There’s nothing easier in the world than offering up short-sale ideas when the market is in a free-fall. Of course, that’s also the most hazardous time. Conversely, there’s nothing harder than daring to offer up such ideas when the market is in up-every-single-day mode, as it is now, but I’m going to do it anyway. Before I do, let’s take a quick look at the /ES futures since April 21st, which was only three weeks but about 800 points ago!
Over the course of the past three weeks, the market has been up every single day except for two. The Fibonacci retracements have provided strong support (green arrows) and resistance (red arrow) along the way, although now we’re in a no man’s land in which there’s no major Fib in the way.
The only obstacle, if you want to call it that, is the lifetime high, which is only about 4% above present price levels.
I am maintaining a very conservative stance, with a mere 66% commitment level and, even after entering the four new positions shown below, only 13 positions total. Here are my four new short-sale positions, with the dashed horizontal line representing my stop-loss price.
Today’s strength is no surprise, as a major news event creating a huge push higher typically bleeds into the next day. I am reviewing my Bear Pen on at least a daily basis, but I am only entering positions in which the risk/reward ratio is strongly appealing.
