The past ten weeks have been sensational, but it's time to step back. I've gone through a few hundred charts this morning already, and I have two dominant conclusions:
(1) The vast majority of individual stocks I follow for their bearish potential are deeply oversold and at risk for a substantial rally;
(2) Every one of these has levels that would make them sensational shorts, and I intend to enter them aggressively, one by one, as those price levels are reached. It could be a while.
This is not to say I am flat, but I am much less aggressively positioned than before. I have 28 shorts and 2 longs right now, the longs being DBA and TBT. I have one medium-sized short on SPY that I entered today with a stop at 111.34. I think this is an important stop-loss level, since it represents the neckline of the pattern that "everyone" (!) is talking about.
Here's a potential path for the SPY, assuming this neckline holds sway (I've given the bounce up a bit of wiggle room). But, as Bernanke demonstrated this morning, and as I said in last night's video, the pandering politicians are bound to stop the fun, and it looks like that process has already started.
