S&P 500 BREAKS OUT, SHORTS PANIC
1 June 2009 by TPC
26 Comments
Chartists are in a frenzy this morning as the S&P 500 surges over its 200 day moving average. Surging Asian shares, a better than expected ISM report and the fabulous GM bankruptcy are sending stocks higher. The 200 day is where the bulls and bears fight their last battles. Is this officially a new bull market or the final resistance? I am officially shorting the surge into S&P 950 via stocks after nearly a month in cash after selling into our March 8th buy call.
* Short various stock indices
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Way to go TPC, I wanted to frigging puke this morning, so I added some more shorts… Consumer is 70% of this economy and they are not spending. Nuff said.
Yeah, I haven't felt right getting short until this morning. It's just too ironic. GM goes bankrupt and the stock market goes nuts.
We'll see how things pan out. I like drawing some battle lines around SP 940-950 though.
I also shorted this morning but hope that we were not early. If we get through 950 then there will be strong resistance around 990-1000 from the November high.
No kidding!? You've been very patient and cautious til now. I suppose we could spurt up towards 1000 at this point if there's enough panic buying, but there ought to be limited downside for shorts at this point. Interesting.
It's a friggen orgy out there. I added a bit of SH just now.
i have a feeling you all are going to regret about it…
You definitely have to respect this rally, but I like testing the market here at the 200 DMA. I'm not saying you should dive in head first, but things are definitely starting to get ahead of themselves…..
I don't know, this could last a while. I think the government is still propping up the markets.
I'm holding a bunch of pipeline MLPs, one REIT (O), GLD, and DBA. So I'm still net long here, barely.
this will last until TPC decides to abandon bearish camp.
Still too many bearish bloggers… those smart types… the only thing is the market is not “fair” anymore. They recognize it but fail to act accordingly.
You know I see this a lot lately, but it really is foolish to think that you can fade the folks who were bearish all through the drop from the '07 highs. You're never going to have everybody on one side of things. And trying to read TPC and the like as a contrary indicator is a fool's game. There really is Smart money and Dumb money.
Exactly you are spot on. There are so many bearish people still. I don't care what sentiment charts say, retailers and many analysts are still skeptical and bearish. When you see the opposite, then it is time to short.
Lee, if you think I am a permabear I guess I should welcome you to the blog and ask you to please read the link in the post. I have been bullish more than a few times in the last year and NEVER go “all in” on one side or the other. Risk management is my game. Not gambling….
not that i am fading them… i am not buying into this rally either. Mostly cash… But can i ask you a question? When you shorted and then even added to your shorts – what was your exit plan? I rather ask differently – what is the SP500 level that will force you to close your shorts?
i do not think you are a perma bear. I understand about not going “all in” either. But was it a small position for you? Or a sizeable one?
Can i ask you the same question i asked onlooker? what is the SP500 level that will force you to close your shorts?
TPC has been saying respect the rally for 3 months. what the hell are you talking about?
oh, just realized your play of words – “foolish” and my id is “leefool” – hehe. gud wan!
go read my post. and no swearing ok? just keep it cool…
I never allocate more than 25% of assets in similar instruments with high correlation. And no single position ever puts my portfolio at risk of more than a 5% total portfolio loss.
This is a fairly sizable position in one strategy I use. I will keep about a 5% stop on it. The position is in the red marginally right now…..
TCP, thanks. Now i better understand your posture – some percentage (up to 25%) is invested short and you will close your shorts around 985. I always look for some “quantitative” measures when reading “trading” posts. If numbers like this are not mentioned than it is really hard to understand the conviction of the trader and his strategy. Thanks for sharing…
I welcome the criticism and questions. If everyone agreed with me then there would be a serious flaw in everything I do….
hello TCP,
Im new. Just found you today. You have an interesting site. Will save this and read it regular.
When are you anticiating the next turn in the SP?
Thanks for your efforts in doing this site.
Steve
Can anyone explain the GM trade to me? I thought under the bankruptcy plan, the value of common shares would fall to one cent.
Hi Steve,
I am testing the short side here for a trade, but I would not be surprised if the SP rallied into early June on seasonal oil strength and Chinese share abritrage. You can search the site for more thoughts on both.
Jeff Saut called for a long trade until sometime in early June. Feels the market is vulnerable to the downside.. Feels like we're going parabolic here right before the big selloff.
Saut has been confusing me lately. A few weeks ago he was aggressively bearish, then cautious and now calling for a rally despite being bearish. He seems confused or hedging his bets currently.
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