Building short positions

It may be time to start establishing some short positions. Obviously, it's not possible to know whether the bear market rally ends here or if it has 15% more upside (remember, lately the average bear market rally is good for 25%, on average, and we're only up 13%) . The strength of this current rally has to be respected but ultimately faded. One good way to do that without getting caught with your pants down, is to build positions over time and doing so around key levels of S&R. Here's 3 examples: FAS, JPM, and SPY

FAS


JPM


SPY

FAZ & FAS --> Low Risk Entries for Monday

FAZ


FAS

SRS & FAS --> two low risk entries

Two contrarian (given the drunken degree of bullishness this week) low-risk entries below:

SRS - depending on the pre-market action, I will be buying the open with a tight stop under 66




FAS - watch 4.52

SKF Shorting Strategy Wins Again

My proprietary, yet highly public, SKF shorting system had its 5 day RSI cross below 60 today - signaling that it's time to cover. If like me, you feel more downside is possible in SKF, given the strength of today's rally, use a trailing stop. Since the inception of SKF, this system has been profitable 92% of the time (11 for 12).


FAS


Horizontal support/resistance in this market has been more reliable than trending price channels. See an alternate view of FAS below.


More upside seems likely in the short-term (1-10 days) but this is still nothing more than a bear market rally - some are bigger than others.

Buying Weakness in XLF

XLF recently experienced 5 consecutively lower closes. The following is a look at what happens historically when this weakness is bought and sold x days later:
As long as the trade is short term, consider using XLF to generate your signals and using SKF, UYG, FAZ, or FAS for the trade.