By Andrew Nyquist
With yesterday’s whoosh lower, I sold my Double Short S&P 500 index fund (SDS) for a small gain. It was a small position that I entered some time ago and was hoping to build rather quickly into the euphoria. And to be honest, I would have made a lot more on the trade if I would have added to my position on the move to 1333 (2X the 2009 low), but I had my finger in my nose. Either way, I am left today with a small position in the regular Short S&P 500 index fund (SH) that I currently have a small paper loss on. And because the market is holding up decently well despite 3 days of selling, I will probably look to sell that as well — I’m still hoping to re-enter the short index funds at higher levels. Net-net, a wash. Note, though, that because I am taking my short index funds off does not mean I’m bullish here. I just need some time to sit back and watch the action for setups.
So what to do now. Well, it’s time to go back to the charts to look for stocks that set up for very short term trades to the upside – quick and easy day or swing trades. I’m thinking I’ll have to be a bit picky and patient, as the dollar registered a perfected daily DeMark buy set up, so a bit of strengthening in the dollar may be a headwind for the equities and allow for a couple more days of backing and filling. I’ve also learned over the years not to force trades, so doing nothing is okay as well. I’ll keep you posted.
Below is an updated chart of the S&P 500, as well as the Dollar Index ($USD) showing the DeMark buy setup, allowing for a few days of reactionary dollar strength. Note that the dollar chart is through EOD yesterday (1/30). Today is the first day of a 1-4 day reactionary move higher for the USD.
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Position in S&P 500 related short index fund SH.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.
