As an investor, I can understand the reluctance to short a bullish market in a low inflation, solid growth environment, but as a trader, I feel you must consider shorting to take advantage of the volatile movement of the markets. While there are limitations that short sales face regarding availability of stock, affirmative determination issues and upticks/upbids etc., it is simply part of the game.
A few key points; 1. the market/stocks sell off more quickly than they go higher. similar to alonger term breakdown, a stock will fade with no buyers more quickly than it will move higher.
2. Just as going long, you have to be good at time the short. Waiting for the market to be ugly and down hard is not the time to do it, you would probably be getting on the wrong side at exactly the wrong time.
As I had stated in the Daily Newletter we send, the futures reversal a few days ago when we were up nearly 200 points lead to asome interesting shorts for short term trading. Two days of nearly 100 point losses would be grim enough to cover, as was done. As a trade, you should be looking for a home run and while you'd love to see a 300 point dip, if you look for it you will lose. No different than going long.
-Regards
Steve@yamner.com
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