Time For A Change

I have been lugging a modest net short position but plan on becoming more aggressive on the short side this week. What has changed?
  • Although put/call ratios have failed as signals since mid December, we are seeing even more extreme readings. I have had to reformat the axis on my charts to account for the recent put/call readings because the lines were literally off the charts.

  
  • The bears on the Investors Intelligence survey have finally fallen below 20%. Of all the signals that these sentiment surveys throw off I have found that the bears falling below 20% on the II survey to be one of the most reliable sell signals.
  • Rydex traders recently set a record for being positioned the most bullishly ever.
  • I have seen sentiment become extreme and stay extreme through year end and the beginning of the year before. However, January options expiration has been a turning point in many of these instances.  Last year was one of those instances. January expiration is four short trading days away. 
My vehicle of choice for expanding my net short position will likely be put options on the SPY.


    8 comments:

    nicasurfer said...

    The hedge funds are gonna be trimming the AAPL position for the next couple of days. This should put some serious pressure on the qqqq's.

    Anonymous said...

    Covered ZLC @ 5.04, short from 5.63 and 5.57 (+10%)

    OL DAWG

    Anonymous said...

    Short NAK @ 18.65 and 18.90

    OL DAWG

    Anonymous said...

    Short more NAK @ 19.76

    HOLY FUCK

    OD

    Anonymous said...

    My average price is 19.09 homiez.

    Let's see how this bitch turns out.

    Ol DAWG

    Anonymous said...

    you seem to sell at 10% gains? Is that usually your goal dawg? good luck with nak

    Anonymous said...

    Now I will take 5% on a larger position. 10% is a good gain for this market imo. If market gets to 2009 to early 2010 level of activity I will look for 20%.

    Anonymous said...

    tsachy -

    i have two questions:
    1) why do u look at the 30 day mva?
    2) what does the ISE indicate and how is it different than the put/call chart?

    thank you