Short-Selling, Puts & Inverse ETFs 02 (Feb 12 - Dec 25)

[iam802]

Worth reading.

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Muddy Waters Secret China Weapon Is on SEC Website

http://www.bloomberg.com/news/2013-02-1 ... bsite.html

[winston]

We just got another big reason for caution as stocks make new highs

Investors reduced bearish stock bets to the lowest level since at least 2007 as the bull market in American equities begins its fifth year.

Short sales in the Standard & Poor's Composite 1,500 Index fell to 5.6 percent of shares available for trading in February, down from a record 12 percent during the credit crisis and the lowest ever in data compiled by Bespoke Investment Group and Bloomberg starting six years ago.

The last time the number of shares borrowed and sold short approached this level, the equity gauge lost 3.3 percent in the next three months.

Source: Bloomberg

[winston]

With the sharp drop today, is it the beginning of the "M" ?

[winston]

This Will Be the Time to Get Aggressive on the Short Side By Jeff Clark

Shortly after the first hour of trading on Thursday, I turned off my computer and walked away.

I was about to allow my emotions to influence my trading. So instead of doing something monumentally stupid, I shut everything down.

You see… I was frustrated. So I was either going to throw in the towel, concede that stocks will move higher every day forever, and throw a bunch of money into the stocks that have been levitating all year… or I was going to take an overly aggressive stance on the short side, insist that the market had to go lower, and show everyone that I'm right and they're wrong.

Neither of those actions are based on logic.

Logic says two things right now…

1. Stocks are extended and ripe for a pullback. Even though this rally can continue higher, buying stocks right now is dangerous. There will be less risk after a pullback.

2. It's premature to get too aggressive on the short side. Despite all of the diverging indicators, price action remains positive.

So until we get a decline that takes out an important support level (previously 1,552, now around 1,570) and sticks, one or two short positions make sense. More than that is a gamble.

Traders battle their emotions every day. We're human, and it's natural. It is critical, though, to recognize when emotions are overriding logic and to prevent it from happening.

Stocks will pull back at some point. Maybe Friday's decline was the start. If the market breaks down through an important support level, ultimately, it will bounce back up and test it from below. That'll be the time to get aggressive with shorts.

That may be next week or next month. Who knows? But I'll be ready when it happens.


Source: Growth Stock Wire

[winston]

Waiting for the "M" to form ...

I think there's still plenty of money on the sidelines, waiting for a dip to buy.

[winston]

In another possible sign of weakening sentiment: Two massive blocks of puts were bought on Friday on the iShares MSCI Emerging Markets Fund and the Vanguard FTSE Emerging Markets Fund , according to options strategists.

The move suggests investors are hedging against a possible decline in emerging markets in the weeks and months ahead.


Source: Reuters

[winston]

[b]How to Know When It's Time to Short Stocks [/b By Jeff Clark

The stock market is neither bullish nor bearish right now. It's choppy.

Choppy markets are great for short-term day-traders who attempt to scalp profits off volatile intraday moves. But they don't do much for folks trying to trade intermediate-term trends…

We've seen plenty of intraday volatility lately. The Dow Jones Industrial Average moved more than 100 points in one direction or the other every day last week. But it closed yesterday near where it started the month. So there's a lot of movement… But stocks aren't really going anywhere.

This is the sort of action that often occurs before a change in trend – as momentum shifts from bullish to bearish. The quick drops in the stock market increase nervousness among bullish investors. And the sharp rallies shake out anyone who got too short too early.

It's tough to trade a choppy market. Most folks are better off just standing aside and waiting for the bearish trend to develop before trying to go short. That means waiting for the S&P 500 to violate its 50-day moving average (DMA).

For the past six months, the 50-DMA has been the support line for rising stock prices. Take a look…

Each time stocks have come down and tested the 50-DMA (the blue line on the chart) this year, the market has bounced back. It happened again last week. So we still can't rule out another push higher and another attempt for the S&P 500 to make new all-time highs.

And we can't be sure that stocks have entered an intermediate-term correction until the S&P 500 drops below the support of its 50-DMA. So it's still too early to get aggressive with short sales.

But once the 50-DMA fails, the next support level is all the way down at the 200-DMA (the red line) near 1,500.

That's what makes the short case so compelling right now. And it's why it's dangerous to add any long exposure today. The distance between the 50- and 200-DMAs is the largest it has been all year. A small break of support at the 50-DMA could lead to a large decline.


Source: www.growthstockwire.com

[winston]

Profiting from the Perfect Storm By Shah Gilani

I would be shorting or buying puts on China, Europe, the euro, the Australian dollar, industrial commodities, steel, copper, high-yield bonds, municipal bonds, and the Nasdaq.

http://www.wallstreetinsightsandindictm ... e=complete

[winston]

The Worst Trade You Can Make

by Alexander Green

http://www.investmentu.com/2013/Decembe ... ?src=email

[winston]

3 Reasons Why Bears Never Prosper

If you're only playing the short side of the market, you're bound to lose more often than you win

By David Fabian

Source: FMD Capital Management

http://investorplace.com/2014/02/3-reas ... wx2hs40OZQ