Friday, January 29, 2010

Game Plan from Here - Currently 43% Short

Let me lay out my thoughts ahead of time in terms of strategy.  I am currently 43% short as of that break of S&P 1085, than 1080.  That includes the dollar long positions; without them it is probably closer to 36% short.  (technically it is more than 43% short since I am using options which provide me with a lot of leverage but I am keeping it simple)

Now that S&P 1078 is broken I want to see 1071.50 filled; which is the gap from November 2009.  If that happens today, I will let go of some of my puts and short 3x ETFs positions.  Maybe 1/3rd - maybe 1/2 ... I am not going to edit this post with all the details.  Instead I am giving you my marching orders ahead of time.

The best thing for the bulls (perversely) is a very bad open in the market Monday morning to flush out and panic people.  Then a reversal from that flush.  I don't know if the powers that be will allow futures to do bad things Monday morning but let's see.  If that happened I would get rid of a lot more of my short exposure of all sorts, but keep my dollar longs for the long(er) run.

As long as we hold below S&P 1080-1085 I won't reverse any position until I see the gap filled.  I cannot see any brave sucker soul buying long into the close here, but who knows.  It now seems very much certain that the 200 day moving average on the S&P 500 will be a very probable target in the weeks to come. It's just a question of trying to avoid the oversold bounce that surely is not that far away, and locking in our very hearty gains before the bulls come and take them away.

A very fun week... makes up for the boredom of November and December 09.  This is the type of week our relative performance versus the market and mutual fund peers will go off the charts.

EDIT: S&P 500 hit 1071.59; I did my deed.  Goldman Sachs style.

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