Setting up for a monster short

Discussion in 'Trading' started by detective, Jan 14, 2008.

  1. If the markets are up big today, it will set up a monster short down the road. This market is totally different from the one in August and November. The price action is much weaker, and the potential catalysts are much more limited. The rate cut as catalyst for a long rally has already been used up, and is no longer going to suck in dumb longs for the ride to 1550 on the S&P.

    The Fed cutting rates 50 bp intermeeting or on January 30 will be the last gasp of the bulls for a while. The consumer was the final straw and the retail stocks show that the consumer is on its final legs. Consumer weakness is going to drip down into tech and rip this market apart in February.
  2. So are you going to trade this 'setup' with real money? Just curious.
  3. Yes. I haven't been this bearish about the stock market since fall of 2000. Hyperinflation is the only thing that will save the stock market, as earnings will be buoyed and bump up stocks. This Fed will keep rates low even in a hyperinflation as the economy will be weak.
  4. faure


    Here's an idea - short just before the FOMC and cover at the close.
  5. Or if there is an intermeeting cut short the runup and stay short till 3 days before the FOMC meeting.
  6. Fact is, we haven't had the "monster selloff" with all the news baked in now.

  7. Mvic


    The financials report this week, what if they say that things are not as bad as they thought or improving? Last week they were moving up even on the sell offs. Even if they report bad news the market isn't going to sell of substantially from here with the stimulus package and Fed action looming. I'm looking for a rally on the Fed/ stimulus/ better than expected news from the financials and then a possible short. Thing is that the stimulus package, depending on how large and focused, could keep the market in denial for several months or good part of the year.