Friday, April 23, 2010

Don't Even Think About Shorting

Some of my readers have asked if they should look to short this market.  NO, NO, NO...Even though the market  has shown signs of a possible upcoming pullback or correction, you don't want to mess with this brake less locomotive.

Each night I look at my short and long screens.  I have found that, and this has been pretty common for some months now, short setups tend to break up, not down.  Or they will start to breakdown and squeeze hard over the next few days.  This is not the type of action you want if you're considering a short trade for more then a few hours.  In fact this is the only reason that I have continued to take long trades even though it seemed on several occasions the market was ready to correct.

Even if I knew the market was going to go down tomorrow I would not attempt to short for more then a day.  The bulls just have too much power right now to warrant the risk/reward.  The short side will be no different then the long side eventually.  You will see plenty of setups and evidence that it is working.

On the long side I continue to trade.  I do not want to get caught over invested.  If the market keeps rising I will participate as a swing trader.  Most of the stocks I'd like to own are just too extended to take long term positions.

Questions, comments, and suggestions always welcome.

Good Luck
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