I have, in recent weeks, been pretty balanced about my approach to the market. I've said repeatedly how hedged I've been. I have had many shorts and many longs, and in spite of a lot of movement in individual portfolios, the sum vale of all of them has largely been stuck for a long time. This, I suppose, is a testament to good hedging, since I avoided the very nasty drawdowns I suffered last Spring.
Those of you reading my posts and comments yesterday (Sunday) saw a different tone. I was ready to throw being hedged under a bus and, for a while at least, become a real Bear again. I didn't set out to have such a big shift in attitude, but as I kept looking at chart after chart (eventually going through nearly 1,000 individual ones) it become apparent to me that the bulls were about to get clobbered.
Specifically, I usually put together two watch lists when going through one of my big chart sweeps – "Bull Pen" and "Bear Pen", each of which contain long and short ideas. These lists usually are fairly close in size (say, 60 in one and 40 in the other). Yesterday was different – – I wound up with 131 in Bear Pen and virtually none in Bull Pen.
I am absolutely drowning in bearish ideas right now. My overall portfolio has a bearish tilt to it, but I'm going to shift much more heavily bearish. I have not felt this strongly in a long, long time – – maybe not since September 19, 2008. I have matured enough as a trader not to simply dump all my longs and go totally short. I instead will make my stops extremely tight (giving longs a very short leash) and augment my bearish tilt with the best of those 131 opportunities.
