The writing is on the wall

• Posted by vinaydh
• on January 25th, 2010

Market has a different feel to it these days. The pullback is still not deeper than some of the other pullbacks but still the quickness of this move is a first since this uptrend started. That in itself is a big red flag for this rally. I think the odds of this turning into a much bigger pullback are very high. It may sound counter intuitive but any monster rally would reinforce the view that the tide has indeed turned in favor of bears.

One has to be nimble and quick to adapt to the changing market conditions. There is no room for inertia in this market. I think the right approach now is to short rallies. At least not a time to be in love with the long side. Shorting is not easy but in my experience it’s the quickest way to make money because stocks go down many times faster than they go up. Market gave back the gains made in the last 2 months in 3 days flat. But shorting requires much more conviction, it’s not for the faint of heart, one has to believe in one’s thesis and stick to it in the face of big rallies that are going to emerge every now and then in a downtrending market.

In short time to get the bear suit out. I could care less if the market wants to go down or up but I care that it stays the course for some time so that one can relax and enjoy the ride without worrying about a U turn.

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