The Little Market That Could

Posted on 02/09/10 at 1:53pm by Ryan Mallory

I couldn't be more excited about my prospects for the shorting this market than I am right now, with the market staring down the barrel of two percent gains, I just need those bulls out there to keep telling themselves "I think I can...I think I can". As it stands right now, I am looking at tomorrow morning, assuming we can get some follow through on this market, to start putting some capital to work and shorting the pig out of this market.

My top prospect at the moment is Coca-Cola (KO) as they are up over 4% on positive earnings, but I also have my eyes on Avon (AVP), JP Morgan (JPM), Rambus (RMBS), Alcon (ACL), to just name a few. To see the rest of them, check out my post from last Friday where I detail my top 30 short plays with the stop-loss included.

Ideally, I would like to start to putting on my short positions in the mid-to-high 1080's on the S&P. Check out the charts below.

Click Here to See the S&P and KO charts

 

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I would not even think of

by Swing Trader on 02/09/10 3:40pm

I would not even think of shorting this market outside a few select names. KO is up on impressive earnings (are you gonna scalp it for a measly 2% gain?) and JPM is way, way oversold after the Obama bank tax idea was announced. Just my opinion though. If you really want to short, look at the airlines. 

I like your ideas on the

by Ryan Mallory on 02/09/10 5:01pm

I like your ideas on the airlines, and do agree with you that we are oversold, but I would also say that traditional oversold/overbought indicatiors don't necessarily indicate a pullback/rally is in th cards - just look at last year, every indicator out there had us overbought for months at a time. Instead, I am going to rely primarily on market price action, particularly the S&P to determine when I should start shorting this market.

KO is honestly one of my favorite short setups out there and will likely short it at some point tomorrow. This earnings season, and it really wasn't all that bad of a one, had no impact at all on this market, and I'm not guessing that KO will either, nor will it be able withstand any future market selling pressures.

I will take a look at KO more

by Swing Trader on 02/09/10 5:14pm

I will take a look at KO more closely. I just glanced at it in passing today. What type of indicators do you use to determine oversold/overbought conditions? MACD, RSI, Bollinger Bands? 

I hear you loud and clear about the market being able to persist in an overbought or oversold state. The collapse in materials just these last few weeks has been astounding, when they were clearly overextended for weeks/months, but if you tried shorting them at all you got murdered.

Good luck with your trades. I will keep an eye on your future posts.

 

I am getting moderately more

by Bud Fox on 02/11/10 3:33pm

I am getting moderately more bullish here. I was advocating buying VIX calls, SPY puts or exiting the market completely as earnings season got underway. Bearish sentiment now is very high, but I think the bears could be a little behind. That being said, I am not long. There is a lot of uncertainty right now, but I think risk/reward has found some equilibrium between the long and short side. Valuations don't look bad (the market is trading at 1996 inflation adjusted levels), and earnings have been quite good. I should note, however, that I think any new bull market will eventually come crashing down as a result of the unprecedented actions (bailouts, crazy deficits, global currency devaluations, 0% interest rates, etc.) that were taken to stem the financial crisis. For every action there is a reaction. The consequences could be quite unpleasant.

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