SSS - The Short-Side: A Quick Assessment

Published : January 28 2011 at 12:45 ET

We would first like to thank all of you who attended this morning's webinar. We are currently tweaking the file for upload, so that may take a few hours. For those of you who missed it, sit tight, it should get there. Also, we should correct another one of Gil's "Reagen-esque" number-flubbs; he meant a subscriber base or VoSI that is in the "four-figures" not "five-figures." In the grander scheme of things we have a tiny community, and not one that figures as a big force in the markets just yet, unless we talk about thin stocks. Nevertheless, the growth is astounding to us in a few short months of existence.

Currently the short-side of this market is premature, outside of a few potential situations that we would characterize as tactical in nature, e.g., that we would only seek to make a quick 5-10% on a market break, such as perhaps a rally by CRM up towards its 65-day ema and 50-day sma lines. We have been testing a position in CRM off of this morning's hire prices, but so far we don't sense any traction, so we covered to take a small profit. As well, during the webinar, we discussed taking a position in the SQQQ earlier this morning, but that has been sold. We are flat, at least with respect to GM's personal accounts.

The short side takes time to develop, and as we pointed out during the webinar, the market's action up here is deleterious, to be sure, but as the man from up on the mountain said, "major movements do not begin and end in a day." For now ANY shorting is strictly tactical, and we may simply leave these ideas to execution in our own accounts, since risk must be managed very tightly and a strong sense of the market's intra-day "cadence" is implemented. We can take a quick 3-4% out of the market this way, helping to off set entirely prior losses taken off the peak on the long side, and sit tight. That is what we have done here, but we are now watching closely for better-defined tactical set-ups to present themselves. Stay tuned if you are a short-seller, but be advised if you are trying ANY of this for the first time, do not operate with ANY MORE THAN 10% OF YOUR ACCOUNT VALUE! For those of you with less experience, but with some experience, may know what we mean when we say risk must be managed tightly on the short side

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