The market seems to be in a holding pattern as every time it looks like the market is ready to breakdown it stalls out and ticks higher. This happened last week and happened again this week. This leaves the market still in a long-term downtrend but has now put the sub-intermediate and short-term trends in a more lateral condition. This means that the market could still break higher and we might be forced to exit our recent shorts. The fact is that if the market was going to make us a lot of money in our shorts it would already be trending down. At the same time, we can’t make money on our few longs because the market definitely will not trend up. However, with gold and silver looking bullish, either the market is going to go down as those assets become safety nets or the market will go up due to hyperinflation. Since either outcome could happen it appears that the market is sort of stuck in limbo. Hopefully, since we have taken eight new shorts recently, the market will go down. However, if the market doesn’t fall I wouldn’t be surprised because, honestly, by now after those two hard breaks from the 50 day moving average the market should already be testing those November lows. The reasons why I believe we could still easily go down is because all eight new shorts still have not given a full cover signal warning us that we were wrong and there was only one short that needed to be fully covered the past week. That short will be covered Monday morning as it has too much green BOP and strong accumulation, to go with the rounding price pattern it is recently displaying. However, looking at my two long-term shorts that I have fully covered recently, this will probably be a bad decision. The two shorts that I have covered that gave me more than a 35% gain included CAJ and ATHR. If you look at both stocks today, you can see they should STILL be shorts. So if you don’t want to cover all of your SPW, you don’t have to. I just ALWAYS follow my rules and this breakout with price/volume/BOP over the recent resistance is enough to have me fully cover. Still there are 42 current shorts that say we should be going lower. Besides my current shorts, I have my eye on UBSI, MLM, NVO, SPLS, GGG, CAI, NST, SHW, LHCG, CERN, AOS, GPC, TD, CBY, ISRG, WAB, KEX, and CAT, just to name a few. Even if the market breaks higher, some of our shorts might still hold in there, as long as volume is low. If the rally comes on strong volume in the market, don’t hesitate to fully cover any long-term winners that have huge reversal days.
new short positions: none
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