What you need to know before you short this market
From Jeff Clark, Editor, Stansberry Short Report:
One of the reasons I’ve been reluctant to get aggressive with short trades – even though my personal bias is firmly in the bear camp – is the tendency of buyers to show up at just the right time to prevent any technical damage to occur on the charts.
That has happened again yesterday and today.
We can blame it on Central Bank interference, computer trading, or just good old fashioned market manipulation. But, there’s no sense getting all worked up over it. That’s the environment we’re in, and have been in for quite some time.
Good traders have to put their personal bias aside and trade whatever the market is willing to give.
Frankly… I’ve been bearish all year. But, I’ve made far more money betting on the upside of stocks than the downside. That’s also true of our track record in Direct Line and Short Report.
At some point… maybe soon… this market will break support and the bears will have their day. Remember, though, the first breakdown usually finds support. Conditions get oversold quickly. Then we get the inevitable bounce back up toward the former support level – which is now resistance. THAT is usually the best, low-risk setup for establishing short trades. You can get aggressive.
If the market keeps pushing higher, then you stop out for a small loss. But, if the market turns back down… well… that next leg lower is usually the largest.
My point is this… Don’t worry about missing your chance to get aggressive on the short side of the market.
Your best short trades aren’t going to be from calling the top in stocks. They’re going to come from shorting the oversold bounce that happens right after the top.