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The Recent Reluctance To Call Shorts

May 18, 2008 1:37 PM

lightbulb.jpgYou may have noticed i have said “caution” a number of times, most recently on AAPL, GS and XLF, but have not called for an outright short, other than UPS. The reason is i would rather be short going with the tide of the market. Shorting against an overall uptrend market can work, but the profits are more limited, in general, and you can get whipsawed.

 For instance, I saw trouble in both Goldman and XLF on 05/03, but never called the short. I should have, obviously, but I thought the market “may” hold them. It didn’t.  However, once the market turns the other direction, and we get short chart patterns like those that formed in GS and XLF, I will go back to outright short calls and remove the word caution. For instance, right now, if the market sentiment (particularly energy) was negative, CHK would be a short right here with a hard stop above $59.60. But I would rather wait until the tide turns a bit…..

You may think my “lightbulb” has been turned off, but I try and make calls where I am reasonably confident that I am correct and I would rather not paddle upstream.

Written by Tom@StockBlade.com · Filed Under CHK, GS, UPS, XLF 

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